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State Tax Credits News Briefs - July 2011

A federal appeals court has denied a motion to reconsider the 4th U.S. Circuit Court of Appeals decision in Virginia Historic Tax Credit Fund v. Commissioner of Internal Revenue. In the case, the 4th Circuit Court of Appeals ruled in March that the allocation of the tax credits through partnerships amounts to a sale and should be taxed as income. Some preservation advocates warn that the ruling threatens to cripple historic tax credit (HTC) programs in Virginia and other states. Preservation officials in Virginia have warned that taxation of the state tax credits will make many property rehabilitation projects impossible to finance. The Associated Press reports that Kathleen Kilpatrick, executive director of the Virginia Department of Resources, said preservation groups will now look to Congress for a solution.

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The Ohio Department of Development (ODOD) announced that five community development entities (CDEs) will receive a total of $10 million to spur economic investments under the second round of state new markets tax credit (NMTC) allocations. Cincinnati New Markets Fund LLC, Cleveland New Markets Investment Fund II LLC, Dayton Region New Market Fund LLC, Finance Fund and Northeast Ohio Development Fund LLC each will receive $2 million for a minimum of $5.1 million in investment activity. ODOD estimates that the credits will leverage at least $25.6 million in economic activity. Each allocatee has identified in its respective investment area several potential projects that would benefit from state NMTCs. More information about the program and the allocations is available at www.ohio.gov.

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Iowa has enacted legislation to increase funding under the state's Brownfield/Grayfield Tax Credit Program from $1 million total to $5 million per year for 10 years. S.F. 514 provides for a tax credit worth as much as 24 percent of the cost to redevelop brownfield sites and a 12 percent credit for grayfield sites. If developers meet certain green standards, the brownfield and grayfield credit amounts increase to 30 and 15 percent, respectively.

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WellSpring Resources, formerly known as Community Counseling Center, held an open house and ribbon-cutting at its new location in Alton, Ill. The $7 million development was financed with equity from federal and state NMTCs. Other funding included developer equity and a U.S. Department of Housing and Urban Development Section 108 loan. WellSpring serves more than 3,000 families each year.

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A $27 million project to restore the historic Victory Theatre in Holyoke, Mass. is under way with a $1.2 million state HTC allocation. Built in 1919, the town's last surviving vaudeville theatre was vacant for 30 years until the Massachusetts International Festival of the Arts (MIFA) began raising funds to save the endangered property. At the time of this writing, MIFA had raised approximately $19 million. The theatre is scheduled to reopen in December 2012.

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The Missouri Legislature adjourned without passing bills to cap the state HTC and low-income housing tax credit programs. S.B. 258 would have capped the HTC at $75 million annually and S.B. 280 proposed a $16 million annual cap for the state LIHTC. The Aerotropolis Trade Incentive and Tax Credit Act also failed to pass, the St. Louis Business Journal reported. That bill, S.B. 390, would have created $360 million in tax incentives for shipping companies that build shipping facilities in Missouri and export goods by air from the state.

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State and federal historic tax credits were approved for a project to redevelop Lansing, Mich.'s historic Knapp's department store in downtown, the Lansing State Journal reported. The $20 million mixed-use development, to be named Knapp's Centre, will include residential units; office, retail and restaurant space; and a business incubator for the Lansing Economic Development Corporation, developer Eyde Company said. The $20 million rehabilitation project will receive roughly $10 million in HTCs, a $4.8 million new markets tax credit allocation and other state incentives. Economic development officials approved the project for state renaissance zone credits and HTCs on the same day that Gov. Scott Walker enacted legislation to eliminate all state tax credits beginning in 2012. The Eyde Company expects the development to create as many as 200 construction jobs and 50 permanent positions.

Journal Category:

State Tax Credits

Authors:

Novogradac

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