law22272

Chapter 272

2022 -- S 2551 SUBSTITUTE B
Enacted 07/02/2022

A N A C T

RELATING TO STATE AFFAIRS AND GOVERNMENT -- REBUILD RHODE ISLAND TAX CREDIT

Introduced By: Senators Kallman, McCaffrey, Gallo, DiMario, Ruggerio, Miller, Lawson, Valverde, Seveney, and Lombardo

Date Introduced: March 01, 2022

It is enacted by the General Assembly as follows:

SECTION 1. Sections 42-64.20-3 and 42-64.20-5 of the General Laws in Chapter 42-64.20

entitled "Rebuild Rhode Island Tax Credit" are hereby amended to read as follows:

42-64.20-3. Definitions.

As used in this chapter:

(1) "Adaptive reuse" means the conversion of an existing structure from the use for which

it was constructed to a new use by maintaining elements of the structure and adapting such elements

to a new use.

(2) "Affiliate" means an entity that directly or indirectly controls, is under common control

with, or is controlled by the business. Control exists in all cases in which the entity is a member of

a controlled group of corporations as defined pursuant to § 1563 of the Internal Revenue Code of

1986 (26 U.S.C. § 1563) or the entity is an organization in a group of organizations under common

control as defined pursuant to subsection (b) or (c) of § 414 of the Internal Revenue Code of 1986

(26 U.S.C. § 414). A taxpayer may establish by clear and convincing evidence, as determined by

the tax administrator, that control exists in situations involving lesser percentages of ownership

than required by those statutes. An affiliate of a business may contribute to meeting either the

capital investment or full-time employee requirements of a business that applies for a credit under

this chapter.

(3) "Affordable housing" means housing for sale or rent with combined rental costs or

combined mortgage loan debt service, property taxes, and required insurance that do not exceed

thirty percent (30%) of the gross annual income of a household earning up to eighty percent (80%)

of the area median income, as defined annually by the United States Department of Housing and

Urban Development.

(4) "Applicant" means a developer applying for a rebuild Rhode Island tax credit under this

chapter.

(5) "Business" means a corporation as defined in § 44-11-1(4), or a partnership, an S

corporation, a nonprofit corporation, a sole proprietorship, or a limited-liability corporation. A

business shall include an affiliate of the business if that business applies for a credit based upon

any capital investment made by an affiliate.

(6) "Capital investment" in a real estate project means expenses by a developer incurred

after application for:

(i) Site preparation and construction, repair, renovation, improvement, equipping, or

furnishing on real property or of a building, structure, facility, or improvement to real property;

(ii) Obtaining and installing furnishings and machinery, apparatus, or equipment, including

but not limited to, material goods for the operation of a business on real property or in a building,

structure, facility, or improvement to real property.

In addition to the foregoing, if a developer acquires or leases a qualified development

project, the capital investment made or acquired by the seller or owner, as the case may be, if

pertaining primarily to the premises of the qualified development project, shall be considered a

capital investment by the developer and, if pertaining generally to the qualified development project

being acquired or leased, shall be allocated to the premises of the qualified development project on

the basis of the gross leasable area of the premises in relation to the total gross leasable area in the

qualified development project. The capital investment described herein shall be defined through

rules and regulations promulgated by the commerce corporation.

(7) "Certified historic structure" means a property located in the state of Rhode Island and

is:

(i) Listed individually on the national register of historic places; or

(ii) Listed individually in the state register of historic places; or

(iii) Located in a registered historic district and certified by either the Rhode Island

historical preservation and heritage commission created pursuant to § 42-45-2 or the Secretary of

the United States Department of the Interior as being of historic significance to the district.

(8) "Commerce corporation" means the Rhode Island commerce corporation established

pursuant to § 42-64-1 et seq.

(9) "Commercial" shall mean non-residential nonresidential development.

(10) "Construction worker" means any laborer, mechanic, or machine operator employed

by a contractor or subcontractor in connection with the construction, alteration, repair, demolition,

reconstruction, or other improvements to real property.

