Give former Governor Taft credit for signing Historic Rehabilitation Tax Credit into Law

Submitted by Norm Roulet on Wed, 01/10/2007 - 05:18.

At the recent Green Affordable Housing discussion held at Cleveland Institute of Art, in association with their Home House Exhibit, Cleveland Planning Director Bob Brown stated that Cleveland needs to see more older properties renovated - we have many great old buildings, they add character and quality to our community, and that is the most environmentally sound strategy. Typically, much more energy is conserved by saving an old building than may be saved by building a new building, even if very energy efficient, because the energy required for creating and constructing all the material of a new building is the greatest factor in overall environmental impact, even when factored over a very long time period. So it is very good news for Cleveland and the environment that, just before leaving office for good, Governor Talf signed Sub HB 149 into law, providing critical tax incentives for the redevelopment of historic buildings in older cities and towns. A priority for NEO economic development strategy should including identifying important properties the community would like to see saved and move them on track to take advantage of these tax benefits - make sure as many of the 100 annual statewide projects are NEO project as is possible.

The new law, which was actively supported by Greater Ohio, is a victory for many historic preservation organizations, in particular Heritage Ohio.   Now known as the Ohio historic rehabilitation tax credit, the new law provides for 100 pilot projects in each of the next two years. It will become effective in 90 days.

Provisions include:

  • Provides for refundable tax credit of 25% of the “qualified rehabilitation expenditures” on eligible projects toward intangibles, corporation franchise, or income tax
  • Projects can be submitted beginning July 1
  • Before a project can be approved, the Ohio Dept. of Development and the Tax Commissioner must certify that it will produce a net gain in state and local tax revenues as a result of the rehab
  • Projects must also be listed on the National Register of Historic Places and verified as being of significance to a National Register Historic District, or individually listed as an historic landmark designated by a local government certified under federal law.

After the two-year trial period, the program will be studied to determine if it met its goals and then be considered for permanent implementation.

No cap on the eligible cost of the rehab was included in the final version of the bill. There is also no language indicating whether residential buildings are to be included; that will be determined when rules and regulations are written. Condominiums and multi-families are potential beneficiaries, but the program is not intended for single-family homeowners.

Gene Krebs, state director for Greater Ohio, said the bill represents, “the best language for historic rehabilitation in the country.

“Rep. Calvert and Sen. Schuring are to be thanked for moving Ohio forward in the national movement to restore and re-use historic structures. This kind of reinvestment in Ohio’s older cities and towns is critical to our economic development and quality of life.”

Update December 13, 2006
Historic Preservation Tax Credit Passes

The Ohio Legislature has passed the long-awaited historic preservation tax credit bill, Am. H.B. 149. The bill, which had passed the House earlier in the year, passed the Senate Wednesday, Dec. 13, with some significant changes. The amended version was passed by the House on Thursday. It now awaits Gov. Taft’s signature.

Appreciation goes to Sen. Kirk Schuring of Canton who moved the bill and its amendments through the Senate, and to Rep. Charles Calvert of Medina, chief sponsor in the House.

The bill provides for a pilot program that would award a tax credit refund of 25% on qualified rehabilitation expenses to 100 projects in each of the next two years. The refundable tax credit provides greater benefit and makes the bill more attractive.

Another change introduced into the bill requires that state officials do a cost-benefit analysis before awarding the credit to a project. Only projects that are projected to bring in additional tax revenues once the building is in use will be eligible for the credit.

Update May 16, 2006. For more information, call 614-258-1713.

The Ohio House has passed Am Sub HB 149, which would create a 25% tax credit for the rehabilitation of Ohio’s vacant and underutilized historic buildings. The tax credit will encourage private investment in historic properties, generate additional jobs and stimulate economic development within existing communities. Additionally, this credit should spur greater investments in smaller commercial projects and Main Street commercial properties of older neighborhoods – particularly where there is a critical need for community revitalization.

The Senate has considered a companion bill, SB 60, but it has not come to the floor for a vote, so the Senate will now take up the House version. Below is a comparison between the two bills, plus more detail about HB 149.

