Read the full stored bill text
Legislation Document
SPONSOR:
Sen. Huxtable & Sen. Lockman & Rep. K. Johnson
Sens. Cruce, Hoffner, Sokola, Walsh; Reps. Burns, Chukwuocha, Hilovsky, Lambert, Snyder-Hall
DELAWARE STATE SENATE
153rd GENERAL ASSEMBLY
SENATE BILL NO. 149
AN ACT TO AMEND TITLE 9 AND TITLE 14 OF THE DELAWARE CODE RELATING TO PAYMENTS IN LIEU OF TAXES FOR LOW-INCOME HOUSING TAX CREDIT PROPERTIES.
BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF DELAWARE:
Section 1. Amend Chapter 81, Title 9 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
Subchapter IV. Low-Income Housing Tax Credit Properties
§ 8161. Definitions.
For purposes of this subchapter:
(1) “Annual revenue” means the sum reported as total net revenue on the DSHA Statement of Profit and Loss, including the sum of a LIHTC property’s total rent revenue, total financial revenue, and total other revenue.
(2) “DSHA” means the Delaware State Housing Authority.
(3) “Low-Income Housing Tax Credit” or “LIHTC” means tax credits allocated by the DSHA under the federal Tax Reform Act of 1986, 26 U.S.C. § 42.
(4) “LIHTC property” means affordable housing that is financed using LIHTC funds and the property remains subject to the affordability controls for rent and income limits established under the federal Tax Reform Act of 1986, 26 U.S.C. § 42.
§ 8162. Tax exemption; payment in lieu of taxes.
(a) A county or municipality may, by ordinance, exempt LIHTC properties from taxation for public purposes. This exemption from taxation must require all of the following:
(1) A LIHTC property must be in compliance with all applicable LIHTC requirements.
(2) A LIHTC property must apply for the exemption in the same manner as required for other exemptions.
(3) A LIHTC property that is exempt from taxation make an annual payment equal to 5% of the LIHTC property’s annual revenue for the property’s most recent fiscal year.
(b) The sum collected under this section from a LIHTC property is divided between political subdivisions having authority to levy taxes on the LIHTC property’s land and improvements in proportion to the respective tax rates.
§ 8163. Collection; penalties.
(a) The receiver of taxes and county treasurer shall collect payments under § 8162 of this title in the same manner and at the same time as provided for the collection of taxes under Chapter 80 of this title.
(b) A penalty on the unpaid balance may accrue and be due to the county at a rate and in a manner set by ordinance. The county may establish procedures for the abatement of this penalty.
Section 2. Amend § 8106A, Title 9 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
§ 8106A. New Castle County property tax exemptions; applications; refunds.
(a)(1) This section applies to property in New Castle County that is entitled to an exemption as any of the following:
f. A Low-Income Housing Tax Credit property under an ordinance enacted under subchapter IV of Chapter 81 of this title.
Section 3. Amend § 1902, Title 14 of the Delaware Code by making deletions as shown by strike through and insertions as shown by underline as follows:
§ 1902. Power of district to levy taxes for school purposes.
(a) Any district may, in addition to the amounts apportioned to it by the Department of Education or appropriated to it by the General Assembly, levy and collect additional taxes for school purposes upon the assessed value of all taxable real estate in the district, except any of the following:
(9) Real estate exempt from taxation as a Low-Income Housing Tax Credit property under an ordinance enacted under subchapter IV of Chapter 81 of Title 9.
SYNOPSIS
This Act creates a uniform framework under which a county or municipality may enact an ordinance that exempts Low-Income Housing Tax Credit (LIHTC) properties from property taxes and instead, require that a LIHTC property make an annual payment in lieu of taxes equal to 5% of the LIHTC’s annual net income as reported to the Delaware State Housing Authority (DSHA). Under this Act, a LIHTC property that is exempt from property taxes is also exempt from taxation by school districts.
Allowing LIHTC properties to make a payment in lieu of taxes, acknowledges the public benefit of the affordable housing provided by LIHTC properties. The Internal Revenue Service LIHTC was created in 1986 by the federal government to encourage a private/public investment to preserve and construct new affordable rental housing. Alone and in combination with tax exempt private activity bonds, the LIHTC has been the most productive source of affordable housing financing in the nation’s history. DSHA receives an annual tax credit amount and awards credits annually through a competitive process. The awards are based on criteria outlined in DSHA’s Qualified Allocation Plan. The equity raised through the tax credit investment makes it possible for developers to attract the financing needed to create or restore low-income rental housing. A LIHTC project must comply with a number of requirements including the timeframe from the award to when the building is placed in service, tenant income restrictions, maximum rent levels, and percentage of low-income occupancy. All buildings financed with the LIHTC are subject to a land use covenant to enforce program compliance for the entirety of the affordability period.
Author: Senator Huxtable