Esta ley crea la "Ley de Créditos Contributivos por Inversión en Nueva Construcción y Rehabilitación de Viviendas de Alquiler para Familias de Ingresos Bajos o Moderados". Establece un crédito contributivo del 50% por cada dólar invertido en la construcción o rehabilitación sustancial de unidades de vivienda destinadas al alquiler para familias de bajos o moderados ingresos. Define los requisitos para calificar, el proceso de solicitud, la disponibilidad y arrastre del crédito, la obligación de mantener las unidades alquiladas a familias de bajos ingresos por un mínimo de 10 años, y las penalidades por incumplimiento. También establece la administración de la ley por parte de la Autoridad para el Financiamiento de la Vivienda de Puerto Rico en coordinación con el Departamento de Hacienda.
To create the "Tax Credits for Investment in New Construction and Rehabilitation of Rental Housing for Low or Moderate Income Families Act", in order to provide tax credits for new investment in new construction, or substantial rehabilitation of housing units, to be rented to low or moderate income families or persons; determine investments that are eligible for the tax credits provided in this Act; define the nature, extent and scope thereof; empower the Puerto Rico Housing Financing Authority to grant, deny or revoke the same; establish norms and provide for the promulgation of the regulations needed to implement this Act; provide penalties, and for other purposes.
It is the public policy of the Government of the Commonwealth of Puerto Rico to guarantee, in the measure that the resources and efforts of the Government will allow, that every family shall have the opportunity to enjoy adequate housing. The problem of the lack of housing and the needs of those persons and families that cannot acquire their own residence due to limitations of income or qualification for credit, is a situation that requires our attention and immediate action. A recent study revealed that an average of 20,640 additional dwellings each year in a period of five (5) years (20022006) is required to meet the growing demand for low cost housing.
With a view of providing each Puerto Rican with the opportunity to enjoy adequate housing, this Legislature intends to stimulate private enterprise to build or restore projects of rental housing units for low and moderate-income people or families. Through this legislation, the
Government of the Commonwealth of Puerto Rico shall grant tax credits for investments in new construction or substantial rehabilitation of housing units to be rented to low-income families. Thus, the problem that has been discussed can be met by increasing the inventory of available low cost housing in the country, while guaranteeing a rental fee that is within the reach of our families with limited financial resources.
It is important to indicate that this tax credit will also provide the necessary tools to stimulate the substantial rehabilitation of existing facilities and structures that will help to renew and repopulate the urban centers of our towns. Finally, the credits provided in this measure shall be an instrument for the generation of greater economic activity, through the promotion of the construction industry in our country.
This Act shall be known and may be cited as the "Tax Credits for Investment in New Construction and Rehabilitation of Rental Housing for Low or Moderate Income Families Act".
For the purposes of this Act, the terms and phrases defined herein shall have the meanings stated below, unless otherwise construed from the text itself. The terms and phrases used in the singular form shall include the plural, and vice versa.
(a) "Agency".- means any department, administration, bureau, office, instrumentality or public corporation of the Commonwealth of Puerto Rico.
(b) "ARPE". - means the Puerto Rico Regulations and Permits Administration, created pursuant to the provisions of Act No. 76 of June 24, 1975, as amended, known as the Puerto Rico Regulations and Permits Organic Act".
(c) "Authority". - means the Puerto Rico Housing Finance Authority created according to Act No. 103 of August 11, 2001, or its successor.
(d) "Bank". - means the Government Development Bank for Puerto Rico, created according to the provisions of Act No. 17 of September 23, 1948, as amended, known as the "Government Development Bank for Puerto Rico Act".
(e) "Change of Control". - means the sale, encumbrance, conveyance, fusion, exchange, barter, or other transfer of ten percent (10%) or more of the stock, interest or shares in the capital of the corporation, partnership or entity, to a single person, or group of persons acting in concert, whether in one single, or several transactions with such purpose, or that results in the holding or control by any person or group of persons acting in concert, of ten percent ( $10 %$ ) or more of the stock, interest or equity in the capital of said corporation, partnership or entity.
