Amendment #57 to H4165

Gateway Regions Pilot

Ms. Andrews of Orange moves to amend the bill by adding the following sections:-

SECTION XX.  (a) For the purposes of this section, the following terms shall have the following meanings:-

“Certified housing structure”, a housing structure within gateway region housing rehabilitation zones which meets the rehabilitation requirements set forth by the department.

“Commissioner”, the commissioner of revenue.

“Department”, the department of housing and community development.

“Gateway region”, a group of more than 1 and fewer than 8 contiguous municipalities with: (i) a combined population over 20,000 and under 45,000, (ii) a median household income below the commonwealth average in each municipality, (iii) a per capita income below the commonwealth average in each municipality; and (iv) a percentage of the population having attained a bachelor’s degree or higher below the commonwealth average each municipality that agrees to collaborate as a region,  completes and submits a joint application for  designation as a gateway region to the secretary of housing and economic development, and is designated as such by the secretary of housing and economic development prior to January 1, 2015. Any region designated as a gateway region shall remain a gateway region for at least 5 consecutive calendar years.

“Gateway region housing project”, a project to build, convert from non-residential uses, or rehabilitate housing in a gateway region;

“Gateway region rehabilitation zone”, an area of a gateway region established under subsection (c).

“Qualified rehabilitation expenditure”, any amount that: (i) is properly chargeable to the homeowner, (ii) is expended in the rehabilitation of a structure that, by the end of the taxable year in which the certified rehabilitation is completed, is a qualified historic structure, as defined in section 38R of chapter 63 of the General Laws, (iii) is expended in compliance with a plan of proposed rehabilitation that has been approved by the department, and (iv) is not funded, financed, or otherwise reimbursed by any state or local grant, grant made from the proceeds of tax-exempt bonds issued by the commonwealth, a political subdivision of the commonwealth, or an instrumentality of the commonwealth or of a political subdivision of the commonwealth, state tax credit other than the tax credit provided for under this section, or other financial assistance from the federal government, the commonwealth, or a political subdivision of the commonwealth.

“Rehabilitation”, the process of returning a structure to a state of utility, through repair or alteration, which makes possible an efficient use while preserving those portions and features of the structure and its site and environment which make the structure and its site and environment historically, architecturally, or culturally significant.

“Secretary”, the secretary of housing and economic development.

“Substantial rehabilitation”, rehabilitation of a structure for which the qualified rehabilitation expenditures, during the 12-month period selected by the taxpayer ending with or within the taxable year, exceed $5,000.

“Taxpayer”, resident of the commonwealth that makes qualified rehabilitation expenditures for the purposes of subsection (c), or, a person subject to taxation under chapter 63 of the General Laws for the purposes of subsections (d) and (e).

(b) On or before January 1, 2016, the secretary shall designate no more than 2 gateway regions.  The tax credits established pursuant to subsections (c) to (e), inclusive, shall be available to the applicable persons within such regions (i) for 5 taxable years, or (ii) until the total amount of credits authorized pursuant to this section equals $4,000,000, whichever occurs first.

(c) There shall be a gateway region homeowner rehabilitation tax credit. The secretary, or the secretary’s designee, in an agreement with the gateway region shall, on or before March 31, 2015, establish gateway region rehabilitation zones within which homes will be eligible for the tax credit. The secretary shall establish an application process by which a taxpayer within a gateway region rehabilitation zone may request the tax credit. The application shall include proof of ownership, rehabilitation plans, estimated rehabilitation expenses, and any other information the secretary needs to be able to award the tax credit.

A taxpayer may file an application with the secretary or the secretary’s designee. An incomplete application shall not be processed until all required application information has been received.

The tax credit shall be for individual homeowners who make substantial rehabilitation to their primary home of residence. The credit shall not exceed 25 per cent of the home’s appraised value. The credit shall be awarded annually in an amount not to exceed $5,000. If the credit allowable for any taxable year exceeds the annual limit for that tax year, the taxpayer may carry forward and apply in the next 4 subsequent taxable years, the remaining portion, still subject to the annual limit. The carryover period shall not exceed 4 taxable years after the close of the taxable year during which the tax credit was first taken. The secretary or the secretary’s designee shall determine whether the proposed substantial rehabilitation for which a complete application is received meets the applicable standards in determining the awarding of the tax credit.

