Historic Tax Credits News Briefs - April 2021

Bills introduced in the Tennessee Legislature in early February would establish a state historic tax credit (HTC) worth 25% of qualified rehabilitation expenditures, with a 5% bonus for properties in specially designated areas. S.B. 678 (and an identical bill in the Tennessee House) would mirror the federal HTC with the addition of the bonus for designated areas (which include designated Tennessee main street communities or downtown communities, federal opportunity zones, counties with populations of less than 500,000, Tier 3 or Tier 4 counties and disaster areas). The state HTC would have a statewide annual cap of $5 million and 65% of the annual allocation would be reserved for projects in the special designated areas. The credit would be taken in one year with an individual cap of $500,000 per taxpayer, although it could be carried forward for up to seven years if the credit exceeds tax liability. The credit would apply to properties that began construction Jan. 1, 2020, or later and would be repealed Dec. 31, 2025. All seven states that border Tennessee currently have state HTCs.

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A bill in the Mississippi Legislature would make the state HTC transferrable and would set an annual cap of $3 million per taxpayer. S.B. 2831 would allow the state HTC to be transferred once, beginning July 1, 2021. The legislation also would set the annual cap per taxpayer per fiscal year. Mississippi’s HTC is for 25% of qualified rehabilitation expenditures and does not currently have a transaction or taxpayer cap.

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A bill introduced Feb. 3 in the Maryland Senate would increase the annual statewide HTC cap for small commercial properties from the current cap of $4 million to $5 million. S.B. 659 would affect properties with qualified rehabilitations expenditures of $500,000 or less.

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Two pieces of legislation introduced in the Minnesota Senate in January would extend the state’s HTC looming expiration date–one until 2026, the other permanently. S.F. 318 would extend the state HTC until 2026, allowing allocation certificates issued before 2027 to be in effect through 2029. S.F. 685 would repeal the sunset date and make the credit permanent. There are identical versions of both bills in the Minnesota House of Representatives. Minnesota’s state HTC is worth 100% of the federal HTC and has a sunset date of June 30.

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A bill introduced in the Kentucky House of Representatives Feb. 2 would increase the statewide HTC cap, increase transaction caps and encourage rural development. H.B. 344 would increase the statewide annual cap from $5 million to $30 million and would increase the annual individual cap for non-owner-occupied property from $400,000 to $5 million. The bill would also allow a 30% state HTC for development in a rural county (defined as a county with a population of less than 50,000) and reserve 40% of the statewide cap for rural counties. The changes would take place after April 30. The Kentucky state HTC is currently for 30% of qualified rehabilitation expenditures for owner-occupied residential properties and 20% for other properties.

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A bill introduced in the North Carolina House of Representatives Feb. 10 would create a 5% bonus under the state HTC program for properties initially used for education that are placed into service for that purpose after rehabilitation. H.B. 70 would apply the bonus credit proportionately for properties that are used for multiple purposes. The North Carolina HTC is 15% for the first $10 million of qualified rehabilitation expenditures and 10% for amounts more than $10 million to $20 million. The educational bonus would be effective for tax years beginning on or after Jan. 1, 2021.

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The Illinois Rivers Edge Tax Credit, the state HTC, would be extended five years under a bill introduced Feb. 9 in the state Legislature. S.B. 157 would extend the sunset date from Jan. 1, 2022, to 2027. The credit is for 25% of qualified rehabilitation expenditures in areas that are located within the River Edge Redevelopment Zone and meet four other qualifications.

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A bill introduced in the Illinois state Senate Feb. 26 would create a Lincoln-Douglas state historic tax credit (HTC), applicable to historic properties in seven cities. S.B. 1880 would create a 25% credit for qualified expenditures, effective immediately for the municipalities of Ottawa, Freeport, Jonesboro, Charleston, Galesburg, Quincy and Alton. The existing Illinois River Edge HTC applies to properties in five cities within the River Edge Redevelopment Zones.

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The Georgia Department of Revenue announced Feb. 17 a proposed rule and a hearing to address changes in the department that oversees the state HTC incentive. Georgia S.B. 473 changed the certifying agency for the credit from the Georgia Department of Natural Resources to the Georgia Department of Community Affairs.

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A bill introduced in the Rhode Island General Assembly Feb. 10 would eliminate the sunset provision for the state HTC. The credit is currently set to expire when the maximum aggregate credits is exhausted or June 30, 2021, whichever comes first. H.B. 5458 would extend the credit indefinitely.

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The Arkansas state HTC would increase its annual allocation and be extended by 10 years under legislation introduced Feb. 24 in the state House of Representatives. H.B. 1555 would increase the annual cap on the state HTC from $4 million to $10 million and would extend the sunset date from Dec. 31, 2027, to Dec. 31, 2037.