(f) "Credit Certification". - means the written concession issued pursuant to the provisions of this Act, by means of which the Executive Director certifies that the Credit is available to be claimed by the owner, and the terms and conditions imposed therein. The owner or assignee or acquirer of the credit must submit a copy of the Credit Certification along with the filing of the Income Tax Return, in order to claim the Credit.
(g) "Qualification Certificate". - means the written communication issued pursuant to the provisions of this Act, whereby the Executive Director
notifies the owner that the Eligible Investment and the Housing Project have pre-qualified for the credits provided under this Act, and the terms and conditions imposed in it. The Qualification Certificate shall indicate the amount of credit that shall be reserved for the owner for the term provided in this Act, while he/she constructs and completes the construction or rehabilitation of the housing project that qualified for the credit, and obtains the final concession of the credit through the credit certification, as provided in this Act.
(h) "1994 Internal Revenue Code". - means the Puerto Rico Internal Revenue Code of 1994, created under the provisions of Act No. 120 of October 31, 1994, as amended.
(i) "Credit". - means the Eligible Investment tax credit for new construction or substantial rehabilitation of rental housing units to be rented to low income families, granted by the Authority with the endorsement of the Department of the Treasury, by means of a credit certification issued under this Act.
(j) "Department of the Treasury". - means the Department of the Treasury of the Commonwealth of Puerto Rico, established by Section VI of Article 10 of the Constitution of the Commonwealth of Puerto Rico, and Article 230 of July 23, 1974, as amended, known as the "Government of Puerto Rico Accounting Act"
(k) "Executive Director". - means the Executive Director of the Authority or the official on whom he/she delegates his/her powers and authority. (1) "Owner". - means the person who is the owner in fee simple of a Housing Project for rent to low-income families or persons.
(m) "Low Income Family". - means any family or person who does not own a dwelling and whose annual income does not exceed what is established, or low or moderate income families by the low-cost housing projects of the Commonwealth of Puerto Rico or the Government of the United States of America, as established by the Secretary of Housing, as said amount varies from time to time.
(n) "Majority Proprietary Interest". - means any person who owns or controls, or has entered into an agreement to own or control, directly or indirectly, at least ten (10) percent of any class of shares of a corporation, of the capital stock of a partnership, or equity in an entity. For the purpose of determining the shares or equity in the capital stock of a partnership, or equity in an entity, the special rules of Section 1028 of the 1994 Internal Revenue Code shall apply.
(o) "Eligible Investment". - means the amount of money furnished by an owner to be used totally and exclusively in the new construction of housing units, or the substantial rehabilitation of existing physical facilities to be destined for rental housing units for low or moderate income families, which can be derived from financing, contributions from the owner's own funds or any other source that the Authority deems as acceptable and consistent with the public policy of the Government established in this Act, as determined by the Authority through regulations. The Authority shall determine through said Regulations, which items of the construction or substantial rehabilitation will qualify for the credits. For the purposes of this Act,
(i) the money used for the acquisition of land or structures to be rehabilitated, (ii) the money that has been invested before the effective date of this Act, and (iii) the money that has been invested prior to a conference with the officials designated by the Authority to discuss the merits of the
housing project ("pre-application conference), shall not be deemed as an Eligible Investment for the purposes of this Act, except in those situations in which, at the discretion of the Executive Director, otherwise justify the best interests of the Commonwealth of Puerto Rico.
(p) "Planning Board". - means the Puerto Rico Planning Board created pursuant to the provisions of Act No. 75 of June 24, 1975, as amended, known as the Puerto Rico Planning Board Organic Act"
(q) "New Construction". - means any housing project whose construction commences after the date of approval of this Act.
(r) "Person". - means every enterprise, corporation, partnership, company, mercantile partnership, special partnership, individual, or group of individuals; a trust, a succession, and any other natural or juridical person.
(s) "Petitioner". - means the owner-developer, promoter or authorized representative of a housing project that has requested credit under this Act.
