It is enacted by the General Assembly as follows:

SECTION 1. Title 42 of the General Laws entitled "State Affairs and Government" is hereby amended by adding thereto the following chapter:

{ADD 42-64.7-1. Short title. -- This chapter shall be known and may be cited as the "Rhode Island Mill Building and Economic Revitalization Act". ADD}

{ADD 42-64.7-2. Legislative findings and purpose. -- It is found and declared that:

(a) Throughout the state of Rhode Island there are located numerous historic and industrial mill structures which over the past two (2) decades have experienced high vacancy rates and physical deterioration.

(b) Without added economic incentive, such structures are not viable for redevelopment and reuse by modern commercial and manufacturing enterprises and will continue their physical deterioration.

(c) The redevelopment and reuse of such historic industrial mill structures are of critical importance to the economic well being of the state of Rhode Island and its towns and cities.

(d) The adoption of certain economic incentive measures, as hereinafter provided, will assist in stimulating the reuse and redevelopment of Rhode Island's historic industrial mill structures, and will benefit the health, safety, welfare and prosperity of the people of this state. ADD}

{ADD 42-64.7-3. Purpose. -- It is the purpose of this chapter to create economic incentives for the purpose of stimulating the redevelopment and reuse of Rhode Island's historic industrial mill structures. ADD}

{ADD 42-64.7-4. Definitions and construction. -- (a) As used in this chapter, unless the context otherwise requires, the term:

(1) "Certifiable building" means a building:

(A) that was constructed prior to January 1, 1950; and

(B) having at least two (2) floors, excluding a basement; and

(C) which is or will be used primarily for manufacturing, wholesale trade and other commercial purposes; and

(D) the use of which conforms to the comprehensive plan and local land use management ordinances of the municipality in which the building is located; and

(E) that is proposed for substantial rehabilitation; and

(F) that has been at a minimum seventy-five percent (75%) vacant for a minimum of twenty-four (24) months at the time of submission by the municipality; and

(G) that is designated by the municipality for consideration as a certifiable building as hereinafter provided; and

(H) meets other requirements as established by the council; and

(I) designated by the enterprise zone council as a certified building pursuant to the requirements of section 42-64.7-5.

(2) "Certification of an eligible business" means an annual process taking place on a calendar year basis to certify entities as eligible businesses for the purposes of this act. Businesses certified as eligible businesses for the purpose of this chapter and which may also be eligible for certification as certified businesses under the provisions of section 42-64.3-3(d) of the general laws must elect certification under only one designation of each certification year. This election must be made for each certification year provided that the business continues to be eligible for both designations on a year to year basis.

(3) "Certified building owner" means an individual, partnership, corporation or other entity which is listed in the appropriate municipal records of land evidence as the owner.

(4) "Eligible business" means any business, corporation, sole proprietorship, partnership limited partnership or limited liability company which:

(A) is located in a certified building after said building has undergone substantial rehabilitation as hereinafter defined; and (B) is engaged principally in manufacturing, wholesale trade, or other commercial business activities; and

(C) whose total Rhode Island salaries and wages exceed the total Rhode Island salaries and wages paid to its employees in the prior calendar year; and

(D) has received certification from the enterprise zone council pursuant to the rules and regulations promulgated by the council; and

(E) which, as part of its annual certification:

(i) obtains certificates of good standing from the Rhode Island division of taxation, the corporations division of the Rhode Island secretary of state, and the appropriate municipal authority; and

(ii) provides the enterprise zone council an affidavit stating under oath that the entity seeking certification as a qualified business has not within the preceding twelve (12) months from the date of application for certification changed its legal status or location solely for the purpose of gaining favorable treatment under the provision of this chapter; and

(iii) meets certain other requirements set forth by the council.

(5) "Enterprise zone" means an enterprise zone established pursuant to section 42-64.3-4 of the general laws.

(6) "Enterprise zone council" or the "council" means the enterprise zone council established pursuant to section 42-64.3-3.1 of the general laws, and empowered with the same authority and given the same responsibilities under that section.

(7) "Municipality" means any city or town within the state, whether now existing or hereafter created.

(8) "Qualified employee" means a full-time employee of an eligible business whose business activity originates and terminates from within the eligible business and certified building on a daily basis, and who is employed by the eligible business at the end of the calendar year, and who is a domiciled resident of the state of Rhode Island.

(9) "Salaries and wages" means salaries, wages, tips and other compensation as defined in the Internal Revenue Code of 1986.