(10)(11) "Developer" means a person, firm, business, partnership, association, political

subdivision, or other entity that proposes to divide, divides, or causes to be divided real property

into a subdivision or proposes to build or builds a building or buildings or otherwise improves land

or existing structures, which division, building, or improvement qualifies for benefits under this

chapter.

(11)(12) "Development" means the improvement of land through the carrying out of

building, engineering, or other operations in, on, over, or under land, or the making of any material

change in the use of any buildings or land for the purposes of accommodating land uses.

(12)(13) "Eligibility period" means the period in which a developer may claim a tax credit

under this act, beginning with the tax period in which the commerce corporation accepts

certification from the developer that it has met the requirements of the act and extending thereafter

for a term of five (5) years.

(13)(14) "Full-time employee" means a person who is employed by a business for

consideration for a minimum of at least thirty-five (35) hours per week, or who renders any other

standard of service generally accepted by custom or practice as full-time employment, or who is

employed by a professional employer organization pursuant to an employee leasing agreement

between the business and the professional employer organization for a minimum of thirty-five (35)

hours per week, or who renders any other standard of service generally accepted by custom or

practice as full-time employment, and whose wages are subject to withholding.

(14)(15) "Hope community" means a municipality for which the five-year (5) average

percentage of families with income below the federal poverty level exceeds the state five-year (5)

average percentage, both as most recently reported by the U.S. Department of Commerce, Bureau

of the Census.

(15)(16) "Manufacturer" shall mean any entity that:

(i) Uses any premises within the state primarily for the purpose of transforming raw

materials into a finished product for trade through any or all of the following operations: adapting,

altering, finishing, making, processing, refining, metalworking, and ornamenting, but shall not

include fabricating processes incidental to warehousing or distribution of raw materials, such as

alteration of stock for the convenience of a customer; or

(ii) Is described in codes 31-33 of the North American Industry Classification System, as

revised from time to time.

(16)(17) "Mixed use" means a development comprising both commercial and residential

components.

(17)(18) "Partnership" means an entity classified as a partnership for federal income tax

purposes.

(18)(19) "Placed in service" means the earlier of (i) Substantial construction or

rehabilitation work has been completed that would allow for occupancy of an entire structure or

some identifiable portion of a structure, as established in the application approved by the commerce

corporation board; or (ii) Receipt by the developer of a certificate, permit, or other authorization

allowing for occupancy of the project or some identifiable portion of the project by the municipal

authority having jurisdiction.

(19)(20) "Project" means qualified development project as defined under subsection

(23)(24).

(20)(21) "Project area" means land or lands under common ownership or control in which

a qualified development project is located.

(21)(22) "Project cost" means the costs incurred in connection with the qualified

development project or qualified residential or mixed use project by the applicant until the issuance

of a permanent certificate of occupancy, or until such other time specified by the commerce

corporation, for a specific investment or improvement, as defined through rules and regulations

promulgated by the commerce corporation.

(22)(23) "Project financing gap" means:

(i) The part of the total project cost that remains to be financed after all other sources of

capital have been accounted for (the sources will include, but not be limited to, developer-

contributed capital), which shall be defined through rules and regulations promulgated by the

commerce corporation; or

(ii) The amount of funds that the state may invest in a project to gain a competitive

advantage over a viable and comparable location in another state by means described in this chapter.

(23)(24) "Qualified development project" means a specific construction project or

improvement, including lands, buildings, improvements, real and personal property or any interest

therein, including lands under water, riparian rights, space rights and air rights, acquired, owned,

leased, developed or redeveloped, constructed, reconstructed, rehabilitated or improved,

undertaken by a developer, owner or tenant, or both, within a specific geographic area, meeting the

requirements of this chapter, as set forth in an application made to the commerce corporation.