(t) "Housing Project". - means the development plan of newly constructed housing units or the substantial rehabilitation of one or several existing physical facilities, to be devoted to rental housing units for low or moderate income families, for which the owner has requested credit pursuant to this Act, and for which the owner has obtained the corresponding approvals, endorsements, and permits from the agencies concerned, as required by the applicable laws and regulations, and which will include housing projects such as urbanizations and multi-story housing structures. For the purposes of this Act, the housing project shall have at least twelve (12) housing units to be used for rental to low or moderate-income families of which one (1) shall be prepared and furnished specifically for persons with disabilities. In the event that the Housing Project is developed in an
Urban Center, it may have less than twelve (12) housing units, provided it has the approval of the Municipal Assembly and the Mayor of said municipality.
(u) "Substantial Rehabilitation. - means the qualification of the owner and of the housing project for the rehabilitation, renewal or substantial expansion of one or several existing physical facilities, for which matching funds have been invested for at least twenty-five percent (25%) of:
(i) the value of the facility to be rehabilitated, renewed or expanded, according to the certified appraisal. The value of the substantial rehabilitation shall be determined according to the norms established by the Executive Director through regulations to such effects.
(v) "Maximum Rent". - means the maximum rental rates for which an Owner can rent those housing units under the provisions of this Act, as established from time to time by the Executive Director through regulations to such effects. Criteria that are similar to those provided in the "Low Income Housing Tax Credit Program", United States Internal Revenue Code § 42, also provided, that the Executive Director shall take into consideration factors such as:
(i) the type and size of the housing unit, (ii) the location of the housing project, and (iii) the amount that will be needed for the owner to meet the administration and maintenance expenses of the housing units and receive a reasonable yield on his/her capital investment.
(w) "Occupancy Requirement". - means the condition to maintain the housing units rented to and occupied by low or moderate income families qualified as such, on which credit is computed, for a term of not less than ten (10) consecutive years, as provided in Article 5(a) of this Act, counted from the date that the Executive Director issues the corresponding Certification of Credit.
(x) "Secretary of the Treasury", - means the Secretary of the Department of the Treasury, or the official on whom he/she delegates his/her powers and prerogatives under the Organic Act of the Department of Housing.
(y) "Secretary of Housing". - means the Secretary of the Puerto Rico Department of Housing or the official on whom he/she delegates his/her powers or prerogatives under the Organic Act of the Department of Housing.
(z) "Housing". - means any building, structure, or part thereof that is used and occupied to be lived in by human beings, or is intended to be used for such purpose, and shall include any patio, garden, outbuildings and appurtenances thereof, or that are usually used as such. (aa) "Low-cost Housing". - means any dwelling whose price, if sold to a low-income family, shall not exceed the maximum established by Act No. 47 of June 26, 1987, as amended, known as the "Public and Private Sector Co-Partnership for New Housing Operation Act", as said amount may vary from time to time. (bb) "Housing Unit". - means any structure that is fit for family cohabitation that meets the construction or rehabilitation requirements that apply to the Commonwealth or Federal housing programs, and has all the endorsements, approvals, and permits required by the applicable laws and regulations. (cc) "Autonomous Municipalities". - means those municipalities that have acquired a fifth $\left(5^{ ext {th }} ight)$ level of permit-granting autonomy pursuant to Act No. 81 of August 30, 1991, as amended, known as the "Autonomous Municipalities Act of the Commonwealth of Puerto Rico of 1991".
Section 3.- Tax Credit for Investment in Construction or Rehabilitation of Rental Housing for Low or Moderate Income Families. -
(a) General rule - Subject to the provisions of this Act and the regulations promulgated thereby, every owner of a rental housing project for low income families may qualify for a tax credit of fifty cents ($.50) for each dollar ($1.00) of Eligible Investment used in the new construction or substantial restoring of housing units to be rented to low or moderate income families.
(b) Other Tax Benefits - This credit shall not apply nor be available to any owner whose housing project receives or has received any other tax benefit under other Commonwealth or Federal laws or regulations, that may use, or has used them against the investment in new construction or substantial restoring of rental housing units for low or moderate income families requested under this Act, with the exception of the tax benefits granted under Act No. 47 of June 26, 1987, as amended, known as the "Public and Private Sector Co-Partnership for the New Housing Operation Act".