(10) "Substantial rehabilitation" means rehabilitation or reconstruction costs of a building in a dollar amount that equals or exceeds twenty percent (20%) of the market value of such building prior to rehabilitation or reconstruction, as said prior to market value is determined by a Rhode Island licensed and certified appraiser who is independent of the building owner or owners and their affiliated corporations, and/or any tenants of the certifiable building and their affiliated corporations.

(11) "Rehabilitation and reconstruction costs" means and includes only those amounts incurred and paid by the certified building owner, after issuance of the notice of final designation of the building, solely and exclusively for the rehabilitation of said certified building and which are incurred and paid by the certified building owner to acquire tangible personal property and structural components of the said certified building which (A) are depreciated pursuant to chapter 26, section 167 of the United States Code; (B) have a useful life of three (3) years or more as evidenced by the tax depreciation method taken and shown on the federal tax return of the certified building owner; and (C) are acquired by purchase as defined in chapter 26, section 179(d) of the United States Code. Rehabilitation and reconstruction costs do not include amounts incurred or paid with respect to tangible personal property and structural components of the said certified building which the certified building owner leases from any other person or corporation. For the purposes of the preceding sentence, any contract or agreement to lease or rent or for a license to use the property shall be considered a lease unless the contract or agreement is treated for the federal income tax purposes of the certified building owner as an installment purchase rather than a lease. ADD}

{ADD 42-64.7-5. Building certification process. -- (a) No later than December 1, 1997, a municipality shall submit to the enterprise zone council a list of industrial mill structures located within the municipality for consideration by the council as to whether any such structure qualifies as certifiable buildings. The council will notify the municipality as to which structures qualify as certifiable buildings.

(b) On or before May 1, 1998, any building designated by the enterprise zone council as a certifiable building may then be submitted by the municipality to the council for preliminary designation as a certified building provided that such municipality has given notice to the council.

(1) That the building conforms to the area restriction set forth in square feet in paragraph (d) of this section, and

(2) That within six (6) months of such designation, the municipality agrees to:

(A) Promulgate local regulations and ordinances providing favorable local property tax treatment for certified industrial mill buildings which are substantially rehabilitated; and

(B) Promulgate local regulations and ordinances to expedite the building permit review and approval process required in the municipality for the rehabilitation of certified buildings; and

(C) Promulgate local regulations and ordinances waiving all building permit fees of the municipality for the rehabilitation of certified buildings; and

(D) Promulgate local regulations and ordinances adopting design standards in the municipality which encourage historic preservation of certified buildings, or alternatively, adopt such design standards as are developed and recommended by the Rhode Island historic preservation commission; and

(E) Promulgate local regulations and ordinances requiring that the advice of the Rhode Island historic preservation commission will be obtained for the rehabilitation of any certified building in the municipality; and

(F) Establish a program for eligible businesses which coordinates the economic development activities of state and local business assistance programs and agencies, including but not limited to, the ocean state business development authority, the Rhode Island small business development center, the Rhode Island export assistance center, the applicable private industry council, and the applicable chamber of commerce.

(c) Notwithstanding anything to the contrary contained herein, the council's preliminary designation of certified buildings within any municipality shall be limited in accordance with the following:

(1) One (1) certified building per municipality having a population according to the most recent federal census of less than twenty-five thousand (25,000), provided, however, that in the event one (1) or more enterprise zones have been designated in the municipality, it may be permitted two (2) certified buildings, in which event, at least one (1) of the certified buildings shall be located within the municipality's boundaries of an enterprise zone;

(2) Two (2) certified buildings per municipality having a population according to the most recent federal census of between twenty-five thousand and one (25,001) and seventy-five thousand (75,000), provided, however, that in the event one (1) or more enterprise zones have been designated in the municipality it may be permitted three (3) certified buildings, in which event, at least one (1) of the certified buildings shall be located within the boundaries of an enterprise zone;

(3) Four (4) certified buildings per municipality having a population according to the most recent federal census in excess of seventy-five thousand and one (75,001), provided, however, that in the event one (1) or more enterprise zones have been designated in the municipality, it may be permitted six (6) certified buildings, in which event, at least two (2) of the certified buildings shall be located within the boundaries of an enterprise zone.

(d) The aggregate square footage of all certified buildings within any municipality shall not exceed the average of three hundred thousand (300,000) gross square feet per certified building. ADD}

{ADD 42-64.7-6. Notice of final designation of certified building. -- (a) Upon notice to the council that the municipality has satisfied the requirements of section 42-64.7-5(b)(2)(A) through (F), the council shall provide to the municipality and to the certified building owner a written notice of final designation, which notice shall include a statement that an independent appraisal is required in order to comply with the requirements of section 42-64.7-4(10).

