Regular Session 2015-2016 Senate Bill 0282 P.N. 1008

PRIOR PRINTER'S NO. 160

PRINTER'S NO. 1008

THE GENERAL ASSEMBLY OF PENNSYLVANIA

SENATE BILL

No.

282

Session of

2015

INTRODUCED BY VULAKOVICH, COSTA, SCARNATI, BLAKE, BOSCOLA,

BREWSTER, FARNESE, FONTANA, HUGHES, LEACH, PILEGGI, SCHWANK,

SMITH, STEFANO, TEPLITZ, VOGEL, WARD, WILEY, BARTOLOTTA,

McGARRIGLE, YAW, ALLOWAY, GREENLEAF, RAFFERTY AND BROWNE,

JANUARY 16, 2015

SENATOR EICHELBERGER, FINANCE, AS AMENDED, JUNE 3, 2015

AN ACT

Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An

act relating to tax reform and State taxation by codifying

and enumerating certain subjects of taxation and imposing

taxes thereon; providing procedures for the payment,

collection, administration and enforcement thereof; providing

for tax credits in certain cases; conferring powers and

imposing duties upon the Department of Revenue, certain

employers, fiduciaries, individuals, persons, corporations

and other entities; prescribing crimes, offenses and

penalties," providing for a waterfront development tax

credit.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

Section 1. The act of March 4, 1971 (P.L.6, No.2), known as

the Tax Reform Code of 1971, is amended by adding an article to

read:

ARTICLE XVII-J

WATERFRONT DEVELOPMENT TAX CREDIT

Section 1701-J. Scope of article.

This article establishes the waterfront development tax

credit.

Section 1702-J. Definitions.

The following words and phrases when used in this article

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Business firm." An entity authorized to do business in this

Commonwealth and subject to taxes imposed under Article III, IV,

VI, VII, VIII, IX or XV or the tax under Article XVI of the act

of May 17, 1921 (P.L.682, No.284), known as The Insurance

Company Law of 1921. The term includes a pass-through entity.

"Contribution." A donation of cash or personal property made

under this article.

"Department." The Department of Community and Economic

Development of the Commonwealth.

"Eligible applicant." A business firm or individual meeting

all of the following:

(1) Has contributed to a waterfront development

organization.

(2) Is subject to a tax imposed by Article III, IV, VI,

VII, VIII, IX or XV or Article XVI of the act of May 17, 1921

(P.L.682, No.284), known as The Insurance Company Law of

1921.

"Pass-through entity." A partnership as defined in section

301(n.0), a single-member limited liability company treated as a

disregarded entity for Federal income tax purposes or a

Pennsylvania S corporation as defined in section 301(n.1).

"Waterfront." A site which is directly adjacent to a body of

water.

"Waterfront development organization." An authority

established under the act of December 6, 1972 (P.L.1392,

No.298), known as the Third Class City Port Authority Act, or a

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nonprofit entity which meets all of the following:

(1) For a nonprofit entity, is exempt from Federal

taxation under section 501(c)(3) of the Internal Revenue Code

of 1986 (Public Law 99-514, 26 U.S.C. § 1 et seq.).

(2) Has been in existence for a minimum of five years.

(3) Has a board of directors which meets at least once

annually.

(4) Has completed a waterfront development plan.

(5) Uses at least 95% of its annual contributions from

eligible applicants for projects authorized under this

article. For purposes of this definition, an authority or a

nonprofit entity "uses" its annual contributions when it

expends or otherwise encumbers those funds for expenditure

during the then current fiscal year of the authority or

nonprofit entity or during the next succeeding fiscal year of

the authority or nonprofit entity.

"Waterfront development plan." A plan approved by the

Department of Community and Economic Development which meets all

of the following:

(1) Provides for the development or enhancement of

waterfront property which creates public access to the water,

increases property values, restores ecology and catalyzes

further financial investment and job creation to incentivize

future economic development.

(2) Adheres to current environmental practices.

(3) Considers and integrates approaches that support

natural and native habitat.

(4) Considers and integrates architectural and landscape

design elements and standards.

"Waterfront development project." A project to develop a

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waterfront site or area or a project which creates or improves

public access and connections to the waterfront. The term may

include:

(1) Streets and public rights-of-way.

(2) Waterfront parks, gardens and open spaces.

(3) Enhancement of access to public utilities.

(4) The promotion of erosion control, storm water

management and other environmental projects which promote

economic development.

(5) Water transportation facilities for use by the

public, including water transit landings and boat docking.

(6) Amenities, including infrastructure and recreational

projects.

Section 1703-J. Waterfront Development Tax Credit Program.

The Waterfront Development Tax Credit Program is established

to encourage private investment in waterfront property which

creates public access to the water, increases property values,

restores ecology and catalyzes further financial investment and

job creation.

