Bill Summary – FastDemocracy

HOUSE BILL NO. 5430
     February 07, 2024, Introduced by Reps. Andrews, Arbit, Byrnes, McKinney, Paiz, Hood, Brabec,
        Haadsma, Tsernoglou, Rheingans, Wilson, Scott, Hoskins, Skaggs and Churches and referred
        to the Committee on Tax Policy.
          A bill to amend 1967 PA 281, entitled
    "Income tax act of 1967,"
    by amending sections 266a and 676 (MCL 206.266a and 206.676), as
    added by 2020 PA 343.
                     THE PEOPLE OF THE STATE OF MICHIGAN ENACT:
       Sec. 266a. (1) Subject to the limitations under this section,
 a qualified taxpayer with a certificate of completed rehabilitation
 issued pursuant to subsection (4) (8) after December 31, 2020 and
 before January 1, 2031 may credit against the tax imposed by this
 part the amount determined pursuant to subsection (2) for the
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 qualified expenditures for the rehabilitation of a historic
 resource pursuant to the rehabilitation plan in the year in which
 the certificate of completed rehabilitation of the historic
 resource is issued. The qualified taxpayer shall initially claim a
 credit under this section within 5 years after the certificate of
 completed rehabilitation is issued pursuant to subsection (4). (8).
 If the credit is not initially claimed within 5 years after the
 certificate is issued, the certificate is no longer valid and the
 qualified taxpayer is no longer eligible to claim a credit under
 this section for that rehabilitation plan. Only those expenditures
 that are paid or incurred during the time periods prescribed for
 the credit under section 47(a)(2) 47 of the internal revenue code
 and any related treasury regulations shall be considered qualified
 expenditures.
       (2) Subject to the limitations under this section, a qualified
 taxpayer that has claimed and received a credit for qualified
 expenditures under section 47(a)(2) of the internal revenue code or
 has entered into an agreement under subsection (10) may claim a
 credit under this section equal to the following under the
 following circumstances:
       (a) For a qualified taxpayer that has claimed and received a
 credit for qualified expenditures under section 47 of the internal
 revenue code or has entered into an agreement under subsection (14)
 as follows:
       (i) For a large nonresidential historic resource or a medium
 nonresidential historic resource, 25% of the qualified expenditures
 that are eligible, or would have been eligible except that the
 qualified taxpayer entered into an agreement under subsection (10),
 (14), for the credit under section 47(a)(2) 47 of the internal
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 revenue code. or, if the
       (ii) For a small nonresidential historic resource or a
 residential historic resource, 30% of the qualified expenditures
 that are eligible, or would have been eligible except that the
 qualified taxpayer entered into an agreement under subsection (14),
 for the credit under section 47 of the internal revenue code.
       (b) For a qualified taxpayer that is not eligible for the
 credit under section 47(a)(2) 47 of the internal revenue code , as
 follows:
       (i) For a large nonresidential historic resource or a medium
 nonresidential historic resource, 25% of the qualified expenditures
 that would qualify under section 47(a)(2) 47 of the internal
 revenue code except that the expenditures are made to a historic
 resource that is not eligible for the credit under section 47(a)(2)
 47 of the internal revenue code.
       (ii) For a small nonresidential historic resource or a
 residential historic resource, 30% of the qualified expenditures
 that would qualify under section 47 of the internal revenue code
 except that the expenditures are made to a historic resource that
 is not eligible for the credit under section 47 of the internal
 revenue code.
       (3) To be eligible for the credit under this section, a person
 shall submit an application and a rehabilitation plan to the state
 historic preservation office. Completed applications must be
 considered in the order in which the office received the completed
 applications. and Notwithstanding any rule to the contrary,
 completed part 1 and part 3 applications must be approved or denied
 within 120 30 days of receipt of the completed applications and
 completed part 2 applications must be approved or denied within 60
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                                       4
 days of receipt of the completed applications. If the office
 determines that the application is complete and the rehabilitation
 plan meets the criteria for a credit under this section, the office
 shall issue a preapproval letter to the applicant that states that
 the rehabilitation plan qualifies for the credit under this section
 and the maximum total amount of the credit reserved for which a
 credit may be claimed when the project is complete and a
 certificate of completed rehabilitation is issued for qualified
 expenditures pursuant to that rehabilitation plan. If an
 application is denied under this subsection, the applicant may file
 an appeal in a form and manner as prescribed by the office or
 subsequently reapply for the same rehabilitation plan or for
 another rehabilitation plan, or both.