(b) Such certification and the benefits accruing thereto shall apply for no more than five (5) years from the date of final designation by the council, except in the case of the carryover of unused specialized investment tax credits as provided by section 44-31-2 of the general laws, and in no case shall the benefits accruing be applied retroactively. ADD}

{ADD 42-64.7-7. Specialized investment tax credit. -- (a) A certified building owner may be allowed a specialized investment tax credit as set out in section 44-31-2 of the general laws against the tax imposed by chapters 44-11 and 44-30. ADD}

{ADD 42-64.7-8. Business tax credits. -- A taxpayer who owns and operates an eligible business within a certified building shall be allowed a credit against the tax imposed pursuant to chapters 44-11 or 44-30 of the general laws as follows:

(a) A credit equal to one hundred percent (100%) of the total amount of Rhode Island salaries and wages as are paid to qualified employees in excess of Rhode Island salaries and wages paid to the same employees in the prior calendar year. The maximum credit allowable per taxable year under the provisions of this subsection shall be three thousand dollars ($3,000) per qualified employee.

(b) Any tax credits provided in subdivision (a) shall not offset any tax liability in years other than the year in which the taxpayer qualifies for the credit. Fiscal year taxpayers must claim the tax credit in the year in which the December 31st of the certification year falls. The credit shall not reduce the tax below the minimum tax. The credit shall be used to offset tax liability under either chapters 44-11 or 44-30 of the general laws, but not both.

(c) In the case of a corporation, the credit allowed under this section shall only be allowed against the tax of that 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.

(d) In the case of multiple business owners, the credit provided in subdivision (a) shall be apportioned according to the ownership interests of the eligible business.

(e) In the event that the eligible business is located within an enterprise zone and is a certified business under the provisions of chapter 42-64.3-6 of the general laws, the taxpayer must elect to use the credit provided under subdivision (a) or the credit provided in chapter 42-64.3-6 to offset tax liability, but the taxpayer may not elect to claim both. ADD}

{ADD 42-64.7-9. Interest income. -- (a) A taxpayer shall be allowed a ten percent (10%) credit against taxes due under the provisions of chapters 44-11, 44-13, 44-14, 44-17, or 44-30 for interest earned and paid on loans made to eligible businesses as defined in section 42-64.7-4 of this chapter, solely and exclusively for expenditures within the certified building.

(b) The taxpayer shall further be allowed a one hundred percent (100%) credit against taxes due under chapters 44-11, 44-13, 44-14, 44-17, or 44-30 for interest earned on loans made solely and exclusively for the purposes of substantial rehabilitation as defined in section 42-64.7-4.

(c) Any tax credit herein provided shall not offset any tax liability in taxable years other than the year in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum, and, in the case of a corporation, shall only be allowed against the tax of that 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.

(d) The taxpayer shall be allowed a maximum credit of ten thousand dollars ($10,000) per taxable year under subdivision (a) of this section. The taxpayer shall be allowed a maximum credit of twenty thousand dollars ($20,000) per taxable year under subdivision (b).

(e) In the event a certified building owner is also a qualified business under chapter 42-64.3 of the general laws, the lender/taxpayer must elect to treat the loan described in subdivision (a) and its related interest payments as pertaining to the interest credit provided in this section or section 42-64.3-8.1, but not both. ADD}

{ADD 42-64.7-10. Exemption or stabilization of taxes. -- Notwithstanding the provisions of any municipal charter or any other general, special or local law to the contrary, real property taxes for a certified building and tangible property taxes of the owner or owners of such certified building for tangible property used therein may be exempted from payment, in whole or in part, notwithstanding the valuation of the property or the rate of tax, by the vote of the city or town council to the extent deemed appropriate by the city or town council to carry out the purposes of this chapter 42-64.7. This section shall be construed to provide a complete, additional and alternative authority for the city or town council to grant exemption or stabilization of real or tangible property taxes with respect to certified buildings and the granting of tax exemption or stabilization by the city or town council under the provisions of this section does not require the taking of any other proceedings or the happening of any condition, except for the vote of the city or town council. ADD}

