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HB 3658

Relating to court-appointed counsel.

2025 Regular Session Introduced by Kevin Mannix

Provides a 20% credit on qualified costs to convert older office buildings to residential/retail/commercial uses, with green standards and affordable housing requirements.

In committee upon adjournment.
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Bill Summary · HB 3658

HB 3658 — Revitalizing Illinois Downtowns Tax Credit (Introduced)

Purpose / Intent

Create a nonrefundable Illinois income tax credit to encourage adaptive reuse of older office buildings — converting them to residential, retail, or other commercial uses — while promoting green building performance and, for residential conversions, affordable housing.

Key provisions

  • Credit amount: 20% of "qualified conversion expenditures" incurred by the taxpayer for a qualified converted building.
  • Eligible expenditures: Costs properly chargeable to a capital account for converting an office building to residential/retail/other commercial use. Excludes:
    • Acquisition cost of the building/property
    • Cost to enlarge the building
    • Expenditures allocable to tax-exempt use property
    • Expenditures incurred by a lessee on or after conversion completion
  • Qualified converted building requirements:
    • Substantial conversion from office to residential/retail/other by the taxpayer
    • Previously used (or available for lease) as office space, not residential
    • Initially placed in service at least 25 years before the conversion start
    • Eligible for federal depreciation
    • Building is carbon neutral or certified under specified green standards (examples listed: BREEAM, LEED, Green Globes, UL 3223, ENERGY STAR, Envision, ISO 50001 or equivalent approved by DCEO)
    • For residential conversions: at least 20% of units must be rent‑restricted to households at ≤80% of area median income (AMI), and subject to a binding state/local affordable housing financing agreement
  • "Substantially converted": Qualified expenditures during a taxpayer-selected 24‑month period ending in the taxable year must exceed the greater of (a) adjusted basis of the building/structural components (as of the start of that 24‑month period) or (b) $15,000.
  • Project labor agreement: Any construction work included among qualified conversion expenditures must be subject to a project labor agreement.
  • Limits and caps:
    • Per-taxpayer cap: $15,000 maximum credit in a single tax year.
    • For multi‑year projects: the taxpayer may aggregate credits and claim in the final taxable year provided the total does not exceed $15,000 per year for each year of the project.
    • Statewide annual cap: $50,000,000 total credits awarded per State fiscal year, allocated first‑come, first‑served.
  • Carryforward: Unused credit may be carried forward up to 5 taxable years.
  • Pass‑throughs: Credit allocation for partners and S‑corp shareholders is handled per existing rules (Section 251).
  • Administration: Illinois Department of Revenue administers the credit and may adopt rules in consultation with the Department of Commerce and Economic Opportunity (DCEO).

Who is affected

  • Primary beneficiaries: Illinois resident owners of qualifying office buildings who undertake eligible conversions.
  • Secondary effects: Contractors (subject to PLA), local governments (through affordable housing agreements), and DCEO/Revenue for administration; neighborhoods that gain housing, retail, or commercial activity.

Timeline & procedural status

  • Effective date: Act takes effect upon becoming law. Credit available for taxable years beginning on or after January 1, 2026.
  • Legislative actions (selected): Introduced Feb 18, 2025; assigned to Revenue & Finance and related committees; passed the House May 10, 2025; status shows Rule 19(a) / re‑referred to Rules Committee (Mar 21, 2025). Administration details to be set by Department rules.

Potential impact (concise)

  • Incentivizes adaptive reuse of older office stock, with environmental performance and affordable‑housing conditions for residential projects.
  • Fiscal exposure limited by $50M annual statewide cap and $15K per‑taxpayer/year cap (but may be prorated across project years under the bill’s aggregation rule).
  • Implementation requires rulemaking and project labor agreements, which affect procurement and labor arrangements.

Compiled from official sources — confirm details with the bill’s official record.

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