Historic Tax Credits News Briefs - August 2021

Friday, August 6, 2021

Sens. Ben Cardin, D-Maryland; Bill Cassidy, R-Louisiana; Maria Cantwell, D-Washington; and Susan Collins, R-Maine, introduced the Historic Tax Credit Growth and Opportunity (HTC-GO) Act in late June. The legislation is identical to the 2019 version of the bill, which would provide an increase in the historic tax credit (HTC) percentage to 30% from 20% for the first $2.5 million of qualified rehabilitation expenditures for smaller projects; provide a drop in the substantial rehabilitation test threshold from 100% to 50% of the adjusted basis; eliminate the HTC basis adjustment; eliminate the Internal Revenue Code (IRC) Section 50(d) income recognition requirement and more. The HTC-GO Act may be included in infrastructure legislation later this year.

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The Internal Revenue Service (IRS) published in June an updated frequently asked questions (FAQ) document concerning the federal HTC. The questions addressed included eligibility and definitions, qualified rehabilitation expenditures, basis and several other key aspects surrounding HTC. The FAQ provides a quick overview of the HTC incentive, as well as references to the relevant sections of the IRC, key Treasury Regulations and other IRS guidance.

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Texas Gov. Greg Abbott signed legislation June 14 that amends the state HTC regulations to make expenses for a nonprofit corporation to rehabilitate a historic structure ineligible for the HTC if the structure is leased to a tax-exempt entity in a disqualified lease. The law takes effect Jan. 1, 2022.

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Illinois Gov. J.B. Pritzker signed legislation June 22 to implement the state budget, including provisions to extend the sunset date for the state’s River Edge HTC and the state credit for affordable housing donations. The law extends the sunset date for the River Edge HTC from Dec. 31, 2021, to Dec. 31, 2026. The credit is for 25% of qualified rehabilitation expenditures in the River Edge Redevelopment Zone that meet four other qualifications. The legislation similarly extends the sunset date for the affordable housing donation credit, which is worth 50% of the donation.

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Minnesota Gov. Tim Walz signed legislation in July that extended the state HTC for one year, to June 30, 2022. The extension was included in an omnibus tax bill. The Minnesota HTC is worth 20%, matching the federal HTC. It can also be taken as a grant worth 90% of the federal credit.

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The Ohio Development Services Agency announced June 30 nearly $35.9 million in Ohio Historic Preservation Tax Credits to rehabilitate 51 buildings. Buildings in Newark, Urbana, Cleveland, Akron, Canton, Toledo, Van Wert, New Lexington, Cincinnati, Xenia, Dayton and Springfield were awarded credits, including the former home of Cleveland AM radio station WHK as well as the former home of the Akron Beacon-Journal newspaper, a Toledo post office and a bevy of ongoing changes to Cincinnati’s Over-the-Rhine neighborhood. Three developments topped out at $5 million apiece. Together, the projects are expected to leverage as much as $368 million in investments.

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Legislation introduced in June in the Delaware General Assembly would extend the state HTC nine years. S.B. 182 would extend the credit’s sunset date from June 30, 2021, to June 30, 2030. Delaware’s HTC is for 20% of qualified expenditures for properties eligible for the federal HTC. Delaware’s state HTC has an $8 million annual cap. The legislation had passed the state’s House and Senate as of June 29.

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The National Park Service (NPS) announced its plans June 7 to pull a March 2019 proposal to change regulations concerning properties listed in its National Register of Historic Places (NRHP). The proposed rule would have included changes to implement 2016 amendments to the NRHP, allowed the owners of a majority of land area in a proposed historic district veto power over its listing, extended the timeline to respond to appeals of the failure of a nominating authority to nominate a property for inclusion in the NRHP and other minor changes.

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The NPS released in June its new flood adaptation guidelines to help property owners make their historic buildings–including those financed with HTC equity–more resilient to flooding risks while preserving their historic character. Guidelines on Flood Adaptation for Rehabilitating Historic Buildings includes guidelines to help property owners identify and evaluate adaptation options to best preserve the historic character, site and setting of their buildings.

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A pair of former NASA buildings in Fairview Park, Ohio, are part of a $46 million development using $4.5 million in state HTCs to convert them into luxury apartments and a hotel. Developer Ceres Enterprises and investor Citiroc Real Estate Company started work in 2020 on the 200,000-square-foot investment. The Centaur, the apartment building, will host 84 homes while the hotel, The Orbit, will have 54 rooms available. The development is scheduled for completion later this year.

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The Iowa Economic Development Authority (IEDA) in May released its Historic Preservation Tax Credit Program 2020 Progress Report. This report includes data from July 1, 2019, through June 30, 2020. During that period, IEDA registered 33 projects for tax credits and allocated $44.4 million in tax credits, and IEDA and the Iowa Department of Cultural Affairs issued tax credits for 49 projects totaling $32.9 million, including tax credits issued for reserved projects.

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Legislation in Maryland took effect July 1 to expand the types of property eligible for its state HTC. The legislation expanded the definitions of “certified historic structures” and “single-family, owner-occupied residences” to include structures located on property owned by the Maryland Department of Natural Resources, occupied by a person under an agreement with the department that allows the occupant to pay for the structure’s rehabilitation as a condition of occupancy, and meets one of the criteria to be designated as a certified historic structure or be eligible to be listed in the National Register of Historic Places as determined by the director of the Maryland Historical Trust.

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The Rhode Island Division of Taxation issued a final decision and order June 29 that a taxpayer’s tax credits were deemed null and void after the taxpayer failed to provide supporting documentation for the quarterly reports and the properly remained idle for more than six months. The decision determined the division was within its province to deny the credits allocated in August 2015 after the taxpayer’s development remained idle from October 2016 to March 2018. The division said the decision was consistent with statute and regulation.

Journal Category: 
Historic Tax Credits
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