(24)(25) "Recognized historical structure" means a property located in the state of Rhode

Island and commonly considered to be of historic or cultural significance as determined by the

commerce corporation in consultation with the state historic preservation officer.

(25)(26) "Residential" means a development of residential dwelling units.

(26)(27) "Targeted industry" means any advanced, promising, or otherwise prioritized

industry identified in the economic development vision and policy promulgated pursuant to § 42-

64.17-1 or, until such time as any such economic development vision and policy is promulgated,

as identified by the commerce corporation.

(27)(28) "Transit-oriented development area" means an area in proximity to transit

infrastructure that will be further defined by regulation of the commerce corporation in consultation

with the Rhode Island department of transportation.

(28)(29) "Workforce housing" means housing for sale or rent with combined rental costs

or combined mortgage loan debt service, property taxes, and required insurance that do not exceed

thirty percent (30%) of the gross annual income of a household earning between eighty percent

(80%) and one hundred and forty percent (140%) of the area median income, as defined annually

by the United States Department of Housing and Urban Development.

42-64.20-5. Tax credits.

(a) An applicant meeting the requirements of this chapter may be allowed a credit as set

forth hereinafter against taxes imposed upon such person under applicable provisions of title 44 of

the general laws for a qualified development project.

(b) To be eligible as a qualified development project entitled to tax credits, an applicant's

chief executive officer or equivalent officer shall demonstrate to the commerce corporation, at the

time of application, that:

(1) The applicant has committed a capital investment or owner equity of not less than

twenty percent (20%) of the total project cost;

(2) There is a project financing gap in which after taking into account all available private

and public funding sources, the project is not likely to be accomplished by private enterprise

without the tax credits described in this chapter; and

(3) The project fulfills the state's policy and planning objectives and priorities in that:

(i) The applicant will, at the discretion of the commerce corporation, obtain a tax

stabilization agreement from the municipality in which the real estate project is located on such

terms as the commerce corporation deems acceptable;

(ii) It (A) Is a commercial development consisting of at least 25,000 square feet occupied

by at least one business employing at least 25 full-time employees after construction or such

additional full-time employees as the commerce corporation may determine; (B) Is a multi-family

residential development in a new, adaptive reuse, certified historic structure, or recognized

historical structure consisting of at least 20,000 square feet and having at least 20 residential units

in a hope community; or (C) Is a mixed-use development in a new, adaptive reuse, certified historic

structure, or recognized historical structure consisting of at least 25,000 square feet occupied by at

least one business, subject to further definition through rules and regulations promulgated by the

commerce corporation; and

(iii) Involves a total project cost of not less than $ 5,000,000, except for a qualified

development project located in a hope community or redevelopment area designated under § 45-

32-4 in which event the commerce corporation shall have the discretion to modify the minimum

project cost requirement.

(4) For construction projects in excess of ten million dollars ($10,000,000), all construction

workers shall be paid in accordance with the wages and benefits required pursuant to chapter 13 of

title 37 with all contractors and subcontractors required to file certified payrolls on a monthly basis

for all work completed in the preceding month on a uniform form prescribed by the director of

labor and training. Failure to follow the requirements pursuant to chapter 13 of title 37 shall

constitute a material violation and a material breach of the agreement with the state. The commerce

corporation, in consultation with the director of labor and training and the tax administrator, shall

promulgate such rules and regulations as are necessary to implement the enforcement of this

subsection.

for the issuance of rebuild RI tax credits for each of the following:

(1) Qualified development projects that involve certified historic structures;

(2) Qualified development projects that involve recognized historical structures;

(3) Qualified development projects that involve at least one manufacturer; and

(4) Qualified development projects that include affordable housing or workforce housing.

(d) Applications made for a historic structure or recognized historic structure tax credit

under chapter 33.6 of title 44 shall be considered for tax credits under this chapter. The division of

taxation, at the expense of the commerce corporation, shall provide communications from the

commerce corporation to those who have applied for and are in the queue awaiting the offer of tax

credits pursuant to chapter 33.6 of title 44 regarding their potential eligibility for the rebuild RI tax

credit program.

