Supporting Re-authorization of our State Historic Rehabilitation Tax Credit

03/01/2016
By Preservation Maryland

With the support of Preservation Maryland, legislation is moving forward that would alter and extend the state’s historic rehabilitation tax credit for an additional five years.

The re-authorization legislation is House Bill 939 and Senate Bill 759

“Altering the definition of “qualified rehabilitation expenditure,” for purposes of the sustainable communities tax credit, to exclude any amounts funded by federal grants; repealing the requirement that the competitive award process for the award of initial credit certificates favor underrepresented jurisdictions; extending the termination of the sustainable communities tax credit from July 1, 2017, to July 1, 2022; etc.”

St. Michael’s Church in Baltimore, a 2015 tax credit recipient.

Preservation Maryland Strongly Supports HB939/SB759 with the Following Minor Amendments:

PRESERVATION MARYLAND OPPOSES NEW POLICY PREVENTING FEDERAL FUNDS AS PART OF COSTS

The legislation as currently configured prevents using federal grants as a portion of project costs – a problem for non-profits engaging in historic rehab and workforce housing development. Preservation Maryland opposes this policy and is asking legislators to amend the language to remove this new complication.

PRESERVATION MARYLAND SUPPORTS REVERTING TO ORIGINAL NAME

The current legislation keeps the name “Sustainable Communities Tax Credit.” Preservation Maryland has requested reverting back to, “Historic Rehabilitation Tax Credit,” which more accurately reflects and explains the intent and purpose of the program. While a laudable goal to connect preservation to sustainability, the brand has been compromised and the current name causes more confusion than anything.

SUSTAINABLE COMMUNITY REQUIREMENT

The requirement that projects, particularly small business credit projects, are located in DHCD designated “Sustainable Communities” has been particularly complicating and has been a barrier to use of the credit in rural areas. To date, only $724,096 of the initial $4 million appropriation for small commercial projects has been awarded. Preservation Maryland joins with other organizations and businesses to request that this requirement be eliminated for small commercial projects.

What else does the re-authorization accomplish?

The credit would be extended for an additional five years, until 2022.

The requirement to consider “underrepresented communities” would be eliminated from the scoring process of awarding tax credits – but the 60% cap on the total amount Baltimore City projects could receive in any given year would be preserved. The “underrepresented communities” requirement was administratively difficult and its elimination will have little to no effect on the issuance of tax credits on any municipality.

What doesn’t this re-authorization accomplish?

Unfortunately, this is an “authorizing” bill – and does not impact appropriations for the credit. Since this program is an appropriated tax credit, it is dependent on the Administration to provide a yearly budget allocation. With just $9 million currently available, sustained advocacy will be necessary to increase available tax credits for this important program.

Next Steps for Re-authorization

The House & Senate will hold hearings on the bills and Preservation Maryland will provide written and oral testimony. Any amendments may be considered to address constituent concerns before a final bill is presented for approval. You are encouraged to show your support for re-authorization by contacting Senator Richard Madaleno, the Senate sponsor of the bill, or Delegate Jay Walker, House bill sponsor.

Preservation Maryland

Preservation Maryland is Maryland’s first and largest organization dedicated to preserving the state’s historic buildings, neighborhoods, landscapes, and archaeological sites.

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