Historic Tax Credits News Briefs - February 2017

Tuesday, February 7, 2017

The Oklahoma Incentive Evaluation Commission released, “2016 Tax Incentive Evaluation Report,” Dec. 1, 2016. The commission recommended that Oklahoma retain its state historic tax credit (HTC), but with an annual cap. The report stated that adding a program cap would ensure some measure of future budget predictability. Once a cap is established, the report recommends that projects be accepted on a first-come, first-served basis. The commission found that the 20 percent state tax credit program has been highly successful in rehabilitating historic structures across Oklahoma, with total development investments having increased from $1 million in 2005 to nearly $86 million in 2015. The report is available at www.historictaxcredits.com.

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The Internal Revenue Service (IRS) was scheduled to issue Notice 2017-10 Jan. 23, which concerns syndicated conservation easement transactions. The notice informs taxpayers that certain syndicated conservation easement transactions are identified as tax-avoidance transactions and must be listed transactions and disclosed in each taxable year. The notice specifically applies to transactions that purport to give investors the opportunity to obtain charitable contribution deductions significantly larger than the amount invested–often 2.5 times the amount of the investor’s share of the investment. The IRS says taxpayers who have filed returns taking the position they were entitled to the benefits of this type of transaction should take appropriate corrective action. The notice is available at www.historictaxcredits.com. 

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The Community Preservation Corporation (CPC), with development and preservation partners, announced Dec. 13, 2016, a $19.2 million transaction to transform the historic R.E. Dietz building in Syracuse, N.Y., into a mixed-use development. The mixed-use property will convert the 208,000-square-foot R.E. Dietz lantern factory building, built in 1904, into 92 rental apartments and 37,500 square feet of commercial space. Amenities will include a social/party room, a business technology center, a game room and a fitness room. Financing for the rehabilitation includes a $19.2 million construction loan from CPC and its lending partners Pathfinder Bank and NBT Bank. CPC is also providing a SONYMA-insured $16.2 million permanent loan funded through its agreement with the New York State Common Retirement Fund. The property was awarded a $900,000 grant from Empire State Development through the last round of Regional Economic Development Council funding, and a $517,000 Save the Rain grant from Onondaga County. Additionally, the project has received its Part I and Part II approvals from the NYS Historic Preservation Office (SHPO) and National Park Service to qualify for state and federal HTCs. 

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On Dec. 16, 2016, the Maryland Department Planning, Maryland Historical Trust announced $9 million in tax credits for eight rehabilitation projects throughout the state. The eight recipients of the 2017 Heritage Structure Rehabilitation Competitive Commercial Tax Credits (formerly Sustainable Communities Tax Credits) are Baltimore’s Saint Peter’s School, Home of the Friendless, Peale’s Baltimore Museum, National Enameling & Stamping Company and Auto Outing/Tulley’s Dancing Academy, as well as 302-304 Park Row in Chestertown, Phillps Packing Company, Plant F in Cambridge and Ramocciotti/Professional Arts Building in Hagerstown. A total of 14 applicants applied, requesting $24 million in tax credits.

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Peter Van Loan introduced on Dec. 1, 2016, a private member’s bill in the Canadian House of Commons that would create a 20 percent tax credit for rehabilitation of recognized historic places. Bill C-323 seeks to limit the destruction of Canada’s heritage buildings and encourage the rehabilitation of these culturally significant buildings. The tax credit would be available to properties that appear on the National Register of Historic Places, and would also allow owners to writeoff spending on heritage restoration at a faster rate than currently. To be eligible for the tax credit and accelerated write-off, restoration would have to be certified by an architect as following the Parks Canada published standards for conservation of historic places. 

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Tim Boyle, president of City Property Company announced in early December 2016 that plans for the cleanup and rehabilitation of the former Standard- Coosa-Thatcher plant in Chattanooga, Tenn., will begin in March. The former textile mill will be converted into the Standard Coosa Lofts, a 300,000-square-foot complex on 5.5 acres providing 170 apartments. Rehabilitation will be financed with the use of $11.5 million in federal HTCs and $24.1 million in federal low-income housing tax credits (LIHTCs). Construction costs are expected to total $57.5 million and are slated for completion by late summer 2018. At press time, Mike Mallen, an attorney for the developer, said the project still needed Hamilton County Commission approval.

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At its Dec. 1, 2016, meeting in Washington, D.C., the Advisory Council for Historic Preservation (ACHP) swore in new member Luis Hoyos. Member Leonard Forsman was sworn in as the new vice chairman of the preservation. In addition, members passed several action items including a report and recommendations regarding the ACHP’s public policy initiative for the 50th anniversary of the National Historic Preservation Act and the future of the federal preservation program. ACHP also endorsed a diversity statement regarding internal ACHP business including staff and council member diversity and inclusiveness, as well as supported sections of House and Senate bills regarding the Water Resources Development Act regarding historic properties and the Army Corps of Engineers. ACHP’s next business meeting will be March 22-23 in Washington, D.C.

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