House Bill 0195e1

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                                           HB 195, First Engrossed



  1                      A bill to be entitled

  2         An act relating to housing; creating s.

  3         196.1978, F.S.; providing that property used to

  4         provide housing for certain persons under ch.

  5         420, F.S., and owned by certain nonprofit

  6         corporations is exempt from ad valorem

  7         taxation; creating ss. 220.185 and 420.5093,

  8         F.S.; creating the State Housing Tax Credit

  9         Program; providing legislative findings and

10         policy; providing definitions; providing for a

11         credit against the corporate income tax in an

12         amount equal to a percentage of the eligible

13         basis of certain housing projects; providing a

14         limitation; providing for allocation of credits

15         and administration by the Florida Housing

16         Finance Corporation; providing for an annual

17         plan; providing application procedures;

18         providing that neither tax credits nor

19         financing generated thereby shall be considered

20         income for ad valorem tax purposes; providing

21         for recognition of certain income by the

22         property appraiser; amending s. 420.503, F.S.;

23         providing that certain projects shall qualify

24         as housing for the elderly for purposes of

25         certain loans under the State Apartment

26         Incentive Loan Program, and shall qualify as a

27         project targeted for the elderly in connection

28         with allocation of low-income housing tax

29         credits and with the HOME program under certain

30         conditions; amending s. 420.5087, F.S.;

31         directing the Florida Housing Finance


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                                           HB 195, First Engrossed



  1         Corporation to adopt rules for the equitable

  2         distribution of certain unallocated funds under

  3         the State Apartment Incentive Loan Program;

  4         authorizing the corporation to waive a mortgage

  5         limitation under said program for projects in

  6         certain areas; providing an effective date.

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  8  Be It Enacted by the Legislature of the State of Florida:

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10         Section 1.  Section 196.1978, Florida Statutes, is

11  created to read:

12         196.1978  Low-income housing property

13  exemption.--Property used to provide housing pursuant to any

14  state housing program authorized under chapter 420 to

15  low-income or very-low-income persons as defined by s.

16  420.0004, which property is owned entirely by a nonprofit

17  corporation which is qualified as charitable under s.

18  501(c)(3) of the Internal Revenue Code and which complies with

19  Rev. Proc. 96-32, 1996-1 C.B. 717, shall be considered

20  property owned by an exempt entity and used for a charitable

21  purpose, and such property shall be exempt from ad valorem

22  taxation. All property identified in this section shall comply

23  with the criteria for determination of exempt status to be

24  applied by property appraisers on an annual basis as defined

25  in s. 196.195.

26         Section 2.  Section 220.185, Florida Statutes, is

27  created to read:

28         220.185  State housing tax credit.--

29         (1)  LEGISLATIVE FINDINGS.--The Legislature finds that:

30         (a)  There exist within the urban areas of the state

31  conditions of blight evidenced by extensive deterioration of


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                                           HB 195, First Engrossed



  1  public and private facilities, abandonment of sound

  2  structures, and high unemployment, and these conditions impede

  3  the conservation and development of healthy, safe, and

  4  economically viable communities.

  5         (b)  Deterioration of housing and industrial,

  6  commercial, and public facilities contributes to the decline

  7  of neighborhoods and communities and leads to the loss of

  8  their historic character and the sense of community which this

  9  inspires; reduces the value of property comprising the tax

10  base of local communities; discourages private investment; and

11  requires a disproportionate expenditure of public funds for

12  the social services, unemployment benefits, and police

13  protection required to combat the social and economic problems

14  found in urban communities.

15         (c)  In order to ultimately restore social and economic

16  viability to urban areas, it is necessary to renovate or

17  construct new infrastructure and housing, including housing

18  specifically targeted for the elderly, and to specifically

19  provide mechanisms to attract and encourage private economic

20  activity.

21         (d)  The various local governments and other

22  redevelopment organizations now undertaking physical

23  revitalization projects and new housing developments in urban

24  areas are limited by tightly constrained budgets and

25  inadequate resources.

26         (e)  In order to significantly improve revitalization

27  efforts by local governments and community development

28  organizations and to retain as much of the historic character

29  of our communities as possible, it is necessary to provide

30  additional resources, and the participation of private

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                                           HB 195, First Engrossed



  1  enterprise in revitalization efforts is an effective means for

  2  accomplishing that goal.

  3         (2)  POLICY AND PURPOSE.--It is the policy of this

  4  state to encourage the participation of private corporations

  5  in revitalization projects within urban areas. The purpose of

  6  this section is to provide an incentive for such participation

  7  by granting state corporate income tax credits to qualified

  8  low-income housing projects, including housing specifically

  9  designed for the elderly, and associated mixed-use projects.

10  The Legislature thus declares this a public purpose for which

11  public money may be borrowed, expended, loaned, and granted.