Section 1704-J. Qualification of waterfront development

organization.

(a) General rule.--The following shall apply:

(1) To qualify under this article, a waterfront

development organization shall meet all of the following

requirements:

(i) Submit information to the department which

enables the department to confirm that the organization

is exempt from Federal taxation under section 501(c)(3)

of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 1 et seq.) , IF APPLICABLE .

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(ii) Certify to the department, on a form provided

by the department, that the organization is eligible to

participate in the program established under this article

and agree to annually report by September 1 of each year

all of the following information:

(A) The number of waterfront development

projects funded, in total and by municipality, during

the immediately preceding year.

(B) The amount expended for waterfront

development projects, in total and by municipality,

during the immediately preceding year.

received, in total and by municipality, including a

breakdown of waterfront development projects approved

and rejected, during the immediately preceding year.

(D) The number of project applications

processed, in total and by municipality, and the

amount of any application fees charged per project

application or in the aggregate through a third-party

processor.

(E) The number of waterfront development

projects completed, in total and by municipality,

during the immediately preceding year.

(F) A copy of the Federal Form 990 or other

Federal form of the waterfront development

organization which indicates the tax status of the

organization for Federal tax purposes, if any.

(G) A copy of a compilation, review or audit of

the financial statements of the waterfront

development organization conducted by a certified

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public accounting firm.

(2) The department shall distribute sample forms,

together with the forms on which the information under

paragraph (1)(ii) is to be certified, to each waterfront

development organization not later than May 1 of each year.

(3) The department may not require any additional

information from a waterfront development organization to

meet the requirements of this section than is expressly

authorized under this subsection.

(b) Notification.--The department shall notify a waterfront

development organization if the organization meets the

requirements of this section for the current fiscal year not

later than 60 days after the waterfront development organization

has submitted the information required under this section.

list of each waterfront development organization approved under

this section in the Pennsylvania Bulletin. The list shall also

be posted and updated as necessary on the publicly accessible

Internet website of the department.

Section 1705-J. Waterfront development projects.

(a) General rule.--To qualify for a tax credit under this

article, contributions made to a waterfront development

organization shall be used by the organization for a waterfront

development project approved under this section.

(b) Approval.--The following shall apply:

(1) A waterfront development organization shall apply to

the department for approval of a waterfront development

project as eligible for a waterfront development tax credit

by submission to the department of an application including

all of the following information:

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(i) The location of the waterfront development

project.

(ii) The type of waterfront development project.

(iii) A detailed description of the waterfront

development project, including any architectural and

engineering drawings.

(iv) The status of the waterfront development

project.

(v) The anticipated start date and completion date

for the waterfront development project.

(vi) The life expectancy of the waterfront

development project and a plan for project maintenance

following completion.

(vii) The estimated cost of the waterfront

development project, the total amount of contributions

received which have been designated for the waterfront

development project and the funding source to be used for

payment of unfunded costs, if any.

(viii) Analysis of the direct current and future

economic benefits derived from the waterfront development

project, including indirect and direct job creation

projections.

(ix) The manner in which the organization will do

all of the following:

(A) Verify eligibility of costs.

(B) Monitor progress of the waterfront

development project.

for the waterfront development project for which they

have been designated.

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(x) Any other information required by the

department.

(2) The department, in conjunction with the Department

of Conservation and Natural Resources, shall review

applications received from waterfront development

organizations under paragraph (1).

(3) Within 60 days after receipt of an application, the

department shall notify the waterfront development

organization of its approval or disapproval of a waterfront

development project. If the application is disapproved, the

notice of disapproval shall include the reasons for

disapproval. A waterfront development organization shall have

30 days after receipt of a notice of disapproval to resubmit

the application.

project approved under subsection (b), the waterfront

development organization shall submit written notice of project

completion to the department. The notice shall include all of

the following information:

(1) Certification that the waterfront development

project is complete.

(2) An upkeep and maintenance plan, if applicable to the

waterfront development project.

(3) Any other information required by the department.

(d) Inspection.--Waterfront development projects approved

under subsection (b) may be subject to inspection by the

department or its designated agent.

Section 1706-J. Application for tax credit.

(a) General rule.--An eligible applicant shall apply to the

department for a tax credit under this article. An eligible

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applicant shall receive a tax credit under this article if the

waterfront development organization that receives the

contribution from the eligible applicant appears on the list

established under section 1704-J and the department has approved

the waterfront development project for which the contribution is

to be used under section 1705-J(b).

(b) Time.--The following shall apply:

(1) Except as otherwise provided in paragraph (2), the

department may accept applications for tax credits under this

article not earlier than July 1 of each fiscal year.

