This was supposed to be a traditional Monday news roundup, but . . . well, the weekend got the better of me, and then I heard that the Legislature was finally working the historic tax credit bill through its conference committee and other blah-blah-blah–I don’t know any of the nitty-gritty about how a bill becomes a law, and I don’t want to know.
Here’s where we are, as far as I can tell.
I try hard to stay far, far away from politics and the Legislature, so I may be reading this wrong, but from what I can make out on the Legislature’s handy bill status website, the Historic Preservation Tax Credit is still alive and the conference report has been adopted by both houses. As you may recall, the state income tax credit hit its ceiling last fall, and several big preservation projects have been stalled since then, which you can read up on in the March 28 news roundup. The last we heard of the bill (at least in the Senate version, SB2922, introduced by Sen. Fillingane), it had two features that were a change from the past versions of the credit, namely, the introduction of an annual cap on the credit, and the strange fixation on eliminating single-family residences from eligibility to receive the credit. This looked to me like a typical crony capitalistic move by big developers to grab all the money and leave small-time homeowners in historic neighborhoods out standing in the cold.
Well, as it turns out, at least from my reading of the latest bill, both of those features have remained intact, although with some amendments from the House. You can read it yourself and see what you think (I think this is the final version approved on Monday evening), but I believe the new tax credit bill eliminates “single-family” residences from eligibility (p.2):
however, the term “eligible property” shall not include a single-family dwelling unless:
(i) A certificate evidencing the eligible credit has been issued to the taxpayer by the department prior to July 1, 71 2016, that applies to such dwelling; or
(ii) The dwelling is designated as a National Historic Landmark under the National Historic Landmarks Program.
Weird. What’s the point of this?
But I guess duplexes and apartment complexes are still eligible? What if your mother-in-law is living with you, does that count? If so, I predict a wave of mothers-in-law moving in with their children just long enough to qualify.
The final (?) bill raises the credit’s maximum total to $120 million from the current $60 million, which I think means we have another $60 million? But in a big change, it imposes a single-year cap of $12 million (p.6).
The department shall not issue certificates evidencing the eligible credit which, when combined with certificates of eligible credits issued prior to July 1, 2016, will result in credits being awarded in excess of Twelve Million Dollars ($12,000,000.00) in any one (1) state fiscal year.
My dad, the engineer, always said, “Make sure to look a gift horse in the mouth, or you’ll get stuck spending money on a sick horse with bad teeth.” So, I’m not sure what to say here without seeming churlish. I’m glad to have the credit back (knock on wood) for the big projects, but losing the residential aspect of the credit hurts historic neighborhoods and small property owners all over the state. Houses that might have been bought and fixed up may now go on rotting down instead. Historic neighborhoods that are struggling and might have come back, may now just fall off the edge.
Does the gift horse have bad teeth? A few cavities, at least.
Categories: Preservation Law/Local Commissions, Renovation Projects
If you own a home that was previously eligible for state rehabilitation tax credits, but is no longer eligible, please ask your legislators why they made this change. Be sure and ask them how much the tax credits for owner-occupied homes cost the state in revenues and, the more important question, how much tax revenue the rehabilitation work generated for the tax coffers. It would also be worthwhile asking them what the effect of denying the credit to homeowners of historic houses will be on the stability of historic residential neighborhoods and the property tax revenues they generate.