Sub. HB 149 starts the process of encouraging Ohioans to rehab older structures by creating what amounts to a pilot program with 20 projects over a one-year period. and a credit maximum of $250,000 per project. Sub HB 149 only would also require the Dept. of Taxation to appraise the building rehabbed to determine its appreciation for a study to be made available. There is no mention of a more involved economic analysis.

SB 60 has no cap on either the number of participants or the amount of tax credit, and allows the credit for residential purposes. Both make the credit assignable or transferable to another entity.

Quick view Sub. HB 149

  • the credit is limited to 20 projects for one year
  • the per building credit was increased from $50,000 to $250,000
  • no owner occupied residential is eligible
  • projects require both "before" and "after" appraisals
  • documentation of expenses must be made available to the state historic preservation office on request

What is a tax credit?

A tax credit is a dollar-for-dollar reduction in taxes owed. The State Investment Tax Credit is based on historic building rehabilitation costs, equaling 25% of qualified rehabilitation expenditures. If the amount of the credit exceeds the amount of tax otherwise due for any year, the excess may be carried forward (ten years in Sub HB 149 and until used in SB 60).

What buildings are eligible?

Historic buildings in Ohio that are individually listed in the National Register of Historic Places, certified as contributing to a registered historic district, or designated by a local government.

Who can apply?

Owners holding the fee simple interest in or qualified lessees of historic buildings in Ohio.

What expenditures qualify?

Expenditures for rehabilitation of an historic building, including architectural or engineering fees and cost of preparing National Register nominations. Qualified expenditures do not include acquisition costs or expenditures to expand or enlarge a building. Qualified expenses will mirror the federal tax credit program.

What is the application process?

Owners or qualified lessees will apply to the Ohio Historic Preservation Office for a rehabilitation tax credit certificate. The certificate will be issued if: (1) the building is a historic building, (2) the rehabilitation meets the Secretary of the Interior’s Standards for Rehabilitation, and (3) the qualified rehabilitation expenditures meet certain threshold levels ($5,000 for non-income-producing properties and the greater of $5,000 or the building’s adjusted basis for income-producing properties). An application fee will be charged for administrative purposes.

Can the tax credit be “assigned” or transferred?

Under SB 60 and Sub HB 149 the credit is assignable or transferable. The owner or qualified lessee to whom a rehabilitation tax credit certificate is issued may assign the certificate, or a certificate share, to any other person. This means that other investors can make use of the tax credit, including a mortgagee under a loan agreement.

When will the credit be available?

The credit may be claimed for return years beginning on or after January 1, 2006 in SB 60, and January 1, 2007 under Sub HB 149. Application forms will be available six months after the legislation is passed.

—Heritage Ohio and the Cleveland Restoration Society contributed information to this page

 

??? Home Owners ???

How might this bill help individual homeowners? 

There is an old yellow brick building on Euclid Ave in East Cleveland - in the same block and same side of the street as Jordan Dental (a HORRIBLE adaptation / add-on to an otherwise wonderful old building) and Cummings Funeral Home.

There is a very similar building on Superior near Mount Nebo. 

They may not be historic, and its scarey to think if they are even saveable.  (One might be as it has tenants, homeowners in the townhouse units.)  But I have often thought they would be WONDERFUL buildings if restored.

Just thoughts and ideas.

The building on the Lakeview Cemetry side of Euclid right next to the Marathon station and across the street from the Hough Bakery now empty lot - is that IN Cleveland or in East Cleveland?  The sign for East Cleveland is right there, but sometimes the actual jurisdiction can be actually a few feet one way or the other.

Just wondering ....

KMaCK
***************

Tax credits and idea garage

I'm not sure where the tax credit situation is right now, but there are Federal and state - more for investment property than residents. But there are programs for residents. Contact the community development director Angela Bennett in East Cleveland - she is excellent. You can find her contact info at http://eastcleveland.org

The property next to the Marathon Station is very interesting and historic in several ways, as it was the studio of very important artist Ed Mieczkowski and his art space called Idea Garage. The property has three interesting buildings and a big lot - it should definitely be preserved.

It is part in Cleveland and part in East Cleveland. It was sold recently and is back on the market. I believe the owners wanted to put ministorage there - I don't know what happened with that.

Disrupt IT