Mass. Gen. Laws ch. 23B § 36

Current through Chapter 223 of the 2024 Legislative Session

Section 23B:36 - Program for qualified conversion projects[Effective for tax years beginning on or after 1/1/2025] [Repealed Effective 1/1/2030]

(a) As used in this section, the following words shall, unless the context clearly requires otherwise, have the following meanings:

"Development cost", an expenditure directly related to the construction or substantial rehabilitation of a qualified conversion project, including, but not limited to, the cost of site assessment and remediation of hazardous materials; provided, however, that development cost shall not include the purchase of the property.

"Executive office", the executive office of housing and livable communities.

"Market rate residential unit", a residential unit priced consistently with prevailing rents or sale prices in the municipality as determined by the executive office.

"Qualified conversion project", the rehabilitation of a commercial property, including, but not limited to, commercial centers, office parks and commercial buildings located on main streets or downtown municipal areas, for primary multi-unit residential use or mixed-use, which may include retail or other commercial uses, that:

(i) contains not less than 2 residential units; provided, however, that the project may be a mixed-use development that includes commercial uses in addition to residential units if the building is primarily residential;

(ii) contains at least 80 per cent market rate residential units upon completion of the rehabilitation, to be sold or leased;

(iii) prior to conversion, such building was nonresidential real property, as defined in section 168 of the Internal Revenue Code, all or a portion of which was leased, or available for lease, to office tenants; and

(iv) such building was initially placed in service at least 5 years before the beginning of the conversion.

"Sponsors", as defined in section 25 of chapter 23B.

"Substantial rehabilitation" or "substantially rehabilitated", the necessary major redevelopment, repair and renovation of a property, including, but not limited to, site assessment and remediation of hazardous materials, but excluding the purchase of the property, as determined by the executive office.

(b) The executive office shall establish a program for qualified conversion projects, which shall be administered by the executive office. The purpose of the program shall be to assist in the conversion of commercial properties into residential properties.

(c)

(1) The executive office may certify 1 or more housing development projects as a qualified conversion project:

(i) upon timely receipt of a project proposal requesting the designation as a qualified conversion project from a sponsor; provided, that a project proposal shall be submitted in a form and with information as determined by the executive office, and shall be supported by independently verifiable information and signed under the penalties of perjury; and

(ii) if the executive office determines that the project, together with any municipal resources committed to the project, shall have a reasonable chance of increasing residential growth, diversity of housing supply, supporting economic development and promoting neighborhood stabilization as advanced in the proposal as a qualified conversion project.

(2) Prior to construction, the executive office shall certify that the proposed project meets the definition of a qualified conversion project and the requirements pursuant to paragraph (1).

(3) The executive office shall evaluate and either grant or deny certification of the designation as a qualified conversion project to any project proposal not later than 90 days from the date of its receipt of a complete project proposal. Approval of a project due to the executive office's failure to act within 90 days shall not constitute approval by the executive office of any tax incentives provided under chapters 62 or 63.

(4) The executive office may impose a fee for the processing of applications for the certification of any project under this section.

(5) Prior to construction, the executive office shall certify that all or a portion of the qualified conversion project costs are for construction or substantial rehabilitation and shall identify the development costs.

(d) The executive office shall review each pending certified qualified conversion project, not yet completed, not less than once every 2 years.

(e) The executive office shall review each certified qualified conversion project upon completion and certify that the project is consistent with the requirements of this section, including the development cost and qualified conversion project requirements.

(f)

(1) The executive office may revoke certification of a project if the executive office determines, after an independent investigation, that:

(i) representations made by the sponsor in its project proposal are materially different from the conduct of the sponsor subsequent to the certification and such difference frustrates the public purposes that the certification was intended to advance; or

(ii) the project no longer meets the criteria of this section.

(2) Upon revocation, the commonwealth may bring a cause of action against the sponsor for the value of any economic benefit received by the sponsor prior to or subsequent to such revocation.

(3) A revocation shall take effect on the first day of the tax year in which the executive office determines that a material breach commenced.

(g) There shall be established a tax incentive program for certified qualified conversion projects. After certification by the executive office upon the completion of the project, pursuant to subsection (e), the executive office, in consultation with the commissioner of revenue, may award a tax credit available under subsection (ee) of section 6 of chapter 62 or section 38OO of chapter 63 of not more than 10 per cent of the development cost allocable to total units in a project, as determined by the executive office, to the sponsor of a qualified conversion project. The amount of the credit awarded shall be based on the following factors:

(i) the need for residential development and diversity of housing supply in the municipality;

(ii) the extent to which the certified qualified conversion project will encourage residential development, expansion of diversity of housing supply, support neighborhood stabilization and promote economic development in the zone; and

(iii) the percentage of market rate residential units contained in the certified qualified conversion project. The executive office may limit a credit available to a certified qualified conversion project under subsection (ee) of section 6 of chapter 62 and section 38OO of chapter 63 to a dollar amount or in any other manner deemed appropriate by the executive office.

(h) Annually, not later than December 1, the executive office shall file a report detailing its findings of the review of all certified qualified conversion projects evaluated in the prior fiscal year, including projects evaluated prior to construction, while the project is pending and upon completion, to the commissioner of revenue, the joint committee on revenue and the joint committee on housing. The report shall include, but shall not be limited to:

(i) a list of qualified conversion projects that received certification;

(ii) information about each qualified conversion project, including the site address, project sponsor, range of rents of the residential units, type of residential units, number of each type of residential unit, number of affordable rental units for persons whose income is not more than 60 per cent of the area median income and the number of affordable owner-occupied units for persons whose income is not more than 80 per cent of the area median income; and

(iii) the total amount of development costs for which a tax credit was issued or reserved pursuant to subsection (ee) of section 6 of chapter 62 or section 38OO of chapter 63 for each certified qualified conversion project the year the credit was issued and the completion or estimated completion year of the certified qualified conversion projects.

(i) The executive office shall promulgate guidance or regulations for the administration of this section.

Mass. Gen. Laws ch. 23B, § 23B:36

Repealed by Acts 2024, c. 150,§ 137, eff. 1/1/2030.

Added by Acts 2024, c. 150,§ 5, eff. for tax years beginning on or after 1/1/2025.