States Consider Bills to Create, Expand, Cut Back Historic Credits

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Tax Credit Advisor, May 2009: Several states are considering bills that would establish, cut back, or expand tax credits for the rehabilitation of historic buildings.

Minnesota Credit

In Minnesota, lawmakers are considering two bills (SF 1724, HR 1974) to establish a state historic rehabilitation tax credit. The Senate measure could be folded into an omnibus tax bill.

The legislation would create a certificated state tax credit equal to 25% of the qualified rehabilitation costs for privately-owned historic residential or income-producing commercial properties. Buildings would have to be (1) listed on the National Register of Historic Places, (2) designated as historic by a certified local government or heritage preservation commission, or (3) be a contributing structure within a certified historic district.

Taxpayers would apply for the credit to the State Historic Preservation Office of the Minnesota Historical Society.

The tax credit could be used to offset state income tax liability. Unused credits could be carried back three years and forward 10 years. Credits could be transferred, sold, or assigned in whole or part.

The legislation would give taxpayers the option, in lieu of the tax credit, to receive an historic rehabilitation mortgage credit certificate. The taxpayer would give this to a lender, who would claim the tax credit, in exchange for a write-down of the principal amount or interest rate on a loan made by the lender for the acquisition or rehabilitation of the historic building.

(Bills: http://www.senate.leg.state.mn.us)

Iowa Legislation

The Iowa legislature in April passed a bill (SF 481) that would amend the state’s historic preservation and cultural and entertainment district tax credit program. This credit is equal to 25% of the qualified rehab costs of eligible historic buildings, including commercial properties, and is applicable against state income tax liability.
The bill would raise to $50 million from the current $15 million the maximum amount of credits that can be approved in any one fiscal year, and mandate annual set-asides for the award of credits based on project type. These categories and the percentage of annual credits awarded would be: projects in cultural and entertainment districts (30%); disaster recovery projects (20%); projects creating over 500 new permanent jobs (20%); projects with $500,000 or less in final qualified rehab costs (10%); and any kind of eligible project (20%). Credits reserved for one category but not awarded could be reallocated for other kinds of projects.

(Legislation: http://www.legis. state.ia.us)

Missouri Credit Threatened

The latest version of a Senate substitute bill that incorporates seven separate bills (including SB 45) would impose a cap of $125 million on the total amount of Missouri’s 25% state historic tax credits that may be authorized in any single fiscal year, starting in FY 2010. Currently there is no cap. In addition, no credits could be authorized after 6/30/15.

A separate bill (SB 376) would bar any customer from participating in an energy efficiency program offering a monetary award of a regulated electric utility if the customer has received Missouri state historic or housing tax credits.

(Bills: http://www.house.mo.gov)

New York State

Identical bills (A 6471, SB 2960) introduced in New York would enhance the state’s historic preservation tax credit. The governor vetoed an historic credit bill last year.
The legislation would modify the tax credit for commercial building historic rehab projects, effective 1/1/10. It would restrict the commercial historic credit to projects in distressed areas; raise the credit rate to 20% from 6% and the per-project credit cap to $5 million from $100,000; make the credit assignable, transferable, and conveyable within business partnerships; and terminate these changes at year-end 2013.

(Bill: http://assembly.state.ny.us)

Maryland

Maryland legislators adjourned without passing either of two identical bills (HB 309, SB 258) to enhance the state’s historic preservation tax credit.

The bills would have extended the program by four years, through 6/30/14; authorized $100 million in state historic credits for commercial projects over this time; and increased the credit rate to 25% for green commercial rehab projects.