       (4) Subject to the limitations under this section, the total
 of all credits reserved under preapproval letters for
 rehabilitation plans approved under this section and section 676
 shall not exceed $5,000,000.00 per calendar year through December
 31, 2023 and shall be utilized as follows: . To
       (a) To the extent the office receives applications for the
 rehabilitation of small nonresidential historic resources for
 credits in excess of $2,000,000.00, not less than $2,000,000.00 of
 the $5,000,000.00 each calendar year shall be approved for small
 nonresidential historic resources.
       (b) To the extent the office receives applications for the
 rehabilitation of large nonresidential historic resources for
 credits in excess of $2,000,000.00, not less than $2,000,000.00 of
 the $5,000,000.00 each calendar year shall be approved for large
 nonresidential historic resources.
       (c) To the extent the office receives applications for the
     KAS                                                         00936'23
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 rehabilitation of residential historic resources for credits in
 excess of $1,000,000.00, not less than $1,000,000.00 of the
 $5,000,000.00 each calendar year shall be approved for residential
 historic resources.
       (5) Subject to the limitations under this section, beginning
 with the 2024 calendar year, the total of all credits reserved
 under preapproval letters for rehabilitation plans approved under
 this section and section 676 shall not exceed $100,000,000.00 per
 calendar year and shall be utilized as follows:
       (a) To the extent the office receives applications for the
 rehabilitation of large nonresidential historic resources for
 credits in excess of $70,000,000.00, not less than $70,000,000.00
 of the $100,000,000.00 each calendar year shall be approved for
 large nonresidential historic resources.
       (b) To the extent the office receives applications for the
 rehabilitation of medium nonresidential historic resources for
 credits in excess of $20,000,000.00, not less than $20,000,000.00
 of the $100,000,000.00 each calendar year shall be approved for
 medium nonresidential historic resources.
       (c) To the extent the office receives applications for the
 rehabilitation of small nonresidential historic resources for
 credits in excess of $5,000,000.00, not less than $5,000,000.00 of
 the $100,000,000.00 each calendar year shall be approved for small
 nonresidential historic resources.
       (d) To the extent the office receives applications for the
 rehabilitation of residential historic resources for credits in
 excess of $5,000,000.00, not less than $5,000,000.00 of the
 $100,000,000.00 each calendar year shall be approved for
 residential historic resources.
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       (6) The office shall not issue a preapproval letter or
 certificate of completed rehabilitation that authorizes a qualified
 taxpayer to claim a credit of more than $2,000,000.00 in a single
 tax year through the 2023 tax year for the same historic resource.
 Beginning with the 2024 tax year, the office shall not issue a
 preapproval letter or certificate of completed rehabilitation that
 authorizes a qualified taxpayer to claim a credit of more than the
 following in a single tax year for the same historic resource under
 the following categories:
       (a) For a large nonresidential historic resource,
 $10,000,000.00.
       (b) For a medium nonresidential historic resource,
 $2,500,000.00.
       (c) For a small nonresidential historic resource, $300,000.00.
       (7) If, for any calendar year, the office issues preapproval
 letters and reserves the maximum amount of tax credits allowed
 under this section for that calendar year, the office shall notify
 all applicants who have submitted completed applications and
 rehabilitation plans then awaiting approval or submitted for
 approval after the calculation is made that no additional
 preapproval letters for rehabilitation plans will be issued during
 that calendar year. The office shall also notify those applicants
 of the priority number given to the applicant's application and
 rehabilitation plan awaiting approval. The applications and plans
 will remain in priority status for 2 years from the date of the
 original application and plan and will be considered for approval
 and reservation of tax credits in the priority order established in
 this subsection in the event that additional credits become
 available resulting from the rescission of approvals, under this
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 subsection or subsection (5) or from any unused, recaptured,
 unclaimed, or returned credits during the calendar year and at the
 beginning of the next calendar year. To the extent possible, the
 reallocation of any unused, recaptured, unclaimed, or returned
 credits during the calendar year must be awarded to applicants
 within the same type of historic resource category. However, any
 remaining credits on December 1 of each year may be utilized for
 any approved application, including a request for an additional
 credit under subsection (8). An applicant that has received a
 preapproval letter shall commence rehabilitation, if it has not
 previously begun, within 1 year after the issuance of the
 preapproval letter and complete the rehabilitation plan within 8
 years after the issuance of the preapproval letter or the office
 will rescind the preapproval letter and reallocate the amount of
 the credit reserved for that rehabilitation plan. Upon completion
 of a rehabilitation plan for which a preapproval letter was issued,
 the applicant shall submit to the office documentation that the
 rehabilitation is complete and the completed rehabilitation of the
 historic resource meets the criteria under subsection (6) (10) and
 either of the following:
       (a) All of the following criteria:
       (i) The historic resource contributes to the significance of
 the historic district in which it is located or is individually
 listed on the National Register of Historic Places or state
 register of historic sites.