Section 4. - Credit Availability and Carry-over. -
(a) General Rule. - Credit shall be available to be used by the owner against any tax obligation imposed by Subtitle A of the Internal Revenue Code of 1994, from the date that the Executive Director issues the Credit Certification. The owner shall have to keep the housing units on which he received credit, rented to and occupied by low or moderateincome families for a minimum term of ten (10) consecutive years. For the purpose of computing the income tax, the base of the housing units on which
a credit was received, shall be reduced by the amount taken as credit, but shall never be reduced to less than zero.
(b) Availability of Credit. - Credit may be reclaimed and used after the first tax year following the Executive Director's issues of the Credit Certification.
(c) Credit Certificate. - Credit may be used after the Executive Director, in coordination with the Secretary of the Treasury, certifies the following: (1) That the new construction or substantial rehabilitation of housing units has been fully completed within the term provided in Section 6 of this Act; (2) That the eligible investment was performed according to the itemized costs of new construction, or the cost of substantial rehabilitation of the housing project as submitted by the owner to the Authority. The Executive Director may require the owner to present all those documents and information he/she deems are needed to certify the eligible investment in new construction or substantial rehabilitation of housing units for low or moderate income families, including, but not limited to construction certifications, urbanizing permits and similar documents; (3) That all the housing units by which credit was prequalified were duly rented to low or moderate- income families qualified as such, within a term of one hundred and eighty (180) days counting from the date the construction or rehabilitation of the housing project was completed as certified by the owner. The housing units must be rented for a term of
not less than one hundred and eighty (180) days and under the renting conditions provided in this Act, and pursuant to the regulations adopted thereunder.
(d) Credit Carryover - The portion of the credit which is not used in a specific tax year, may be carried over to subsequent tax years up to a maximum of ten (10 years counting from the date the Executive Director issues the corresponding credit certification.
(a) Occupancy Requirement. - The credit provided under his Act may be enjoyed by the owner, provided that the housing units are kept rented and occupied by low or moderate income families for a term of at lest ten (10) consecutive years, counting from the date that the Executive Director issues the credit certification. The Executive Director may revoke all or part of the credit granted to an owner who fails to comply with the occupancy requirement. If twenty-five percent ( $25 %$ ) of the housing units for which credit was computed are vacant or not rented to low-income families for a maximum term of one hundred and eighty (180) days, it shall not constitute noncompliance with the occupancy requirement. If revoked, and as provided in Section 13(b), the owner shall have to reimburse all or part of the credit granted according to the year in which said noncompliance occurs, as provided in Section 14 of this Act. The owner shall file a sworn statement each year, for the term of ten (10) years mentioned above, at the Main Office of the Authority, with a copy to the Secretary of the Treasury, certifying that the housing units on which the credit was granted, were rented and occupied during the previous year, by low or moderate income families.
(b) Rental terms and conditions. - The housing units on which credit is computed shall only be rented and occupied by qualified low income families for a term of not less than six (6) months for each year, and based on the maximum rent determined by the Executive Director from time to time, as adequate for their rental to families of low or moderate income. Tue owner shall grant a written lease contract to each low income family to which he/she leases a housing unit, consigning in said contract the maximum rent that is applicable and those terms and conditions that the Executive Director determines by regulations.
The new construction or rehabilitation of low cost rental housing units for rent to low or moderate income families must be fully completed in a maximum term of three (3) years and two (2) years, respectively, counting from the date the Executive Director issues the Qualification Certificate. The Executive Director may, at his full discretion, modify or extend the term provided in this Section, if the interests of the Commonwealth of Puerto Rico do so justify it. The Executive Director may again collect the charge or handling fee provided in Section 10 of this Act, for any request for extension of the term provided above.
(a) Assignment, Sale or Transfer of Credit. - Credit provided under this Act may be wholly or partially assigned, sold or otherwise transferred by the owner, only once. For the purposes of this paragraph the change of control of the owner shall not constitute a transfer of the credit provided under this Act.
(b) Notice; Approval - An owner who has assigned, or transferred all or part of his/her credit, as well as the acquirer of the credit shall notify
the Executive Director with a copy to the Secretary of the Treasury, of the assignment, sale, or transfer of credit through a sworn statement to such effects, accompanied by the documents that attest to the assignment or transfer. The sworn statement shall have the information that the Executive Director provides through the regulation promulgated to such effects. The Executive Director, once he/she verifies the validity of the assignment or transfer of the credit, shall issue a certificate of assignment or transfer, as the case may be, which shall be included with the income tax returns of the owner, and the assignee or acquirer of the credit, for the year in which the assignment, sale or transfer of the credit is made. The Executive Director shall notify the Secretary of the Treasury of the certification of the assignment, sale or transfer of the credit.
