Historic Tax Credits News Briefs - March 2015

Sunday, March 1, 2015

On Jan. 30, the Internal Revenue Service (IRS) Office of Chief Counsel released Chief Counsel Advice Memorandum (CCAM) 201505038: Income Inclusion Amount Under Section 50(d)(5). The memo addresses the amount of additional income required to be recognized by a lessee in a historic tax credit (HTC) transaction using a lease passthrough structure. CCAM determines that if the lessor of a qualified rehabilitated building makes an election to treat the taxpayer as having acquired the property for purposes of the investment credit, then the taxpayer must include ratably in gross income an amount equal to 100 percent of the amount of the taxpayer’s credit determined under Section 47. The memo states that the income is based on 100 percent of the credit allowable. CCAM 201505038 is available at www.historictaxcredits.com.

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Sherman Associates, a Minneapolis-based housing developer, announced Jan. 2 the rehabilitation of the Station Plaza in downtown St. Louis. The six-story, 125-year-old brick warehouse, built in 1889 for drying tobacco, will be transformed into 87 studio, one- and two-bedroom apartments with the help of federal low-income housing tax credits (LIHTCs), and state and federal HTCs. Units will be available to residents earning no more than 60 percent of the area’s median income (AMI). The rehabilitation of Station Plaza is expected to be complete by Jan. 1, 2016.

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Zada Development Group, in collaboration with the Dayton Street Neighborhood Association, announced Jan. 8 a $1.8 million Ohio HTC allocation for the construction of Heberle Lofts in the West End neighborhood of Cincinnati. The developers will convert two historic buildings of the 86-year-old Heberle School into 59 market-rate apartments and street-level commercial space. Heberle Lofts will cost $11.2 million and is expected to be completed approximately two years after construction begins. Heberle Lofts will be converted during the first phase and the second phase will focus on the 100-year-old Lafayette Bloom Middle School.

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On Jan. 23, Heritage Consulting Group congratulated Raintree Partners on completing the rehabilitation of the Wilson Building in San Francisco with the use of HTCs. Built in 1906 for retail and office space, the Wilson Building was converted into 67 market-rate loft-style apartments. The nine-story building will also provide 2,000 square feet of commercial space. The renovation of the Wilson Building will cost $22 million.

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The Texas Comptroller of Public Accounts issued guidance Jan. 14 on the certified rehabilitation of certified historic structures tax credit effective for franchise tax reports that were originally due on or after Jan. 1. The guidance lists the provisions of the credit, qualifications for the credit, the application procedure and buying and selling of the state HTC. The credit is up to 25 percent of eligible costs and expenses, placed in service on or after Sept. 1, 2013. To apply for the Texas HTC, several forms must be submitted to the comptroller. An entity that sells or assigns a credit to another entity must provide a copy of the certificate of eligibility, a copy of the audited cost report, Form 05-901 and Form 05-179 to the purchaser or assignee. More information is available at www.comptroller.texas.gov.

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On Jan. 29, Metropolitan LLC announced the pending groundbreaking of the renovations for the Cain Furniture Company building in Birmingham, Ala. The six-story building, also known as the Jefferson Furniture building, will be converted into 25 loft-style apartments. The groundbreaking for the property is expected to take place in the next few months. Project cost will total upward of $6 million. The project was one of 10 properties in 2014 to receive the Alabama Historic Rehabilitation tax credit.

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