(e) Applicants (1) Who have received the notice referenced in subsection (d) above and

who may be eligible for a tax credit pursuant to chapter 33.6 of title 44, (2) Whose application

involves a certified historic structure or recognized historical structure, or (3) Whose project is

occupied by at least one manufacturer shall be exempt from the requirements of subsections

(b)(3)(ii) and (b)(3)(iii). The following procedure shall apply to such applicants:

(i) The division of taxation shall remain responsible for determining the eligibility of an

applicant for tax credits awarded under chapter 33.6 of title 44;

(ii) The commerce corporation shall retain sole authority for determining the eligibility of

an applicant for tax credits awarded under this chapter; and

(iii) The commerce corporation shall not award in excess of fifteen percent (15%) of the

annual amount authorized in any fiscal year to applicants seeking tax credits pursuant to this

subsection (e); and

(iv) No tax credits shall be awarded under this chapter unless the commerce corporation

receives confirmation from the department of labor and training that there has been compliance

with the prevailing wage requirements set forth in subsection (b)(4) of this section.

(f) Maximum project credit.

(1) For qualified development projects, the maximum tax credit allowed under this chapter

shall be the lesser of (i) Thirty percent (30%) of the total project cost; or (ii) The amount needed to

close a project financing gap (after taking into account all other private and public funding sources

available to the project), as determined by the commerce corporation.

(2) The credit allowed pursuant to this chapter, inclusive of any sales and use tax

exemptions allowed pursuant to this chapter, shall not exceed fifteen million dollars ($15,000,000)

for any qualified development project under this chapter; except as provided in subsection (f)(3) of

this section; provided however, any qualified development project that exceeds the project cap upon

passage of this act shall be deemed not to exceed the cap, shall not be reduced, nor shall it be further

increased. No building or qualified development project to be completed in phases or in multiple

projects shall exceed the maximum project credit of fifteen million dollars ($15,000,000) for all

phases or projects involved in the rehabilitation of the building. Provided, however, that for

purposes of this subsection and no more than once in a given fiscal year, the commerce corporation

may consider the development of land and buildings by a developer on the "I-195 land" as defined

in § 42-64.24-3(6) as a separate, qualified development project from a qualified development

project by a tenant or owner of a commercial condominium or similar legal interest including

leasehold improvement, fit out, and capital investment. Such qualified development project by a

tenant or owner of a commercial condominium or similar legal interest on the I-195 land may be

exempted from subsection (f)(1)(i) of this section.

(3) The credit allowed pursuant to this chapter, inclusive of any sales and use tax

exemptions allowed pursuant to this chapter, shall not exceed twenty-five million dollars

($25,000,000) for the project for which the I-195 redevelopment district was authorized to enter

into a purchase and sale agreement for parcels 42 and P4 on December 19, 2018, provided that

project is approved for credits pursuant to this chapter by the commerce corporation.

(g) Credits available under this chapter shall not exceed twenty percent (20%) of the project

cost, provided, however, that the applicant shall be eligible for additional tax credits of not more

than ten percent (10%) of the project cost, if the qualified development project meets any of the

following criteria or other additional criteria determined by the commerce corporation from time

to time in response to evolving economic or market conditions:

(1) The project includes adaptive reuse or development of a recognized historical structure;

(2) The project is undertaken by or for a targeted industry;

(3) The project is located in a transit-oriented development area;

(4) The project includes residential development of which at least twenty percent (20%) of

the residential units are designated as affordable housing or workforce housing;

(5) The project includes the adaptive reuse of property subject to the requirements of the

industrial property remediation and reuse act, § 23-19.14-1 et seq.; or

(6) The project includes commercial facilities constructed in accordance with the minimum

environmental and sustainability standards, as certified by the commerce corporation pursuant to

Leadership in Energy and Environmental Design or other equivalent standards.