(c) Tax exemption. - The money or the worth of the property received in exchange for the credit assigned or transferred shall be exempted from taxation under the Puerto Rico Internal Revenue Code of 1994, up to a sum equal to the amount of the credit assigned, sold or transferred. The value of any property received by the owner in exchange for the credit shall be determined in the manner that the Executive Director, together with the Secretary of the Treasury, shall establish, which shall include an appraisal made by a duly licensed appraiser.
(d) Validity of Credit in Case of Revocation. - In the event credit is revoked as provided in this Act, if it had been assigned, sold or transferred, its validity shall not be affected. In said cases, the owner shall be responsible for the reimbursement of the credit as provided in Section 13 of this Act.
If the Authority grants an owner a larger amount of credit than what could be allowed according to the eligible investment, for the new construction or substantial rehabilitation of housing units for rental to low or moderate income families, said excess shall be owed by the owner as taxable income. The Executive Director shall notify the Department of the Treasury of the excess credit as soon as he is cognizant of the error.
(a) Maximum Limit of Credit. - The maximum amount of credit available in a given tax year, to be distributed under this Act shall be fifteen million $(15,000,000)$ dollars; provided, that the Secretary of the Treasury, together with the Executive Director, may authorize an increment in the amount provided herein, for a specific tax year, when the best interest of the People of Puerto Rico merits it. This authorization shall be obtained through legislation to be filed to such effect. Before approving any application for credit, the Executive Director shall obtain a certification from the Secretary of the Treasury on the current amount of credit available for the taxable year in question.
(b) Residual of Credits. - If the Authority does not grant credits in any tax year for the total amount allowed, it shall not use or pass on to the following fiscal year the residual amount of the credits available for the fiscal year in question.
(c) Increase or Reduction of the Owner's Credit. - In those cases that the owner invests more than the amount previously calculated as an eligible investment and the housing project qualifies for a larger amount of credit, the Executive Director and the Secretary of the Treasury may provide it, at their full discretion, provided that the amount of additional credit
granted shall be reduced from the amount of credit available in the year it is granted. The owner shall submit all the documents, evidence and information that the Executive Director deems are necessary to be able to evaluate and certify the increase in the amount of the eligible investment, and the increase in credits.
(a) Application. - Every person who is interested in constructing or substantially rehabilitating rental housing units for low or moderate income families, who wishes to obtain credit pursuant to this Act, shall file an application, under oath, in the central offices of the Authority with the documents and information that are required by the regulations that the Executive Director has promulgated to such effects. The Executive Director shall remit a copy of the application for credit to the Secretary of the Treasury within thirty(30) days after it is filed.
(b) Requirements. - The Executive Director shall establish by regulations, the information and documents that must be included with the application for credit, provided, however, that the following shall be included with the information and documents that the Executive Director must require with the application for credit: (1) Location and description of the housing project, including, but not limited to the type and number of housing units to be rented to low and moderate income families and the number and description of the units to be used for other purposes; (2) Itemized list of the cost items of the new construction or substantial rehabilitation of all the housing project units; and
(3) Nature of the eligible investment and financing method; and (4) A certified copy of the blueprint and construction permit issued and certified by ARPE or the Autonomous Municipality that has completed its territorial ordinance plan.
(c) Filing Fees - Every Petitioner shall include a certified check or postal money order with the application for credit, in the amount of five hundred (500) dollars drawn to the order of the Secretary of the Treasury, to cover the filing and handling costs of the application. The Executive Director may increase this amount form time to time, through regulations to such effects.
(d) Implementation Fees - The Executive Director may charge every owner who files a credit application under this Act, an annual fee that consists of the amount the Executive Director determines is needed to cover the costs of implementing this Act.
