§ 42-64.20-5. Tax credits. [Effective January 1, 2023.]

(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.

(c)  The commerce corporation shall develop separate, streamlined application processes 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;

(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 (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.