Historic Tax Credits News Briefs – November 2019

Senate Bill 451 to create a California state historic tax credit (HTC) was signed by Gov. Gavin Newsom Oct. 9. The bill will create a state HTC for 20 or 25 percent of qualified rehabilitation expenses (QREs) that meet specific criteria. The credit will have a statewide cap of $50 million per calendar year, and would be in effect from 2021 through 2026. In addition, there would be $2 million set aside for residences and $8 million set aside for developments with QREs of less than $1 million. The credit will be in effect from 2021 through 2025 but will require the Legislature to provide for the expenditure each year in appropriations and require an annual review of the effectiveness of the credits.

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The annual report from Rutgers University and the National Park Service (NPS) released in September reported that properties financed by federal HTCs resulted in 128,500 jobs and $7.7 billion in rehabilitation investment in the fiscal year 2018 (FY 2018). The Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2018 reported that the NPS certified 1,013 historic rehabilitation projects in FY 2018, representing $6.9 billion in estimated rehabilitation costs that qualify for the 20 percent federal HTC. The reports says that 51 percent of certified rehabilitation projects were in low- and moderate-income census tracts and 75 percent were in economically distressed areas. The report says that over the history of the HTC program, the credit has yielded $35.9 billion in federal tax receipts, compared to $30.8 billion in credits allocated. The report is available at www.historictaxcredits.com.

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The Missouri Department of Economic Development published in the Oct. 1 Missouri Register amendments to the state HTC program. Amendments include updates to program definitions and clarifications to the application process and application considerations. Also included is clarification of state HTC certificate issuance requirements, the circumstances under which a project can have multiple construction periods, the treatment of developer fees and general contractor requirements, the treatment of nonprofit entities, and the administrative closure process for inactive projects. Amendments become effective 30 days after publication in the Code of State Regulations.