(e) Compliance Fees - The Executive Director may charge every owner to whom credit is granted under this Act, an annual fee that shall consist of the sum that the Executive Director determines is needed to cover the cost of verification and validation of the compliance with the obligations imposed in his Act, which in said case, shall not be greater than five hundred (500) dollars.
Section 11. - Evaluation of Application; Qualification Certificate; Bond; Insurance or Performance Bond. -
(a) Criteria. - The Executive Director shall evaluate every application for credits pursuant to the provisions of this Act and the regulations adopted thereby, within one hundred twenty (120) days from
receipt of the application. In the evaluation of every application for credit the Executive Director may consider the following: (1) The nature and amount of the eligible investment to be used in the new construction or substantial rehabilitation of housing units for rent to low or moderate- income families; (2) The type and characteristics of the housing units to be developed or rehabilitated by the owner; (3) The location and environmental impact of the housing project proposed by the Petitioner; (4) The need for housing for low and moderate income families in the proposed area; (5) The characteristics of the Petitioner and experience in the development and rehabilitation of low-cost housing units; and (6) Those criteria that the Executive Director deems are relevant and necessary according to the purposes of this Act and the best interests of the Commonwealth of Puerto Rico.
(b) Endorsements from other agencies - The approval of the credit application shall have the prior endorsement of the Secretary of the Treasury and the endorsements that are determined by the Executive Director through regulations.
(c) Qualification Certificate - The Executive Director shall issue a written determination in a term of not more than one hundred and twenty (120) days from the date of the of the proper filing of an application for credit, by which he/she notifies the owner that the Housing project and the
proposed eligible investment qualify for the credit provided by the provisions of this Act. The Executive Director may specify on the Qualification Certificate, the terms and conditions that must be met to enjoy the credit. The Qualification Certificate shall indicate the amount of credits that shall be reserved for the owner and that the credit shall not be available nor shall be claimable until the Credit Certification is issued pursuant to the provisions of this Act.
(d) Bond, Surety or Performance Bond - Every owner shall submit within thirty (30) days of the issue of the Qualification Certificate, a bond, surety or any other form of warranty that is acceptable to the Executive Director, that is sufficient to respond for any reimbursement or revocation of credit ordered under this Act or its regulations, including any applicable interest, penalties or charges. The bond, surety or performance bond, shall be issued to the order of the Department of the Treasury, in the form, amount, and under the terms and conditions that the Executive Director, in coordination with the Secretary of the Treasury, deems convenient to comply with the purposes of this Act or its regulations. Said bond, surety or performance bond shall remain in effect for the term of ten (10) years while the housing project is conditioned to the occupancy requirement. The bond, surety or performance bond shall be reduced in the measure that the ten 10) years involved in the occupancy requirement of the housing project in question elapse, being reduced in an inverse proportion to the percentages provided in the credit reimbursement table in Section 14 of this Act.
(e) Credit Certification - Once the new construction works or substantial rehabilitation of rental housing units subject to a, credit application under this Act, are completed, and after complying with the requirements and conditions imposed in this Act, the regulations adopted
hereunder and the Qualification Certificate, the Executive Director will issue the corresponding Credit Certification.
Section 12. - Change of Control of the Owner; Transfer of Title of the Housing Project or Transfer of Credit. -
(a) General rule - Any transfer of stock, shares, property or any majority proprietary interest that constitutes a change of control of ownership to another person, and any sale, exchange, gift, or any type of alienation or transfer of title of the housing project or the credit, shall require the prior approval of the Executive Director and the endorsement of the Secretary of the Treasury. If the change of control or transfer of title of the housing project or credit is made without prior approval, the owner shall have to reimburse the credits to the Secretary of the Treasury pursuant to Section 14 of this Act. Notwithstanding the above, the Executive Director may retroactively approve any change of control, transfer of title of the housing project, or the credit, made without his/her approval, when, in his/her judgment the circumstances merit said approval, taking into account the best interests of the Commonwealth of Puerto Rico and the purposes of this Act. Any application for a change of control, transfer of title of the housing project, or the credit, must be approved or denied within the sixty (60) days following its filing. The denial of an application for change of control, transfer of title of the housing project, or the credit, must be done in writing, and shall also itemize the reasons for the denial thereof.