(h) Maximum aggregate credits. The aggregate sum authorized pursuant to this chapter,

inclusive of any sales and use tax exemptions allowed pursuant to this chapter, shall not exceed

two hundred ten million dollars ($210,000,000), excluding any tax credits allowed pursuant to

subsection (f)(3) of this section.

(i) Tax credits shall not be allowed under this chapter prior to the taxable year in which the

project is placed in service.

(j) The amount of a tax credit allowed under this chapter shall be allowable to the taxpayer

in up to five, annual increments; no more than thirty percent (30%) and no less than fifteen percent

(15%) of the total credits allowed to a taxpayer under this chapter may be allowable for any taxable

year.

(k) If the portion of the tax credit allowed under this chapter exceeds the taxpayer's total

tax liability for the year in which the relevant portion of the credit is allowed, the amount that

exceeds the taxpayer's tax liability may be carried forward for credit against the taxes imposed for

the succeeding four (4) years, or until the full credit is used, whichever occurs first. Credits allowed

to a partnership, a limited-liability company taxed as a partnership, or multiple owners of property

shall be passed through to the persons designated as partners, members, or owners respectively pro

rata or pursuant to an executed agreement among persons designated as partners, members, or

owners documenting an alternate distribution method without regard to their sharing of other tax

or economic attributes of such entity.

(l) The commerce corporation, in consultation with the division of taxation, shall establish,

by regulation, the process for the assignment, transfer, or conveyance of tax credits.

(m) For purposes of this chapter, any assignment or sales proceeds received by the taxpayer

for its assignment or sale of the tax credits allowed pursuant to this section shall be exempt from

taxation under title 44. If a tax credit is subsequently revoked or adjusted, the seller's tax calculation

for the year of revocation or adjustment shall be increased by the total amount of the sales proceeds,

without proration, as a modification under chapter 30 of title 44. In the event that the seller is not a

natural person, the seller's tax calculation under chapter 11, 13, 14, or 17 of title 44, as applicable,

for the year of revocation, or adjustment, shall be increased by including the total amount of the

sales proceeds without proration.

(n) The tax credit allowed under this chapter may be used as a credit against corporate

income taxes imposed under chapter 11, 13, 14, or 17, of title 44, or may be used as a credit against

personal income taxes imposed under chapter 30 of title 44 for owners of pass-through entities such

as a partnership, a limited-liability company taxed as a partnership, or multiple owners of property.

(o) In the case of a corporation, this credit is only allowed against the tax of a corporation

included in a consolidated return that qualifies for the credit and not against the tax of other

corporations that may join in the filing of a consolidated tax return.

(p) Upon request of a taxpayer and subject to annual appropriation, the state shall redeem

this credit, in whole or in part, for ninety percent (90%) of the value of the tax credit. The division

of taxation, in consultation with the commerce corporation, shall establish by regulation a

redemption process for tax credits.

(q) Projects eligible to receive a tax credit under this chapter may, at the discretion of the

commerce corporation, be exempt from sales and use taxes imposed on the purchase of the

following classes of personal property only to the extent utilized directly and exclusively in the

project: (1) Furniture, fixtures, and equipment, except automobiles, trucks, or other motor vehicles;

or (2) Other materials, including construction materials and supplies, that are depreciable and have

a useful life of one year or more and are essential to the project.

(r) The commerce corporation shall promulgate rules and regulations for the administration

and certification of additional tax credit under subsection (e)(g), including criteria for the eligibility,

evaluation, prioritization, and approval of projects that qualify for such additional tax credit.

(s) The commerce corporation shall not have any obligation to make any award or grant

any benefits under this chapter.

SECTION 2. Sections 44-33.6-2 and 44-33.6-3 of the General Laws in Chapter 44-33.6

entitled "Historic Preservation Tax Credits 2013" are hereby amended to read as follows:

44-33.6-2. Definitions.