(2) The application of any eligible applicant for tax

credits available during a fiscal year as part of the second

year of a two-year commitment or as a renewal of a two-year

commitment which was fulfilled in the previous fiscal year

may be accepted not earlier than May 15 preceding the start

of the fiscal year.

article shall be made available by the department on a first-

come, first-served basis within the limitation established under

section 1708-J.

(d) Contribution.--A contribution by an eligible applicant

shall be made not later than 60 days following the approval of

an application under this section.

(e) Compliance provisions.--Before an application is

approved, the Department of Revenue must make a finding that the

applicant has filed all required State tax reports and returns

for all applicable tax years and paid any balance of State tax

due as determined at settlement, assessment or determination by

the Department of Revenue.

Section 1707-J. Grant of tax credit and amount.

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(a) General rule.--In accordance with section 1708-J(a), the

Department of Revenue shall grant a tax credit against any tax

due under Article III, IV, VI, VII, VIII, IX or XV or under

Article XVI of the act of May 17, 1921 (P.L.682, No.284), known

as The Insurance Company Law of 1921, to an eligible applicant

providing proof of a contribution to a waterfront development

organization in the taxable year in which the contribution is

made. The tax credit shall not exceed 75% of the total amount

contributed by the eligible applicant during the taxable year.

(b) Additional amount.--The Department of Revenue shall

grant a tax credit of up to 90% of the total amount contributed

during the taxable year if the eligible applicant provides a

written commitment to provide the waterfront development

organization with the same amount of contribution for two

consecutive tax years. The eligible applicant shall provide the

written commitment to the department at the time of application

for the tax credit.

receive tax credits from the Department of Revenue in any tax

year for any combination of contributions under subsection (a)

or (b).

(d) Pass-through entity.--The following shall apply:

(1) If a pass-through entity does not intend to use all

approved tax credits under this article, it may elect in

writing to transfer all or a portion of the tax credit to its

shareholders, members or partners, in proportion to the share

of the entity's distributive income to which the shareholder,

member or partner is entitled, for use in the taxable year in

which the contribution is made or in the taxable year

immediately following the year in which the contribution is

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made. The election shall designate the year in which the

transferred credits are to be used and shall be made

according to procedures established by the Department of

Revenue.

(2) A pass-through entity and a shareholder, member or

partner of a pass-through entity shall not claim the tax

credit under this article for the same contribution.

(3) The shareholder, member or partner of a pass-through

entity may not carry forward, carry back, obtain a refund of

or sell or assign the tax credit.

(e) Restriction on applicability of credits.--No tax credits

granted under this article shall be applied against any tax

withheld by an employer from an employee under Article III.

Section 1708-J. Limitations.

(a) Aggregate amount.--The total aggregate amount of all tax

credits under this article shall not exceed $10,000,000 in any

fiscal year.

(b) Activities.--No tax credit shall be granted for

activities that are a part of an eligible applicant's normal

course of business.

(1) Except as provided in paragraph (2), a tax credit

granted under this article for any one taxable year may not

exceed the tax liability of an eligible applicant.

(2) In the case of a credit granted to a pass-through

entity which elects to transfer the tax credit according to

section 1707-J(d), a tax credit granted for any one taxable

year and transferred to a shareholder, member or partner may

not exceed the tax liability of the shareholder, member or

partner.

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(d) Use.--A tax credit not used by the eligible applicant in

the taxable year the contribution was made or in the year

designated by the shareholder, member or partner to whom the

credit was transferred under section 1707-J(d) may not be

carried forward or carried back and is not refundable or

transferable.

Section 1709-J. Lists.

The Department of Revenue shall provide a list of all

waterfront development organizations receiving contributions

from eligible applicants granted a tax credit under this article

to the General Assembly not later than June 30 of each year.

Section 1710-J. Recapture of tax credits.

(a) Repayment.--If a waterfront development organization

fails to complete a waterfront development project under section

1705-J, the waterfront development organization shall repay to

the Commonwealth any tax credits granted under this article for

any contributions to the waterfront development organization.

(b) Assessment and collection.--If the waterfront

development organization fails to repay the amount due under

subsection (a) within 30 days of the date of a demand letter

from the department, the department shall notify the Department

of Revenue within 60 days of the date of the demand letter from

the department. The Department of Revenue may issue an

assessment against the waterfront development organization for

the amount not repaid. The assessment and collection of this

amount shall be made under the provisions of Article II. If the

waterfront development organization fails to pay the assessment,

the board of directors may be held jointly and severably liable

for the unpaid amount.

SECTION 1711-J. GUIDELINES.

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WITHIN 180 DAYS, THE DEPARTMENT, IN CONSULTATION WITH THE

DEPARTMENT OF CONSERVATION AND NATURAL RESOURCES, SHALL DEVELOP

GUIDELINES TO IMPLEMENT THIS ARTICLE.

Section 2. This act shall take effect in 60 days.

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