On November 3, 2016, Downtown Colorado, Inc. hosted a Development and Improvement Districts (DIDs) Forum focused on using historic tax credits. Below is a summary from that presentation, given by Barbara Stocklin-Steely. 1.
Federal Historic Tax Credits
There are two types of Federal tax credits, administered by the National Park Service: a 20% credit, for historic (listed on the National Register or contributing to a National Register District), income producing properties; and a 10% credit for non-historic (not listed) properties built before 1936, that are income-producing. Because of the time and work involved, it is generally not worthwhile for projects For more information, and to see a list of qualified expenditures: NPS Tax Incentives
There are 30 states that have historic tax credits, modeled on the federal program. Colorado is lucky to have one of the nation’s most robust historic tax credit programs.
History Downtown Silverton (photo by Jamie Shapiro)
2. Colorado Historic Tax Credit Round 1 (1990)
The Colorado Tax Credit began in 1990. It can be administered by History Colorado or by a locally designated authority (CLG). It is a 20% tax credit and follows similar guidelines as the Federal tax credit. The minimum is much lower however, with a project minimum of $5,000. To be eligible, projects must be locally designated (by a CLG) or must be on the State or National Register (or contribute to a register district).
Both residential and commercial properties are eligible, as long as they are income producing (e.g. rentals). Building owners can apply on the front end or the back end of projects. Can only be filed when state general fund growth is more than 6% (this is about 2/3 of the time). Under this program, credits are straightforward, and are typically processed within 30 days.
The 1990 program is still on the books, and is now the best program for small projects. In Denver, this program is known as “the Denver Program”- marketed to small commercial projects, between $5,000-$50,000. Municipalities could look into bringing this program to your community.
Lobach Block, Florence (Photo by Jamie Shapiro)
Colorado Historic Tax Credit Round 2 (2015)
The program was updated in 2015, but remains largely the same. Key differences from the 1990 program include:
- · Separate path for commercial projects (filed with the State Office of Economic Development and History Colorado and Residential, which can go through local governments with CLG.
- · Owner can use, transfer or sell these tax credits
- · In 2016, $5million in tax credits will be awarded; in 2017-2019 $10 million each year will be awarded.
- · There is currently a waitlist for projects—if timing is a factor, this program may be difficult.
Historic Walsenburg (photo by Jamie Shapiro)
Who Should Apply
Building owners who want to reuse their buildings, and require some investment. The investment can include roofing, heating and HVAC systems, structural issues and cosmetic repairs. Owners should be “on board” with the Secretary of the Interiors Guidelines for Historic Rehabilitation.”
Tips for Applying
- · Find out early if your project is a good fit: ask local, state and federal agencies.
- · Get advice often and by many people
- · Submit design concepts to tax credit reviewers—sometimes you just have to ask
- · Reality check—decide early to “go” or “no go.” Don’t keep fighting it.
- · Look for other incentives—savvy people look all over (New Market tax credits, Grants, Property Tax Relief, Easements, etc.)
- · Consider old state commercial
- · Lobby Colorado to improve the Historic Tax Credit: state like Texas have more staff and more streamlined process, and could serve as a good model for Colorado.
Based on the Downtown Colorado, Inc. Development and Improvement Districts (DIDs) Forum: Using Historic Tax Credits, November 3, 2016, by Barbara Stocklin-Steely: http://www.squaremoon.us/