Louisiana Projects Take Honors at National Historic Tax Credit Conference
In mid-September the real estate section of Graffagnini, L.C. attended Novogradac’s Historic Tax Credit Conference in Chicago. This conference proved to be both informative and insightful, so we would like to share our knowledge!
The Historic Tax Credit (“HTC”) formally recognizes the value of America’s historic buildings by encouraging the preservation of the nation’s cultural and historic resources. This recognition comes in the form of a dollar-for-dollar tax reduction for the owner of such properties upon proper rehabilitation.
Federally the HTC is two tiered, where the owner receives one of two different tax credits for qualified rehabilitation expenditures (“QRE”) depending on how his building, which must be “income producing,” is classified. QREs are the costs incurred in connection with rehabilitation of the qualified rehabilitated building (“QRB”). The first alternative is a ten percent (10%) tax credit for QREs that is granted if the building was placed in service prior to 1936 and thus is not classified as a certified historic structure. The second alternative is a twenty percent (20%) tax credit for QREs that is granted if the building qualifies as a “certified historic structure.” A “certified historic structure” is defined as buildings listed on the National Register for Historic Places or buildings listed as a contributing building in a National Register, state or local historic district certified by the Secretary of the Interior.
Louisiana offers a state-level HTC program that allows up to a twenty-five percent (25%) tax credit for the eligible costs and expenses (i.e. – QREs) incurred during the rehabilitation of a historic structure located in a downtown development or a cultural district that will be used for non-residential or residential rental purposes. In Louisiana, the state-level HTCs are bifurcated from the federal HTCs and thus should be applied for separately.
2-Step Process Entailed with HTCs:
Step 1 – Structuring the partnership between the developer/owner and the investor
- The investor can opt for the direct investment structure or lease pass-through structure. There are differing processes and consequences with each structure.
Step 2 – Preparing the Historic Preservation Certification Application for the state historic preservation office (“SHPO”) and National Park Service (“NPS”)
Part I – Evaluation of Significance and Appearance of the Building
Part II – Description of Rehabilitation
Part III – Request for Certification of Completed Work
The state of Louisiana was definitely well-represented at the conference as two separate Louisiana HTC projects were awarded Historic Rehabilitation Awards for 2014. Those projects include:
- The Corona [Baton Rouge, LA] – Honorable Mention for “Historic Development that Overcame Significant Obstacles.”
- The Community Greens at Washington & Broad [New Orleans, LA] – Winner for “Historic Development that Best Demonstrates Financial Innovation.”
In mid-September the real estate section of Graffagnini, L.C. attended Novogradac’s Historic Tax Credit Conference in Chicago. This conference proved to be both informative and insightful, so we would like to share our knowledge!
The Historic Tax Credit (“HTC”) formally recognizes the value of America’s historic buildings by encouraging the preservation of the nation’s cultural and historic resources. This recognition comes in the form of a dollar-for-dollar tax reduction for the owner of such properties upon proper rehabilitation.
Federally the HTC is two tiered, where the owner receives one of two different tax credits for qualified rehabilitation expenditures (“QRE”) depending on how his building, which must be “income producing,” is classified. QREs are the costs incurred in connection with rehabilitation of the qualified rehabilitated building (“QRB”). The first alternative is a ten percent (10%) tax credit for QREs that is granted if the building was placed in service prior to 1936 and thus is not classified as a certified historic structure. The second alternative is a twenty percent (20%) tax credit for QREs that is granted if the building qualifies as a “certified historic structure.” A “certified historic structure” is defined as buildings listed on the National Register for Historic Places or buildings listed as a contributing building in a National Register, state or local historic district certified by the Secretary of the Interior.
Louisiana offers a state-level HTC program that allows up to a twenty-five percent (25%) tax credit for the eligible costs and expenses (i.e. – QREs) incurred during the rehabilitation of a historic structure located in a downtown development or a cultural district that will be used for non-residential or residential rental purposes. In Louisiana, the state-level HTCs are bifurcated from the federal HTCs and thus should be applied for separately.
2-Step Process Entailed with HTCs:
Step 1 – Structuring the partnership between the developer/owner and the investor
- The investor can opt for the direct investment structure or lease pass-through structure. There are differing processes and consequences with each structure.
Step 2 – Preparing the Historic Preservation Certification Application for the state historic preservation office (“SHPO”) and National Park Service (“NPS”)
Part I – Evaluation of Significance and Appearance of the Building
Part II – Description of Rehabilitation
Part III – Request for Certification of Completed Work
The state of Louisiana was definitely well-represented at the conference as two separate Louisiana HTC projects were awarded Historic Rehabilitation Awards for 2014. Those projects include:
- The Corona [Baton Rouge, LA] – Honorable Mention for “Historic Development that Overcame Significant Obstacles.”
- The Community Greens at Washington & Broad [New Orleans, LA] – Winner for “Historic Development that Best Demonstrates Financial Innovation.”