(b) Exceptions - The following transfers or changes of control shall be valid without needing the prior consent of the Executive Director: (1) The transfer of the assets of a decedent to his/her estate or the transfer by legacy or inheritance;
(2) The transfer of stock or shares of the owner when said transfer does not directly or indirectly result in a change of control of the owner; (3) The pledge or mortgage given in the regular course of business with the purpose of providing a guarantee of a bonafide debt. Any transfer of control, title or interest by virtue of said contract shall be subject to the provisions of subsection
(a) of this Section. (4) The transfer by legal operation, by an order of the court, or a bankruptcy judge to a receiver. Any subsequent transfer to a third person who is not the same debtor or former bankrupt shall be subject to the provisions of subsection
(a) of this Section.
(c) Notification. - Every transfer included in the exceptions of subsection
(b) of this Section, shall be reported by the owner to the Executive Director, with a copy to the Secretary of the Treasury, within thirty (30) days after having been made. Noncompliance of this obligation shall bring about the imposition of a fine by the Executive Director, as provided in Section 15 of this Act.
(d) Transfer by Financial Institutions - The financial institution that has obtained a performance credit or other legal proceeding, for having granted or deeded the Qualification Certificate in security as part of the financing of the housing property of the owner, may deed, sell or transfer said credit to a third party as if he/she were the owner, as provided in Section 7 of this Act. The financial institution as well as the grantor or transferor of the credit as third assignee or third acquirer shall be subject to, and shall comply with the provisions of this Act as applicable to them.
(a) Denial and reconsideration. - The Executive Director may deny any application filed under this Act when he/she determines in his/her best judgment that it does not merit the granting of credit, taking into consideration the facts presented, the criteria provided in this Act for the evaluation of the applications for credit, and the other requirements and conditions provided in this Act and in the regulations that are adopted thereby.
Once the owner has been notified of a denial by virtue of the provisions of this Section, he/she may request a first and only reconsideration from the Executive Director, pursuant to the terms and conditions established by the regulations that the Authority promulgates for these purposes, according to the provisions of Act No. 170 of August 12, 1988, as amended. When reconsidering the application, the Executive Director may consider any other term or condition, that does not exceed the benefits provided by this Act, and which, in his/her sound judgment, is needed to ensure the best interests of the Commonwealth of Puerto Rico and the purposes of this Act.
(b) Grounds and procedures for revocation; Recovery of Credit. - The Executive Director may revoke all or part of the Credit granted to the owner under this Act after allowing the owner to appear and be heard. The Executive Director may determine that said revocation shall be effective from the date the owner fails to comply, according to the following cases: (1) When the owner fails to comply with the occupancy requirement, imposes a rental fee that is greater than allowed as a maximum rent, or for noncompliance with any of the obligations that have been imposed under this Act, the
regulations promulgated thereby, or by the terms found in his Qualification Certificate or the Credit Certification, as the case may be. A revocation of Credit under this clause shall bind the owner, his successors or assignees to reimburse the Credit received according to the year that noncompliance occurred, as established in Section 14 of this Act, provided further, that the reimbursement of the credit thus revoked, shall include any applicable interest, surcharges and penalties. This penalty shall be owed by the owner, his successors, or assignees, as taxable income for the following taxable year. (2) When the benefits of this Act have been obtained including but not limited to false or fraudulent representations related to the description of the housing project, its itemization of eligible costs and investment, the description of the housing units to be, or not to be, used for rental to low or moderate income families, compliance with the conditions of the Qualification Certificate, the Credit Certificate, this Act, its regulations, or any other fact or circumstance that, in whole or in part, have motivated the approval of the credit application. The revoking of credit under this clause, shall bind the owner, his successors or assignees, to reimburse the total amount of credit received, plus any applicable interest, surcharges, and penalties. Said amount shall be owed by the owner, his successors, or assignees, as taxable income for the following taxable year.