(d) There shall be a gateway region job development tax credit.  The department of revenue may provide such credit for a corporation against its corporate income tax pursuant to chapter 63 of the General Laws in order to foster job creation in gateway regions. The credit may be claimed for the taxable years or tax periods specified in the taxpayer’s agreement with the department of revenue, which shall not exceed 5 taxable years. The amount of the credit available for a taxable year shall not exceed either $2,500 per new employee or 10 per cent of the corporation’s state income tax, whichever is greater.

A taxpayer or potential taxpayer who proposes a project to create new jobs in a gateway region may apply to the department of revenue to enter into an agreement for a tax credit pursuant to this subsection. The commissioner of revenue shall prescribe the form of the application on or before March 31, 2015. After receipt of an application, the department may enter into an agreement with the taxpayer for a credit pursuant to this subsection if it determines all of the following: (1) the taxpayer’s project will create new jobs in the gateway region; (2) the taxpayer’s project is economically sound and will benefit the people of the gateway region and the commonwealth by increasing opportunities for employment and strengthening the economy of the gateway region and the commonwealth; and (3) receiving the tax credit is a major factor in the taxpayer’s decision to go forward with the project.

An agreement pursuant to this subsection shall include the following: (1) a detailed description of the project that is the subject of the agreement; (2) the term of the tax credit, which shall not exceed 5 years, and the first taxable year, or first calendar year that includes a tax period, for which the credit may be claimed; (3) a requirement that the taxpayer shall maintain operations at the project location for at least twice the number of years as the term of the tax credit; (4) letters of support from the chairman of selectmen or chairman of a town council or town manager of each of the gateway region’s municipalities in which the jobs will be created; (5) a specific method for determining how many new employees are employed during the taxable year or during a calendar year that includes a tax period; (6) a requirement that the taxpayer annually shall report to the commissioner of revenue the number of new employees, the new income tax revenue withheld in connection with the new employees, and any other information the commissioner may need; and (7) a provision requiring that the taxpayer shall not relocate employment positions from elsewhere to the commonwealth to the project site that is subject to the agreement.

If a taxpayer fails to meet or comply with any condition or requirement set forth in a tax credit agreement pursuant to this subsection, the department of revenue may amend the agreement to reduce the percentage or term of the tax credit. The reduction in percentage or term may take effect in the immediate taxable year in which the commissioner of revenue notifies the taxpayer in writing of such failure. If the taxpayer fails to annually report any of the information required by this section within the time required by the commissioner, the reduction of the percentage or term shall take effect in the current taxable year.

Projects that consist solely of point-of-final-purchase retail facilities, which shall be defined by the department of revenue, shall not be eligible for the tax credit pursuant to this subsection; provided, however, that point-of-final-purchase retail facilities shall not be defined to include facilities that primarily sell locally produced or grown products. If a project consists of both point-of-final-purchase retail facilities and non-retail facilities, only the portion of the project consisting of the non-retail facilities shall be considered when computing the amount of the tax credit. If a warehouse facility is part of a point-of-final-purchase retail facility and supplies only that facility, the warehouse facility shall not be eligible for the tax credit pursuant to this subsection. Catalog distribution centers shall not be considered point-of-final-purchase retail facilities for the purposes of this section, and shall be eligible for tax credits pursuant to this subsection.

Financial statements and other information submitted to the department of revenue by an applicant for or recipient of a tax credit pursuant to this subsection, and any information taken for any purpose from such statements or information, shall be considered public records and the commissioner of revenue may make use of the statements and other information for purposes of issuing public reports or in connection with court proceedings concerning tax credit agreements pursuant to this subsection.

If the owner or successor owner of the project that qualified for the tax credit pursuant to this subsection does not continue operations in the gateway region for at least twice the number of years as the term of the tax credit, the taxpayer shall forfeit all credits taken during such term.  In the event of the forfeiture of such credits, the department of revenue shall initiate proceedings against the taxpayer to recover wrongfully exempted taxes and the taxpayer shall promptly repay to the department of revenue any wrongfully exempted state income taxes.  The forfeited amount of credits shall be deemed assessed on the date the department initiates proceedings against the taxpayer and the taxpayer shall promptly repay to the department any wrongfully exempted state income taxes.  The secretary of housing and economic development may elect to waive enforcement of any such forfeiture based on a finding that the waiver is necessary to avert an imminent and demonstrable hardship to the taxpayer.  If a waiver is granted, the recipient shall agree to contractual recapture provisions.  The existence of any waiver granted under this section, the date of the granting of such waiver, and a brief summary of the reasons supporting the granting of such waiver shall be disclosed consistent with the provisions of this section.