12         (3)  DEFINITIONS.--As used in this section:

13         (a)  "Credit period" means the period of 5 years

14  beginning with the year the project is completed.

15         (b)  "Eligible basis" means the adjusted basis of the

16  housing portion of a qualified project as of the close of the

17  first taxable year of the credit period.

18         (c)  "Adjusted basis" means the owner's adjusted basis

19  in the project, calculated in a manner consistent with the

20  calculation of basis under the Internal Revenue Code, taking

21  into account the adjusted basis of property of a character

22  subject to the allowance for depreciation used in common areas

23  or provided as comparable amenities to the entire project.

24         (d)  "Designated project" means a qualified project

25  designated pursuant to s. 420.5093 to receive the tax credit

26  under this section.

27         (e)  "Qualified project" means a project located in an

28  urban infill area, at least 50 percent of which, on a cost

29  basis, consists of a qualified low-income housing project

30  within the meaning of s. 42(g) of the Internal Revenue Code,

31  including such projects designed specifically for the elderly


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                                           HB 195, First Engrossed



  1  but excluding any income restrictions imposed pursuant to s.

  2  42(g) of the Internal Revenue Code upon residents of the

  3  project unless such restrictions are otherwise established by

  4  the Florida Housing Finance Corporation pursuant to s.

  5  420.5093, and the remainder of which constitutes commercial or

  6  single-family residential development consistent with and

  7  serving to complement the qualified low-income project.

  8         (f)  "Urban infill area" means an area designated for

  9  urban infill as defined by s. 163.3164.

10         (4)  AUTHORIZATION TO GRANT STATE HOUSING TAX CREDITS;

11  LIMITATION.--

12         (a)  There shall be allowed a credit of 9 percent of

13  the eligible basis of any designated project for each year of

14  the credit period against any tax due for a taxable year under

15  this chapter.

16         (b)  The total amount of tax credits allocated for all

17  projects shall not exceed the amount appropriated for the

18  State Housing Tax Credit Program in the General Appropriations

19  Act. The total tax credits allocated is defined as the total

20  credits pledged over a 5-year period for all projects.

21         (c)  The tax credit shall be allocated among designated

22  projects by the Florida Housing Finance Corporation as

23  provided in s. 420.5093.

24         (d)  Each designated project must comply with the

25  applicable provisions of s. 42 of the Internal Revenue Code

26  with respect to the multifamily residential rental housing

27  element of the project, including specifically the provisions

28  of s. 42(h)(6).

29         (e)  A tax credit shall be allocated to a designated

30  project and shall not be subject to transfer by the recipient

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                                           HB 195, First Engrossed



  1  unless the transferee is also an owner of the designated

  2  project.

  3         Section 3.  Section 420.5093, Florida Statutes, is

  4  created to read:

  5         420.5093  State Housing Tax Credit Program.--

  6         (1)  There is created the State Housing Tax Credit

  7  Program for the purposes of stimulating creative private

  8  sector initiatives to increase the supply of affordable

  9  housing in urban areas, including specifically housing for the

10  elderly, and to provide associated commercial facilities

11  associated with such housing facilities.

12         (2)  The Florida Housing Finance Corporation shall

13  determine those qualified projects which shall be considered

14  designated projects under s. 220.185 and eligible for the

15  corporate tax credit under that section. The corporation shall

16  establish procedures necessary for proper allocation and

17  distribution of state housing tax credits, including the

18  establishment of criteria for any single-family or commercial

19  component of a project, and may exercise all powers necessary

20  to administer the allocation of such credits. The board of

21  directors of the corporation shall administer the allocation

22  procedures and determine allocations on behalf of the

23  corporation. The corporation shall prepare an annual plan,

24  which must be approved by the Governor, containing general

25  guidelines for the allocation and distribution of credits to

26  designated projects.

27         (3)  The corporation shall adopt allocation procedures

28  that will ensure the maximum use of available tax credits in

29  order to encourage development of low-income housing and

30  associated mixed-use projects in urban areas, taking into

31  consideration the timeliness of the application, the location


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                                           HB 195, First Engrossed



  1  of the proposed project, the relative need in the area of

  2  revitalization and low-income housing and the availability of

  3  such housing, the economic feasibility of the project, and the

  4  ability of the applicant to proceed to completion of the

  5  project in the calendar year for which the credit is sought.

  6         (4)(a)  A taxpayer who wishes to participate in the

  7  State Housing Tax Credit Program must submit an application

  8  for tax credit to the corporation. The application shall

  9  identify the project and its location and include evidence

10  that the project is a qualified project as defined in s.

11  220.185. The corporation may request any information from an

12  applicant necessary to enable the corporation to make tax

13  credit allocations according to the guidelines set forth in

14  subsection (3).