       (ii) Both the rehabilitation plan and completed rehabilitation
 of the historic resource meet the federal secretary Secretary of
 the interior's Interior's standards for rehabilitation and
 guidelines for rehabilitating historic buildings, 36 CFR part 67.
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       (iii) All rehabilitation work has been done to or within the
 walls, boundaries, or structures of the historic resource or to
 historic resources located within the property boundaries of the
 resource.
       (b) The applicant has received certification from the national
 park service National Park Service that the historic resource's
 significance, the rehabilitation plan, and the completed
 rehabilitation qualify for the credit allowed under section
 47(a)(2) 47 of the internal revenue code.
       (8) (4) The office shall verify that the rehabilitation is
 complete and meets the criteria under subsection (3). However, if
 the applicant is eligible for the credit allowed under section
 47(a)(2) 47 of the internal revenue code, additional documentation
 that the rehabilitation is complete for the credit allowed under
 this section is not required. Within 120 Notwithstanding R 206.208
 of the Michigan Administrative Code, 30 days after receiving
 verification, in a form and manner as prescribed by the office,
 that the rehabilitation is complete and meets the requirements of
 subsection (3), the office shall issue a certificate of completed
 rehabilitation to the applicant that states the rehabilitation plan
 submitted by the applicant has been completed, the amount of
 qualified expenditures, and the total amount of the credit allowed
 to be claimed by a qualified taxpayer under this section. If the
 amount of qualified expenditures incurred exceeds the amount of the
 tax credits reserved by the preapproval letter issued under
 subsection (3), the applicant may submit a request to the office,
 in a form and manner as prescribed by the office, for the issuance
 and approval of a certificate of completed rehabilitation in excess
 of the amount initially authorized in the preapproval letter. The
     KAS                                                           00936'23
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 request for an additional credit in excess of the amount initially
 authorized in the preapproval letter under this subsection is a
 request for a new credit and must be given a priority number based
 on the date of the request for consideration if additional credits
 are available. If the office determines that less than
 $5,000,000.00 the maximum amount of the credits allowed under
 subsection (4) or (5), whichever is applicable, has been reserved
 under preapproval letters issued for the calendar year, after
 priority has been given to those notified under subsection (3),
 (7), then the office may issue a certificate of completed
 rehabilitation in excess of the amount included in the preapproval
 letter.
       (9) (5) The office may inspect a historic resource at any time
 during the rehabilitation process and may revoke the preapproval
 letter or the certificate of completed rehabilitation if the
 rehabilitation was not undertaken as represented in the
 rehabilitation plan or if unapproved alterations to the completed
 rehabilitation are made within 5 years after the tax year in which
 the certificate of completed rehabilitation was issued. The office
 shall promptly notify the department of a revocation.
       (10) (6) Qualified expenditures for the rehabilitation of a
 historic resource may be used to calculate the credit under this
 section if the historic resource is 1 of the following during the
 tax year in which a credit under this section is claimed for those
 qualified expenditures:
       (a) Individually listed on the National Register of Historic
 Places or state register of historic sites.
       (b) A contributing resource located within a historic district
 listed on the National Register of Historic Places or the state
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 register of historic sites.
       (c) A contributing resource located within a historic district
 designated by a local unit pursuant to an ordinance adopted under
 the local historic districts act, 1970 PA 169, MCL 399.201 to
 399.215.
       (d) If a determination of eligibility for listing in the
 National Register of Historic Places has been issued by the office
 for the historic resource and that historic resource is 1 of the
 following:
       (i) Located in an incorporated local unit of government that
 does not have an ordinance under the local historic districts act,
 1970 PA 169, MCL 399.201 to 399.215, and has a population of less
 than 5,000.
       (ii) Located in an unincorporated local unit of government.
       (iii) Located in an incorporated local unit of government that
 does not have an ordinance under the local historic districts act,
 1970 PA 169, MCL 399.201 to 399.215, and is located within the
 boundaries of an association that has been chartered under 1889 PA
 39, MCL 455.51 to 455.72.
       (iv) Subject to a historic preservation easement that is held
 by a historic preservation or history organization that accepts<