Historic Tax Credits News Briefs – July 2019

Tuesday, July 9, 2019

Reps. Earl Blumenauer, D-Ore., Darin LaHood, R-Ill., Terri Sewell, D-Ala., and Mike Kelly, R-Pa., introduced the Historic Tax Credit Growth and Opportunity Act May 17 to bring more value to historic tax credit (HTC) transactions and to encourage redevelopment of smaller, income-producing properties. H.R. 2825 would eliminate the HTC basis adjustment requirement, increase the HTC from 20 percent to 30 percent for properties with rehabilitation expenses of less than $2.5 million, allow the transfer of HTCs as a tax certificate in developments with qualified rehabilitation expenses of less than $2.5 million, make it easier to meet the substantial rehabilitation test and create greater flexibility for nonprofits to partner with developers. Similar legislation led by Sen. Bill Cassidy, R-La., was expected to be introduced in the Senate soon.

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The North Carolina state Senate May 20 passed legislation that includes a provision to extend the sunset date for the state HTC to 2024. S.B. 622 would extend the sunset date for several provisions, including the state HTC, from Jan. 1, 2020, until Jan. 1, 2024. The Senate’s appropriations bill now must be reconciled with the House’s bill before being sent to Gov. Roy Cooper. Both bills include the HTC sunset extension.

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Legislation in South Carolina went into effect May 16 to amend the state HTC definition of rehabilitation expenses for textile mills. S. 440 defines “rehabilitation expenses” to include expenditures that include demolition, environmental remediation and site improvements at textile mill sites, but exclude the cost of acquiring the site or the cost of personal property on the site. In order to calculate the credit for new or rehabilitated buildings on a contiguous parcel, expenses now do not include those that increase the square footage by more than 200 percent for buildings that existed immediately before the textile mill became abandoned.

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Legislation in Georgia to allow taxpayers to take the state HTC up to two years after placing a certified historic structure or home into service was effective June 1. H. 224 was signed by Gov. Brian Kemp in early May. The state HTC was previously taken in the year in which the certified rehabilitation was completed. The state HTC is scheduled to expire Dec. 31, 2024.

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Legislation to create a Hawaii state HTC passed both houses of the Legislature and sent to Gov. David Ige May 6. S.B. 1394 would create a credit worth 30 percent of qualified rehabilitation expenses. The credit would have an annual $1 million statewide cap and would begin July 1 and end Dec. 31, 2024. Ige has 45 days to sign or veto the bill. If he does neither, it becomes law.

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