15         (b)  The corporation's approval of an applicant as a

16  designated project shall be in writing and shall include a

17  statement of the maximum credit allowable to the applicant. A

18  copy of this approval shall be transmitted to the executive

19  director of the Department of Revenue, who shall apply the tax

20  credit to the tax liability of the applicant.

21         (5)  For purposes of implementing this program and

22  assessing the property for ad valorem taxation under s.

23  193.011, neither the tax credits nor financing generated by

24  tax credits shall be considered as income to the property, and

25  the rental income from rent-restricted units in a state

26  housing tax credit development shall be recognized by the

27  property appraiser.

28         (6)  The corporation is authorized to expend fees

29  received in conjunction with the allocation of state housing

30  tax credits only for the purpose of administration of the

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                                           HB 195, First Engrossed



  1  program, including private legal services which relate to

  2  interpretation of s. 42 of the Internal Revenue Code.

  3         Section 4.  Subsection (19) of section 420.503, Florida

  4  Statutes, 1998 Supplement, is amended to read:

  5         420.503  Definitions.--As used in this part, the term:

  6         (19)  "Housing for the elderly" means, for purposes of

  7  s. 420.5087(3)(c)2., any nonprofit housing community that is

  8  financed by a mortgage loan made or insured by the United

  9  States Department of Housing and Urban Development under s.

10  202, s. 202 with a s. 8 subsidy, s. 221(d)(3) or (4), or s.

11  236 of the National Housing Act, as amended, and that is

12  subject to income limitations established by the United States

13  Department of Housing and Urban Development, or any program

14  funded by the Rural Development Agency of the United States

15  Department of Agriculture and subject to income limitations

16  established by the United States Department of Agriculture. A

17  project which qualifies for an exemption under the Fair

18  Housing Act as housing for older persons as defined by s.

19  760.29(4) shall qualify as housing for the elderly for

20  purposes of s. 420.5087(3)(c)2. In addition, if the

21  corporation adopts a qualified allocation plan pursuant to s.

22  42(m)(1)(B) of the Internal Revenue Code or any other rules

23  that prioritize projects targeting the elderly for purposes of

24  allocating tax credits pursuant to s. 420.5099 or for purposes

25  of the HOME program under s. 420.5089, a project which

26  qualifies for an exemption under the Fair Housing Act as

27  housing for older persons as defined by s. 760.29(4) shall

28  qualify as a project targeted for the elderly, if the project

29  satisfies the other requirements set forth in this part.

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                                           HB 195, First Engrossed



  1         Section 5.  Subsections (1) and (5) of section

  2  420.5087, Florida Statutes, 1998 Supplement, are amended to

  3  read:

  4         420.5087  State Apartment Incentive Loan

  5  Program.--There is hereby created the State Apartment

  6  Incentive Loan Program for the purpose of providing first,

  7  second, or other subordinated mortgage loans or loan

  8  guarantees to sponsors, including for-profit, nonprofit, and

  9  public entities, to provide housing affordable to

10  very-low-income persons.

11         (1)  Program funds shall be distributed over successive

12  3-year periods in a manner that meets the need and demand for

13  very-low-income housing throughout the state.  That need and

14  demand must be determined by using the most recent statewide

15  low-income rental housing market studies available at the

16  beginning of each 3-year period.  However, at least 10 percent

17  of the program funds distributed during a 3-year period must

18  be allocated to each of the following categories of counties,

19  as determined by using the population statistics published in

20  the most recent edition of the Florida Statistical Abstract:

21         (a)  Counties that have a population of more than

22  500,000 people;

23         (b)  Counties that have a population between 100,000

24  and 500,000 people; and

25         (c)  Counties that have a population of 100,000 or

26  less.

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28  Any increase in funding required to reach the 10-percent

29  minimum shall be taken from the county category that has the

30  largest allocation. The corporation shall adopt rules which

31  establish an equitable process for distributing any portion of


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                                           HB 195, First Engrossed



  1  the 10 percent of program funds allocated to the county

  2  categories specified in this subsection which remains

  3  unallocated at the end of a 3-year period.  Counties that have

  4  a population of 100,000 or less shall be given preference

  5  under these rules.

  6         (5)  The amount of the mortgage provided under this

  7  program combined with any other mortgage in a superior

  8  position shall be less than the value of the project without

  9  the housing set-aside required by subsection (2). However, the

10  corporation may waive this requirement for projects in rural

11  areas or urban infill areas which have market rate rents that

12  are less than the allowable rents pursuant to applicable state

13  and federal guidelines. In no event shall the mortgage

14  provided under this program combined with any other mortgage

15  in a superior position exceed total project cost.

16         Section 6.  This act shall take effect July 1, 1999.

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