Historic Tax Credits News Briefs – August 2018

Tuesday, August 7, 2018

Legislation to eliminate the existing basis adjustment requirement for historic tax credit (HTC) properties was introduced June 13 by Sens. Bill Cassidy, R-La., Ben Cardin, D-Md., Susan Collins, R-Maine, and Reps. Darin LaHood, R-Ill., and Earl Blumenauer, D-Ore. A press release from Sen. Cassidy’s office said the legislation brings the HTC in line with other tax credits claimed over multiple years, including the low-income housing tax credit (LIHTC).

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The Alabama Department of Revenue adopted Rule 810-3-137-.02, Historic Rehabilitation Tax Credit of 2017–Availability, Claiming and Transferability of the Historic Rehabilitation Tax Credit. The rule was effective July 14, and provides guidelines and procedures to be used by the department in the administration of the state HTC. The new rule provides that the owner of a project that has been issued a tax credit certificate must forward a copy of the certificate to the department within 30 days from the date of issuance. Any nonprofit allowed a tax credit must file an Alabama Income Tax Return for the tax year the project is placed in service to claim the credit. Any tax credit transferred must be at a value of at least 85 percent of the present value of the tax credits. Before the effectiveness of a transfer, the transferor must file a transfer statement with the department along with a copy of the draft or final transfer agreement, a copy of the credit certificate and a $1,000 fee for each transferee listed on the statement. The department will issue a transfer tax credit certificate to each transferee for the amount listed on the transfer statement within 30 days after receipt of the executed transfer agreement.

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Delaware Gov. John Carney signed legislation July 1 to increase the annual statewide cap on state HTCs to $8 million for fiscal years 2019-2024. The previous cap was $6.5 million. HB 475 also appropriated $6 million to the Affordable Rental Housing Program, which is to be used to leverage other sources, such as LIHTCs. The bill is available at www.historictaxcredits.com.

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Missouri Gov. Mike Parson signed into law S.B. 773 July 5 to reduce the annual aggregate cap of state HTCs from $140 million to $90 million for each fiscal year beginning July 1, 2018. An additional $30 million in state HTCs above the $90 million cap may be authorized for projects in qualified census tracts. Projects approved for HTCs and those that have applied for HTCs and that meet certain requirements before Oct. 1, 2018, are exempt from the cap. The law requires the Department of Economic Development to consider additional factors in determining whether to award HTCs to a development, including its net fiscal benefit, size and quality. The law also shortens the commence-rehabilitation requirement to within nine months of the date of approval for tax credits, rather than two years. The bill is available at www.historictaxcredits.com.

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The Kansas Court of Appeals June 8 upheld the Board of Tax Appeals’ (BOTA’s) determination that a hotel qualified for Kansas rehabilitation tax credits. The court ruled that BOTA correctly determined that no provisions in the Kansas statute allow for the picking and choosing of parts of a building eligible for qualified expenditures, and the department added requirements not present in the statute. The Department of Revenue’s position was such that renovation work did not qualify was neither based on any provision in Kansas Statutes Annotated Section 79-32,211, nor was there any statutory language to provide for separate consideration of portions of a building that otherwise qualifies as a historic structure. According to the department, anything more than 50 years old is considered historic, but the court of appeals found nothing that supports either the 50-year rule or authorizing a split consideration of a “qualified historic structure” into parts that are more than 50 years old versus parts that are not. Therefore, the entire structure was a qualified historic structure, and the expenditures were made under a qualified rehabilitation plan. The ruling is available at www.historictaxcredits.com.

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Developers Josh Jeffers and Tony Janowiec received $9.5 million in state HTCs in mid-June for the rehabilitation of the Milwaukee Athletic Club building. Developers will renovate the 1917 structure and re-lease a portion of it to the Milwaukee Athletic Club. Also planned is a 96-room hotel and street-level restaurant. The $47.4 million project will be completed in two phases, with rehabilitation to begin in August. Completion is set for summer 2020.


 

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