As used in this chapter:

(1) "Certified historic structure" means a property which is located in the state of Rhode

Island and is:

(i) Listed individually on the national register of historic places; or

(ii) Listed individually in the state register of historic places; or

(iii) Located in a registered historic district and certified by either the commission or

Secretary of the Interior as being of historic significance to the district.

(2) "Certified rehabilitation" means any rehabilitation of a certified historic structure

consistent with the historic character of such property or the district in which the property is located

as determined by the commission guidelines.

(3)(16) "Substantial construction" means that: (i) the The owner of a certified historic

structure has entered into a contract with the division of taxation and paid the processing fee; (ii)

the The commission has certified that the certified historic structure's rehabilitation will be

consistent with the standards set forth in this chapter; and (iii) the The owner has expended ten

percent (10%) of its qualified rehabilitation expenditures, estimated in the contract entered into

with the division of taxation for the project or its first phase of a phased project.

(4)(3) "Commission" means the Rhode Island historical preservation and heritage

commission created pursuant to § 42-45-2.

(5)(4) "Construction worker" means any laborer, mechanic, or machine operator employed

by a contractor or subcontractor in connection with the construction, alteration, repair, demolition,

reconstruction, or other improvements to real property.

(5)(6)(5) "Exempt from real property tax" means, with respect to any certified historic

structure, that the structure is exempt from taxation pursuant to § 44-3-3.

(6)(7)(6) "Hard construction costs" means the direct contractor costs for labor, material,

equipment, and services associated with an approved project, contractors contractor’s overhead

and profit, and other direct construction costs.

(7)(8)(7) "Holding period" means twenty-four (24) months after the commission issues a

certificate of completed work to the owner. In the case of a rehabilitation which may reasonably be

expected to be completed in phases as described in subdivision (15) of this section, "holding period"

shall be extended to include a period of time beginning on the date of issuance of a certificate of

completed work for the first phase or phases for which a certificate of completed work is issued

and continuing until the expiration of twenty-four (24) months after the certificate of completed

work issued for the last phase.

(8)(9)(8) "Part 2 application" means the Historic Preservation Certification Application

Part 2–Description of Rehabilitation.

(9)(10)(9) "Placed in service" means that substantial rehabilitation work has been

completed which would allow for occupancy of the entire structure or some identifiable portion of

the structure, as established in the Part 2 application.

(10)(11)(10) "Principal residence" means the principal residence of the owner within the

meaning of section 121 of the Internal Revenue Code [26 U.S.C. § 121] or any successor provision.

(11)(12)(11) "Qualified rehabilitation expenditures" means any amounts expended in the

rehabilitation of a certified historic structure properly capitalized to the building and either:

(i) Depreciable under the Internal Revenue Code, 26 U.S.C. § 1 et seq.,; or

(ii) Made with respect to property (other than the principal residence of the owner) held for

sale by the owner. Fees paid pursuant to this chapter are not qualified rehabilitation expenditures.

Notwithstanding the foregoing, except in the case of a nonprofit corporation, there will be deducted

from qualified rehabilitation expenditures for the purposes of calculating the tax credit any funds

made available to the person (including any entity specified in section § 44-33.5-3(a)) incurring the

qualified rehabilitation expenditures in the form of a direct grant from a federal, state, or local

governmental entity or agency or instrumentality of government.

(12)(13)(12) "Registered historic district" means any district listed in the national register

National Register of historic places Historic Places or the state register of historic places.

(13)(14)(13) "Remain idle" means that substantial work has ceased at the subject project;

work crews have been reduced by more than twenty-five percent (25%) for reasons unrelated to

scheduled completion of work in accordance with the project schedule, reasonably unanticipated

physical conditions, or force majeure; or the project schedule that was originally submitted by the

taxpayer to the commission has been extended by more than twelve (12) months for reasons other

than reasonably unanticipated physical conditions or an event of force majeure (by way of example,

and not in limitation, any delays, work stoppage, or work force workforce reduction caused by

issues with project funding, finances, disputes, or violation of laws shall be deemed to cause a

project to remain idle).

