1Amending the act of March 4, 1971 (P.L.6, No.2), entitled "An
2act relating to tax reform and State taxation by codifying
3and enumerating certain subjects of taxation and imposing
4taxes thereon; providing procedures for the payment,
5collection, administration and enforcement thereof; providing
6for tax credits in certain cases; conferring powers and
7imposing duties upon the Department of Revenue, certain
8employers, fiduciaries, individuals, persons, corporations
9and other entities; prescribing crimes, offenses and
10penalties," providing for a waterfront development tax
11credit.

12The General Assembly of the Commonwealth of Pennsylvania
13hereby enacts as follows:

14Section 1. The act of March 4, 1971 (P.L.6, No.2), known as
15the Tax Reform Code of 1971, is amended by adding an article to
16read:

17ARTICLE XVII-J

18WATERFRONT DEVELOPMENT TAX CREDIT

19Section 1701-J. Scope of article.

20This article establishes the waterfront development tax
21credit.

1Section 1702-J. Definitions.

2The following words and phrases when used in this article
3shall have the meanings given to them in this section unless the
4context clearly indicates otherwise:

5"Business firm." An entity authorized to do business in this
6Commonwealth and subject to taxes imposed under Article III, IV,
7VI, VII, VIII, IX or XV or the tax under Article XVI of the act
8of May 17, 1921 (P.L.682, No.284), known as The Insurance
9Company Law of 1921. The term includes a pass-through entity.

10"Contribution." A donation of cash or personal property made
11pursuant to this article.

12"Department." The Department of Community and Economic
13Development of the Commonwealth.

14"Eligible applicant." A business firm or individual meeting
15all of the following:

16(1) Has contributed to a waterfront development
17organization.

18(2) Is subject to a tax imposed by Article III, IV, VI,
19VII, VIII, IX or XV or Article XVI of the act of May 17, 1921
20(P.L.682, No.284), known as The Insurance Company Law of
211921.

22"Pass-through entity." A partnership as defined in section
23301(n.0), a single-member limited liability company treated as a
24disregarded entity for Federal income tax purposes or a
25Pennsylvania S corporation as defined in section 301(n.1).

26"Waterfront." A site which is directly adjacent to a body of
27water.

28"Waterfront development organization." A nonprofit entity
29which meets all of the following:

30(1) Is exempt from Federal taxation under section 501(c)

1(3) of the Internal Revenue Code of 1986 (Public Law 99-514,
226 U.S.C. § 1 et seq.).

3(2) Has been in existence for a minimum of five years.

4(3) Has a board of directors which meets at least once
5annually.

6(4) Has completed a waterfront development plan.

7(5) Uses at least 95% of its annual contributions from
8eligible applicants for projects authorized under this
9article. For purposes of this definition, a nonprofit entity
10"uses" its annual contributions when it expends or otherwise
11encumbers those funds for expenditure during the then current
12fiscal year of the nonprofit entity or during the next
13succeeding fiscal year of the nonprofit entity.

14"Waterfront development plan." A plan approved by the
15Department of Community and Economic Development which meets all
16of the following:

17(1) Provides for the development or enhancement of
18waterfront property which creates public access to the water,
19increases property values, restores ecology and catalyzes
20further financial investment and job creation to incentivize
21future economic development.

22(2) Adheres to current environmental practices.

23(3) Considers and integrates approaches that support
24natural and native habitat.

25(4) Considers and integrates architectural and landscape
26design elements and standards.

27"Waterfront development project." A project to develop a
28waterfront site or area or a project which creates or improves
29public access and connections to the waterfront. The term may
30include:

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

2(2) Waterfront parks, gardens and open spaces.

3(3) Enhancement of access to public utilities.

4(4) The promotion of erosion control, storm water
5management and other environmental projects which promote
6economic development.

7(5) Water transportation facilities for use by the
8public, including water transit landings and boat docking.

9(6) Amenities, including infrastructure and recreational
10projects.

11Section 1703-J. Waterfront Development Tax Credit Program.

12The Waterfront Development Tax Credit Program is established
13to encourage private investment in waterfront property which
14creates public access to the water, increases property values,
15restores ecology and catalyzes further financial investment and
16job creation.

17Section 1704-J. Qualification of waterfront development
18organization.