All or any portion of a tax credit issued in accordance with this subsection may be transferred, sold, or assigned to parties who are otherwise eligible for such credit. An owner or transferee desiring to make such a transfer, sale, or assignment shall submit to the commissioner a statement which describes the amount of tax credit for which such transfer, sale, or assignment of the tax credit is eligible. The owner or transferee shall provide to the commissioner appropriate information so that the tax credit can be properly allocated. In the event that recapture of a tax credit is required, any statement submitted to the commissioner pursuant to this paragraph shall include the proportion of the tax credit required to be recaptured, the identity of each transferee subject to recapture and the amount of credit previously transferred to such transferee.

(e) There shall be a tax credit for housing projects within gateway regions. The department shall allocate the gateway region housing project tax credit among as many qualified projects as fiscally feasible, with the goal of increasing market rate housing in the gateway regions. Such credit shall (i) be taken against the taxes imposed pursuant to chapter 63 of the General Laws, (ii) be claimed equally for a period of years, which shall not exceed 5 years, (iii) be subtracted from the amount of state tax otherwise due for each taxable period, and (iv) not be refundable. Such tax credit shall not exceed the amount of state tax owed annually by the claimant.

The owner of a gateway region housing project eligible for the gateway region housing tax credit shall submit, at the time of filing the project owner’s state tax return, a letter of support from the chairman of selectmen or chairman of town council or town manager of the municipality in which the project is located, and a copy of the required statements issued by the department with respect to the gateway region’s housing project. In the case of a failure to attach the required statements, a credit pursuant to this subsection shall not be allowed with respect to such qualified gateway region housing project for that year until the copy is provided to the commissioner.

An owner of a gateway region housing project shall certify to the commissioner the amount of credit allocated to the owner, and shall provide to the commissioner all appropriate information needed for such certification. The commissioner may require the filing of any information or documentation necessary to determine the eligibility for or accuracy of a tax credit claimed pursuant to this subsection.

All or any portion of a tax credit issued pursuant to this subsection may be transferred, sold, or assigned to parties who are otherwise eligible for such credit.  An owner or transferee desiring to make such transfer, sale, or assignment shall submit to the commissioner a statement which describes the amount of gateway region housing tax credit for which such transfer, sale, or assignment of gateway region housing tax credit is eligible. The owner or transferee shall provide to the commissioner appropriate information so that the gateway region housing tax credit can be properly allocated. In the event that recapture of a gateway regions housing tax credit is required, any statement submitted to the commissioner pursuant to this paragraph shall include the proportion of the gateway region housing tax credit required to be recaptured, the identity of each transferee subject to recapture and the amount of credit previously transferred to such transferee.

(f) The commissioner, in consultation with the department as appropriate, shall monitor and oversee compliance with the tax credit programs established pursuant to this section.  The commissioner, or the department, shall report specific occurrences of noncompliance to appropriate state, federal, and local authorities.

(g) The department of revenue shall annually compile a report on the outcomes and effectiveness of the recapture provisions of this subsections (d) and (e), including but not limited to: (1) the total number of taxpayers receiving a tax credit pursuant to said subsections; (2) the total number of recipients in violation of said subsections; (3) the total number of recapture efforts initiated; and (4) the total number of completed recapture efforts.  The report shall be a public record pursuant to clause Twenty-sixth of section 7 of chapter 4 and chapter 66 of the General Laws.

(h) The commissioner, in consultation with the secretary, shall promulgate regulations or guidelines necessary for the administration of this section on or before January 1, 2015.

SECTION XY. Section XX shall be effective for tax years beginning on and after January 1, 2015.

SECTION XZ. Section XX is hereby repealed.

SECTION XZA. Section XZ shall take effect on June 30, 2020.”