(14)(15)(14) "Scattered site development" means a development project for which the

developer seeks unified financing to rehabilitate dwelling units in two (2) or more buildings located

in an area that is defined by a neighborhood revitalization plan and is not more than one mile in

diameter.

(15)(16)(15) "Social club" means a corporation or other entity and/or its affiliate that offers

its facilities primarily to members for social or recreational purposes and the majority source of its

revenue is from funds and/or dues paid by its members and/or an entity defined as a social club

pursuant to the Internal Revenue Code section 501(c)(7).

(16)(17) "Substantial rehabilitation" means, with respect to a certified historic structure,

that the qualified rehabilitation expenses of the building during the twenty-four-(24) month (24)

period selected by the taxpayer ending with or within the taxable year exceed the adjusted basis in

such building and its structural components as of the beginning of such period. In the case of any

rehabilitation, which may reasonably be expected to be completed in phases set forth in

architectural plans and specifications completed before the rehabilitation begins, the above

definition shall be applied by substituting "sixty-(60) month (60) period" for "twenty-four-(24)

month (24) period."

(17)(18) "Trade or business" means an activity that is carried on for the production of

income from the sale or manufacture of goods or performance of services, excluding residential

rental activity.

44-33.6-3. Tax credit.

(a) Subject to the maximum credit provisions set forth in subsections (c) and (d) below,

any person, firm, partnership, trust, estate, limited liability company, corporation (whether for

profit or nonprofit) or other business entity that incurs qualified rehabilitation expenditures for the

substantial rehabilitation of a certified historic structure, provided the rehabilitation meets standards

consistent with the standards of the Secretary of the United States Department of the Interior for

rehabilitation as certified by the commission and said person, firm, partnership, trust, estate, limited

liability company, corporation or other business entity is not a social club as defined in § 44-33.6-

2(15) of this chapter, shall be entitled to a credit against the taxes imposed on such person or entity

pursuant to chapter 11, 12, 13, 14, 17, or 30 of this title in an amount equal to the following:

(1) Twenty percent (20%) of the qualified rehabilitation expenditures; or

(2) Twenty-five percent (25%) of the qualified rehabilitation expenditures provided that

either:

(i) At least twenty-five percent (25%) of the total rentable area of the certified historic

structure will be made available for a trade or business; or

(ii) The entire rentable area located on the first floor of the certified historic structure will

be made available for a trade or business.

(b) Tax credits allowed pursuant to this chapter shall be allowed for the taxable year in

which such certified historic structure or an identifiable portion of the structure is placed in service

provided that the substantial rehabilitation test is met for such year.

five million dollars ($5,000,000) for any certified rehabilitation project under this chapter. No

building to be completed in phases or in multiple projects shall exceed the maximum project credit

of five million dollars ($5,000,000) for all phases or projects involved in the rehabilitation of such

building.

(d) Maximum aggregate credits. The aggregate credits authorized to be reserved pursuant

to this chapter shall not exceed sums estimated to be available in the historic preservation tax credit

trust fund pursuant to this chapter.

(e) Subject to the exception provided in subsection (g) of this section, if the amount of the

tax credit exceeds the taxpayer's total tax liability for the year in which the substantially

rehabilitated property is placed in service, the amount that exceeds the taxpayer's tax liability may

be carried forward for credit against the taxes imposed for the succeeding ten (10) years, or until

the full credit is used, whichever occurs first for the tax credits. Credits allowed to a partnership, a

limited liability company taxed as a partnership, or multiple owners of property shall be passed

through to the persons designated as partners, members, or owners respectively pro rata or pursuant

to an executed agreement among such persons designated as partners, members, or owners

documenting an alternate distribution method without regard to their sharing of other tax or

economic attributes of such entity. Credits may be allocated to partners, members, or owners that

are exempt from taxation under section 501(c)(3), section (c)(4) or section 501(c)(6) of the U.S.