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

20(1) To qualify under this article, a waterfront
21development organization shall meet all of the following
22requirements:

23(i) Submit information to the department which
24enables the department to confirm that the organization
25is exempt from Federal taxation under section 501(c)(3)
26of the Internal Revenue Code of 1986 (Public Law 99-514,
2726 U.S.C. § 1 et seq.).

28(ii) Certify to the department, on a form provided
29by the department, that the organization is eligible to
30participate in the program established under this article

1and agree to annually report by September 1 of each year
2all of the following information:

3(A) The number of waterfront development
4projects funded, in total and by municipality, during
5the immediately preceding year.

6(B) The amount expended for waterfront
7development projects, in total and by municipality,
8during the immediately preceding year.

9(C) The number and nature of funding requests
10received, in total and by municipality, including a
11breakdown of waterfront development projects approved
12and rejected, during the immediately preceding year.

13(D) The number of project applications
14processed, in total and by municipality, and the
15amount of any application fees charged per project
16application or in the aggregate through a third-party
17processor.

18(E) The number of waterfront development
19projects completed, in total and by municipality,
20during the immediately preceding year.

21(F) A copy of the Federal Form 990 or other
22Federal form of the waterfront development
23organization which indicates the tax status of the
24organization for Federal tax purposes, if any.

25(G) A copy of a compilation, review or audit of
26the financial statements of the waterfront
27development organization conducted by a certified
28public accounting firm.

29(2) The department shall distribute sample forms,
30together with the forms on which the information under

1paragraph (1)(ii) is to be certified, to each waterfront
2development organization not later than May 1 of each year.

3(3) The department may not require any additional
4information from a waterfront development organization to
5meet the requirements of this section than is expressly
6authorized under this subsection.

7(b) Notification.--The department shall notify a waterfront
8development organization if the organization meets the
9requirements of this section for the current fiscal year not
10later than 60 days after the waterfront development organization
11has submitted the information required under this section.

12(c) Publication.--The department shall annually publish a
13list of each waterfront development organization approved under
14this section in the Pennsylvania Bulletin. The list shall also
15be posted and updated as necessary on the publicly accessible
16Internet website of the department.

17Section 1705-J. Waterfront development projects.

18(a) General rule.--To qualify for a tax credit under this
19article, contributions made to a waterfront development
20organization shall be used by the organization for a waterfront
21development project approved under this section.

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

23(1) A waterfront development organization shall apply to
24the department for approval of a waterfront development
25project as eligible for a waterfront development tax credit
26by submission to the department of an application including
27all of the following information:

28(i) The location of the waterfront development
29project.

30(ii) The type of waterfront development project.

1(iii) A detailed description of the waterfront
2development project, including any architectural and
3engineering drawings.

4(iv) The status of the waterfront development
5project.

6(v) The anticipated start date and completion date
7for the waterfront development project.

8(vi) The life expectancy of the waterfront
9development project and a plan for project maintenance
10following completion.

11(vii) The estimated cost of the waterfront
12development project, the total amount of contributions
13received which have been designated for the waterfront
14development project and the funding source to be used for
15payment of unfunded costs, if any.

16(viii) Analysis of the direct current and future
17economic benefits derived from the waterfront development
18project, including indirect and direct job creation
19projections.

20(ix) The manner in which the organization will do
21all of the following:

22(A) Verify eligibility of costs.

23(B) Monitor progress of the waterfront
24development project.

25(C) Assure that contributions received are used
26for the waterfront development project for which they
27have been designated.

28(x) Any other information required by the
29department.

30(2) The department, in conjunction with the Department

1of Conservation and Natural Resources, shall review
2applications received from waterfront development
3organizations under paragraph (1).

4(3) Within 60 days after receipt of an application, the
5department shall notify the waterfront development
6organization of its approval or disapproval of a waterfront
7development project. If the application is disapproved, the
8notice of disapproval shall include the reasons for
9disapproval. A waterfront development organization shall have
1030 days after receipt of a notice of disapproval to resubmit
11the application.

12(c) Completion.--Upon completion of a waterfront development
13project approved under subsection (b), the waterfront
14development organization shall submit written notice of project
15completion to the department. The notice shall include all of
16the following information:

17(1) Certification that the waterfront development
18project is complete.

19(2) An upkeep and maintenance plan, if applicable to the
20waterfront development project.

21(3) Any other information required by the department.

22(d) Inspection.--Waterfront development projects approved
23under subsection (b) may be subject to inspection by the
24department or its designated agent.

25Section 1706-J. Application for tax credit.