In case of noncompliance with the occupancy requirement, the maximum rent applicable to housing units, or any other noncompliance of any other obligations and conditions imposed by the Qualification Certificate, the Credit Certificate, this Act or by the regulations promulgated hereunder, in which the Executive Director deems meritorious, the owner shall be bound to reimburse the Department of the Treasury that portion of the credit which he/she is not entitled to use according to the year that the noncompliance occurs, according to the following table:
| IF NONCOMPLIANCE | REFUNDABLE |
|---|---|
| OCCURS DURING THE: | CREDIT |
| First and Second Year | $100 %$ |
| Third year | $90 %$ |
| Fourth year | $80 %$ |
| Fifth year | $70 %$ |
| Sixth year | $60 %$ |
| Seventh year | $50 %$ |
| Eighth year | $40 %$ |
| Ninth year | $30 %$ |
| Tenth year | $20 %$ |
The reimbursement of the credit provided by this Section shall be owed by the owner as income tax, provided, further, that it shall include any applicable interest, surcharges or penalties. In the event that the owner has not used any portion of the credit that he/she is bound to reimburse, said portion of the credit shall be cancelled.
Except when otherwise provided in this Act, the Executive Director shall be in charge of the administration of this Act, and shall exercise the powers, perform the duties, and shall comply with the obligations imposed by this Act. The duties related to income taxes established in this Act, shall be administered by the Secretary of the Treasury.
The Executive Director may impose on any person who infringes any of the provisions of this Act or the regulations promulgated hereunder, an administrative fine of not less than five thousand $(5,000)$ dollars nor more than one hundred thousand $(100,000)$ dollars for each infraction.
The Executive Director, in coordination with the Secretary of the Treasury, shall draft and promulgate within one hundred and twenty (120) days following the approval of this Act, those regulations that are needed to exact compliance and enforce the provisions and purposes or this Act.
Every owner who is adversely affected or harmed by any action of the Executive Director denying a duly-filed application for the benefits of this Act, or revoking and canceling a Credit Certificate pursuant to the provisions of this Act, once the remedy provided in Section 13 of this Act has been exhausted, shall be entitled to a judicial review thereof according to the terms and conditions established by the Regulations to be promulgated by the Authority to such effects, pursuant to the provisions of Act No. 170 of August 12, 1988, as amended. During the filing of the judicial review, the Executive Director is hereby authorized, when, in his judgment, justice
warrants it, to postpone the effective date of any action under those conditions that are required, and to the extent they are needed, to prevent irreparable damage. When said postponement is requested and it is denied, the court before which the review is requested, may decree any procedure that is necessary and appropriate, to postpone the effective date of any action taken by the Executive Director to preserve the status or the rights of the parties, until the termination of the revision procedures, upon furnishing bond to the order of the Secretary of the Treasury, subject to his/her approval and in the amount of the unpaid taxes, plus interest and penalties, plus interest computed for the period of one year at the prevailing legal rate.
Any law, or regulation, or part thereof, of the Government of the Commonwealth of Puerto Rico, or of any municipality, that is in conflict with the provisions of this Act, is hereby repealed, unless it is otherwise provided herein. The provisions of this Act shall prevail over any conflicting provisions of laws or regulations.
If any section, subsection, clause, paragraph, subparagraph, or any other part of this Act were declared unconstitutional by a court with competent jurisdiction, the judgment issued to such effect shall not affect, injure or invalidate the remaining provisions of this Act, and its effects shall be limited to the section, subsection, clause, paragraph, or part of this Act that is declared unconstitutional.
This Act shall take effect immediately after its approval.
I hereby certify to the Secretary of State that the following Act No. 140 (S.B. 795) of the $2^{ ext {nd }}$ Session of the $14^{ ext {th }}$ Legislature of Puerto Rico:
AN ACT to create the "Tax Credits for Investment in New Construction and Rehabilitation of Rental Housing for Low or Moderate Income Families Act", in order to provide tax credits for new investment in new construction, or substantial rehabilitation of housing units, to be rented to low or moderate income families or persons; determine investments that are eligible for the tax credits provided in this Act; define the nature, extent and scope thereof; empower the Puerto Rico Housing Financing Authority to grant, deny or revoke the same; establish norms and provide for the promulgation of the regulations needed to implement this Act; etc., has been translated from Spanish to English and that the English version is correct.
In San Juan, Puerto Rico, today $9^{ ext {th }}$ of October of 2002.
Elba Rosa Rodríguez-Fuentes Director