{ADD 42-64.7-11. Expedited permit process. -- Any building designated by the enterprise zone council as a certified building shall be immediately forwarded by the building owner to the governor and the board of directors of the Rhode Island economic development corporation for consideration as a project of critical economic concern as that term is defined in section 42-117-3(3) of the general laws and shall be entitled to the benefits of chapter 42-117 of the general laws. ADD}

{ADD 42-64.7-12. Expiration. -- This chapter shall terminate and be of no further effect seven (7) years from the effective date of the act, unless the chapter is extended by action of the general assembly. ADD}

{ADD 42-64.7-13. Examination of taxpayer's records. -- The tax administrator and his or her agents for the purpose of ascertaining the correctness of any credit claimed under the provisions of this chapter may examine any books, papers, records, or memoranda bearing upon the matters required to be included in the return, report, or other statement, and may require the attendance of the person executing the return, report, or other statement, or of any officer or employee of any taxpayer, or the attendance of any other person, and may examine the person under oath respecting any matter which the tax administrator or his or her agent deems pertinent or material in determining the eligibility for credits claimed. ADD}

{ADD 42-64.7-14. Penalties. -- Any taxpayer or employee, officer or agent of such taxpayer that willfully fails to comply with the provisions of this chapter 42-64.7 or otherwise submits false or misleading information shall be guilty of a felony and upon conviction thereof shall be fined an amount not more than three (3) times the amount of the tax credit received by such taxpayer, or imprisoned not more than one (1) year, or both. ADD}

{ADD 42-64.7-15. Revocation of certification. -- The council shall have the power to revoke the certification of any building certified under section 42-64.7-5 of this chapter and to revoke the eligibility of any business defined as an eligible business under section 42-64.7-4. ADD}

{ADD 42-64.7-16. Additional rules and regulations. -- (a) The state tax administrator shall promulgate appropriate rules and regulations to ensure the proper administration of the taxation provisions of this chapter. The council shall promulgate appropriate rules and regulations with respect to the building certification process, and the certification of eligible businesses, and shall advise the tax administrator of the same and shall promulgate such other rules and regulations as may be necessary to carry out the provisions of this chapter.

(b) In addition to the rules and regulations as provided in subdivision (a), the Rhode Island economic development corporation with assistance from the department of administration office of systems planning and subject to the approval of the enterprise zone council shall adopt performance standards in order to evaluate the effectiveness of this chapter 42-64.7 in accomplishing its stated purpose.

(c) Such evaluation according to the performance standards established by subdivision (b) shall be conducted and reported on an annual basis for each of the years the provisions of this chapter are in force. ADD}

{ADD 42-64.7-17. Severability. -- If the provisions of this chapter or the application thereof to any person or circumstances is held invalid, such invalidity shall not affect other provisions or applications of the chapter which can be given effect without the invalid provision or application, and to this end the provisions of the chapter are declared to be severable. ADD}

SECTION 2. Chapter 44-31 of the General Laws entitled "Investment Tax Credit" is hereby amended by adding thereto the following section:

{ADD 44-31-2. Specialized investment tax credit. -- (a) A certified building owner as provided in chapter 42-64.7 of the general laws may be allowed a specialized investment tax credit against the tax imposed by chapters 44-11 and 44-30.

(b) The taxpayer may claim credit for the costs of substantial rehabilitation of the certified building, which, as defined in sections 42-64.7-4(a)(10) and (11), is achieved when rehabilitation or reconstruction costs equal or exceed twenty percent (20%) of the market value of the certified building before rehabilitation or reconstruction begins. Once substantial rehabilitation is established by the taxpayer, the taxpayer may claim additional credit for additional rehabilitation or reconstruction costs under this section during the two (2) years following certification.

(c) The credit is ten percent (10%) of the cost solely and exclusively for the substantial rehabilitation of the certified building, provided further that the substantial rehabilitation occurs within two (2) years following the certification of the building in accordance with section 42-64.7-5. Such credit shall be allowable in the year the substantial rehabilitation is first placed into service, which is the year in which, under the taxpayer's depreciation practice, the period for depreciation with respect to such property begins, or the year in which the property is placed in a condition or state of readiness and availability for its specifically assigned function, whichever is earlier.

(d) The credit shall not offset any tax liability in taxable years other than the year or years in which the taxpayer qualifies for the credit. The credit shall not reduce the tax below the minimum; however, amounts of unused credit for this taxpayer may be carried over and offset against this taxpayer's tax for a period not to exceed the following seven (7) taxable years.

(e) In the case of a corporation, this credit shall only be allowed against the tax of that 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. ADD}

SECTION 3. This act shall take effect upon passage.