The California Legislature passed S.B. 451, which would create a State Historic Tax Credit (HTC) for 20 or 25 percent of qualified rehabilitation expenses (QREs) that meet specific criteria and would be in effect from 2021 through 2026. The credit would have a statewide cap of $50 million per calendar year, with $2 million set aside for residences and $8 million set aside for developments with QREs of less than $1 million. The bill would require the Legislature to provide for the expenditure each year in appropriations and would require an annual review of the effectiveness of the credits. Governor Newsom has until Oct. 13 to sign the bill. If he doesn’t sign or veto the legislation, it becomes law.
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House Ways & Means Chairman Kevin Brady (R-TX) has announced he has completed a draft tax measure to fix the “retail glitch” in the new tax law and address many tax extenders. The draft measure is expected to be circulated in the next few days. It is unclear at time of press whether any affordable housing, historic rehabilitation or New Markets Tax Credit provisions are included in Chairman Brady’s draft, which is said to include between 70-80 alterations to last year’s the tax law, HR 1. The measure is a potential vehicle for several NH&RA priorities including fixing the 4 percent LIHTC rate, basis adjustment provisions for the historic credit and an extension of the NMTC, which is set to sunset next year. We will update this story as it develops.
In Fiscal Year (FY) 2017, 1,035 completed historic rehabilitation projects were certified by the NPS, representing $5.82 billion in estimated rehabilitation costs that qualify for the 20% Federal tax credit, according to the Annual Report on the Economic Impact of the Federal Historic Tax Credit in 2017. The report was published through cooperative agreement with Rutgers University, which is responsbile fo the content of the study. Another 1,501 proposed projects were also approved in FY 2017. The report found that many of these projects involved buildings that were abandoned or underutilized and in need of substantial rehabilitation to return them to, or for their continued, economic viability. Based on project data provided by the NPS, PolicyMap (a web-based online data and mapping application) determined that 50% of the certified rehabilitation projects in FY 2017 were located in low- and moderate-income census tracks, and over 79% were located in economically distressed areas.
The Internal Revenue Services (IRS) has issued an updated Draft Form 3468 and Draft Instructions for the 2018 tax year. This is the form that taxpayers must submit in order to claim the federal historic tax credit, as well as several other investment and energy credits. Notably, the form answers a significant question coming out of tax-reform — when the Historic Credit was amended to be claimed “ratably” over 5 years. The form indicates that post-2017 historic credits projects not covered by the transition rules will claim the the credit at a rate of 4 percent per year over five years, beginning with the year placed in service. Prior to tax reform, the historic credit was claimed when the project was placed in service. A final release of this form is expected later this month and it is possible, though unlikely, that the draft form and its instructions could be changed
NH&RA encourages its members to support this important legislation. Sponsors anticipate there is an opportunity to attach the basis adjustment language to a larger legislative package that is likely to move through Congress toward the end of the year. Support for the legislation needs to come from both sides of the aisle to improve its chances of enactment.Read More
Jorjani will serve as ACHP’s first full-time chairman, as the position changed from part-time to full-time with the enactment of the National Park Service Centennial Act in December of 2016.Read More
The National Park Services has published its “Annual Report on the Economic Impact of the Federal Historic Tax Credit for Fiscal Year 2016.” The report, which is produced by Rutgers University with assistance from the National Trust Community Investment Corporation—provides a quantitative analysis of the success of the federal historic tax credit (HTC).
Key findings show that fiscal year 2016 was a record-setting year for historic tax credit use. Activity increased by 32 percent over the last year—the greatest year-over-year increase in the program’s history. A banner year brings the cumulative totals of the credit’s economic impact since 1986 to 42,293 buildings rehabilitated, almost 2.5 million jobs created, and $29.8 billion in federal taxes generated. This last number is particularly significant because it confirms the HTC is a revenue generator for the U.S. Treasury (tax credits issued over this same period total $25.2 billion).
The release of this NPS report is incredibly timely. With pressure mounting for the Republican-controlled Congress to deliver a legislative victory ahead of the 2018 mid-term election season, comprehensive tax reform is now Washington’s top domestic policy objective. Republican leadership is determined to send a tax reform plan to the President before the end of the year. Without frequent and sustained advocacy from constituents over the next several weeks, the HTC is likely to join the many other business tax credits that simply do not make it back into a reformed tax code.