26(a) General rule.--An eligible applicant shall apply to the
27department for a tax credit under this article. An eligible
28applicant shall receive a tax credit under this article if the
29waterfront development organization that receives the
30contribution from the eligible applicant appears on the list

1established under section 1704-J and the department has approved
2the waterfront development project for which the contribution is
3to be used under section 1705-J(b).

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

5(1) Except as otherwise provided in paragraph (2), the
6department may accept applications for tax credits under this
7article not earlier than July 1 of each fiscal year.

8(2) The application of any eligible applicant for tax
9credits available during a fiscal year as part of the second
10year of a two-year commitment or as a renewal of a two-year
11commitment which was fulfilled in the previous fiscal year
12may be accepted not earlier than May 15 preceding the start
13of the fiscal year.

14(c) Availability of tax credits.--Tax credits under this
15article shall be made available by the department on a first-
16come, first-served basis within the limitation established under
17section 1708-J.

18(d) Contribution.--A contribution by an eligible applicant
19shall be made not later than 60 days following the approval of
20an application under this section.

21Section 1707-J. Grant of tax credit and amount.

22(a) General rule.--In accordance with section 1708-J(a), the
23Department of Revenue shall grant a tax credit against any tax
24due under Article III, IV, VI, VII, VIII, IX or XV or under
25Article XVI of the act of May 17, 1921 (P.L.682, No.284), known
26as The Insurance Company Law of 1921, to an eligible applicant
27providing proof of a contribution to a waterfront development
28organization in the taxable year in which the contribution is
29made. The tax credit shall not exceed 75% of the total amount
30contributed by the eligible applicant during the taxable year.

1(b) Additional amount.--The Department of Revenue shall
2grant a tax credit of up to 90% of the total amount contributed
3during the taxable year if the eligible applicant provides a
4written commitment to provide the waterfront development
5organization with the same amount of contribution for two
6consecutive tax years. The eligible applicant shall provide the
7written commitment to the department at the time of application
8for the tax credit.

9(c) Combination of tax credits.--An eligible applicant may
10receive tax credits from the Department of Revenue in any tax
11year for any combination of contributions under subsection (a)
12or (b).

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

14(1) If a pass-through entity does not intend to use all
15approved tax credits under this article, it may elect in
16writing to transfer all or a portion of the tax credit to its
17shareholders, members or partners, in proportion to the share
18of the entity's distributive income to which the shareholder,
19member or partner is entitled, for use in the taxable year in
20which the contribution is made or in the taxable year
21immediately following the year in which the contribution is
22made. The election shall designate the year in which the
23transferred credits are to be used and shall be made
24according to procedures established by the Department of
25Revenue.

26(2) A pass-through entity and a shareholder, member or
27partner of a pass-through entity shall not claim the tax
28credit under this article for the same contribution.

29(3) The shareholder, member or partner of a pass-through
30entity may not carry forward, carry back, obtain a refund of

1or sell or assign the tax credit.

2(e) Restriction on applicability of credits.--No tax credits
3granted under this article shall be applied against any tax
4withheld by an employer from an employee under Article III.

5Section 1708-J. Limitations.

6(a) Aggregate amount.--The total aggregate amount of all tax
7credits under this article shall not exceed $10,000,000 in any
8fiscal year.

9(b) Activities.--No tax credit shall be granted for
10activities that are a part of an eligible applicant's normal
11course of business.

12(c) Tax liability.--The following shall apply:

13(1) Except as provided in paragraph (2), a tax credit
14granted under this article for any one taxable year may not
15exceed the tax liability of an eligible applicant.

16(2) In the case of a credit granted to a pass-through
17entity which elects to transfer the tax credit according to
18section 1707-J(d), a tax credit granted for any one taxable
19year and transferred to a shareholder, member or partner may
20not exceed the tax liability of the shareholder, member or
21partner.

22(d) Use.--A tax credit not used by the eligible applicant in
23the taxable year the contribution was made or in the year
24designated by the shareholder, member or partner to whom the
25credit was transferred under section 1707-J(d) may not be
26carried forward or carried back and is not refundable or
27transferable.

28Section 1709-J. Lists.

29The Department of Revenue shall provide a list of all
30waterfront development organizations receiving contributions

1from eligible applicants granted a tax credit under this article
2to the General Assembly not later than June 30 of each year.

3Section 2. This act shall take effect in 60 days.