Code and these partners, members or owners must be treated as taxpayers for purposes of this

section.

(f) If the taxpayer has not claimed the tax credits in whole or part, taxpayers eligible for

the tax credits may assign, transfer, or convey the credits, in whole or in part, by sale or otherwise

to any individual or entity, including, but not limited to, condominium owners in the event the

certified historic structure is converted into condominiums and assignees of the credits that have

not claimed the tax credits in whole or part may assign, transfer, or convey the credits, in whole or

in part, by sale or otherwise to any individual or entity. The assignee of the tax credits may use

acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed

pursuant to chapter 11, 12, 13, (other than the tax imposed under § 44-13-13), 14, 17, or 30 of this

title. The assignee may apply the tax credit against taxes imposed on the assignee until the end of

the tenth calendar year after the year in which the substantially rehabilitated property is placed in

service or until the full credit assigned is used, whichever occurs first. Fiscal year assignees may

claim the credit until the expiration of the fiscal year that ends within the tenth year after the year

in which the substantially rehabilitated property is placed in service. The assignor shall perfect the

transfer by notifying the state of Rhode Island division of taxation, in writing, within thirty (30)

calendar days following the effective date of the transfer and shall provide any information as may

be required by the division of taxation to administer and carry out the provisions of this section.

For purposes of this chapter, any assignment or sales proceeds received by the taxpayer for

its assignment or sale of the tax credits allowed pursuant to this section shall be exempt from this

title. If a tax credit is subsequently recaptured under this chapter, revoked, or adjusted, the seller's

tax calculation for the year of revocation, recapture, or adjustment shall be increased by the total

amount of the sales proceeds, without proration, as a modification under chapter 30 of this title. In

the event that the seller is not a natural person, the seller's tax calculation under chapters chapter

11, 12, 13 (other than with respect to the tax imposed under § 44-13-13), 14, 17, or 30 of this title,

as applicable, for the year of revocation, recapture, or adjustment, shall be increased by including

the total amount of the sales proceeds without proration.

(g) Credits allowed to partners, members, or owners that are exempt from taxation under

section 501(c)(3), section (c)(4) or section 501(c)(6) of the U.S. Code, and only said credits, shall

be fully refundable.

(h) Substantial rehabilitation of property that either:

(1) Is exempt from real property tax;

(2) Is a social club; or

(3) Consists of a single-family home or a property that contains less than three (3)

residential apartments or condominiums shall be ineligible for the tax credits authorized under this

chapter; provided, however, a scattered site development with five (5) or more residential units in

the aggregate (which may include single-family homes) shall be eligible for tax credit. In the event

a certified historic structure undergoes a substantial rehabilitation pursuant to this chapter and

within twenty-four (24) months after issuance of a certificate of completed work the property

becomes exempt from real property tax, the taxpayer's tax for the year shall be increased by the

total amount of credit actually used against the tax.

(i) In the case of a corporation, this credit is only allowed against the tax of a corporation

included in a consolidated return that qualifies for the credit and not against the tax of other

corporations that may join in the filing of a consolidated tax return.

(j) For construction projects in excess of ten million dollars ($10,000,000), all construction

workers shall be paid in accordance with the wages and benefits required pursuant to chapter 13 of

title 37 and all contractors and subcontractors shall file certified payrolls on a monthly basis for all

work completed in the preceding month on a uniform form prescribed by the director of labor and

training. Failure to follow the requirements pursuant to chapter 13 of title 37 shall constitute a

material violation and a material breach of the agreement with the state. The tax administrator, in

consultation with the director of labor and training, shall promulgate such rules and regulations as

are necessary to implement the enforcement of this subsection.

(k) No tax credits shall be awarded under this chapter unless the division of taxation

receives confirmation from the department of labor and training that there has been compliance

with the prevailing wage requirements set forth in subsection (j) of this section.

SECTION 3. This act shall take effect on January 1, 2023.

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LC005270/SUB B/2

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