NEW YORK STATE ASSEMBLY MEMORANDUM IN SUPPORT OF LEGISLATION submitted in accordance with Assembly Rule III, Sec 1(f)
BILL NUMBER: A9882
SPONSOR: Woerner TITLE OF BILL: An act to amend the tax law and the parks, recreation
and historic preservation law, in relation to the tax credit for reha-
bilitation of historic properties
PURPOSE OF THE BILL:
To extend the historic properties tax credit and decouple it from feder-
al law.
SUMMARY OF PROVISIONS:
The historic properties tax credit is extended from January 1, 2020 to
January 1, 2025. Further, the references to federal law such as defining
the tax credit as 100% of the federal credit are replaced with state law
references and definitions.
JUSTIFICATION:
The federal tax law changes require investors to spread many tax cred-
its, including the historic properties tax credit, across five years,
reducing its year-to-year value significantly. The way the state credit
is written, a similar diminution in value would occur for the state
credit, doubling the negative impact on investors in historic proper-
ties.
Since Governor Cuomo signed the expansion and extension of the Historic
Tax Credit in 2013, significant investment has occurred across the
state, especially upstate in the numerous historic downtowns and neigh-
borhoods. Extension now will ensure projects being planned and already
in developers' pipelines will continue to move forward without losing
the tax benefits that induced the investment in the first place.
Those seeking to renovate, repurpose, and renew historic properties
often must first obtain program eligibility through National Register
Historic District nominations. These nominations can take up to a year
for designation. A key piece of the upstate economic development puzzle,
the historic properties tax credit have been a big part of the invest-
ment in upstate cities and extending the credit and maintaining its
value will ensure the economic revitalization will continue.
PRIOR LEGISLATIVE HISTORY:
The existing historic properties tax credit is set to expire on January
1, 2020.
FISCAL IMPLICATIONS:
None this year, extension of a current program
EFFECTIVE DATE:
This act shall take effect immediately.
STATE OF NEW YORK
________________________________________________________________________
9882
IN ASSEMBLY
February 15, 2018
___________
Introduced by M. of A. WOERNER -- read once and referred to the Commit-
tee on Ways and Means
AN ACT to amend the tax law and the parks, recreation and historic pres-
ervation law, in relation to the tax credit for rehabilitation of
historic properties
The People of the State of New York, represented in Senate and Assem-bly, do enact as follows:
1 Section 1. Subsection (oo) of section 606 of the tax law, as amended
2 by chapter 239 of the laws of 2009, paragraph 1 as amended by chapter
3 472 of the laws of 2010, subparagraph (A) of paragraph 1 and paragraphs
4 4 and 5 as amended by section 1 of part F of chapter 59 of the laws of
5 2013, is amended to read as follows:
6 (oo) Credit for rehabilitation of historic properties. (1) (A) For
7 taxable years beginning on or after January first, two thousand ten and
8 before January first, two thousand [twenty] twenty-five, a taxpayer
9 shall be allowed a credit as hereinafter provided, against the tax
10 imposed by this article, in an amount equal to [one hundred percent of
11 the amount of credit allowed the taxpayer with respect to a certified
12 historic structure under subsection (a) (2) of section 47 of the federal
13 internal revenue code] twenty percent of the qualified rehabilitation
14 expenditures with respect to a certified historic structure located
15 within the state. Provided, however, the credit shall not exceed five
16 million dollars. For taxable years beginning on or after January first,
17 two thousand [twenty] twenty-five, a taxpayer shall be allowed a credit
18 as hereinafter provided, against the tax imposed by this article, in an
19 amount equal to thirty percent of the [amount of credit allowed the
20 taxpayer with respect to a certified historic structure under subsection
21 (a)(2) of section 47 of the federal internal revenue code] qualified
22 rehabilitation expenditures with respect to a certified historic struc-
23 ture located within the state; provided, however, the credit shall not
24 exceed one hundred thousand dollars. For purposes of this subsection the
25 term "qualified rehabilitation expenditure" means any amount properly
26 chargeable to capital account in connection with the certified rehabili-
27 tation of a qualified historic structure, and for property for which
EXPLANATION--Matter in italics (underscored) is new; matter in brackets
[] is old law to be omitted.
LBD14636-02-8
A. 9882 2
1 depreciation would be allowable under section 168 of the internal reven-
2 ue code and which is (i) nonresidential real property, (ii) residential
3 rental property, or (iii) an addition or improvement to nonresidential
4 real property or residential rental property.
5 (B) If the taxpayer is a partner in a partnership or a shareholder of
6 a New York S corporation, then the credit cap imposed in subparagraph
7 (A) of this paragraph shall be applied at the entity level, so that the
8 aggregate credit allowed to all the partners or shareholders of each
9 such entity in the taxable year does not exceed the credit cap that is
10 applicable in that taxable year.
11 (2) (A) Tax credits allowed pursuant to this subsection shall be
12 allowed in the taxable year [that the qualified rehabilitation is placed
13 in service under section 167 of the federal internal revenue code] in
14 which the final certification step of the certified rehabilitation is
15 completed as provided in subparagraph (C) of this paragraph.
16 (B) For purposes of this subsection the term "certified rehabili-
17 tation" means any rehabilitation of a certified historic structure which
18 has been approved and certified as being consistent with the standards
19 established by the commissioner of parks, recreation and historic pres-
20 ervation for rehabilitation by the office of parks, recreation and
21 historic preservation, a local government certified pursuant to section
22 101(c)(1) of the national historic preservation act or a local landmark
23 commission established pursuant to section ninety-six-a or one hundred
24 nineteen-dd of the general municipal law.
25 (C) A certified rehabilitation shall require:
26 (i) an initial certification that the structure meets the definition
27 of the term "certified historic structure";
28 (ii) a second certification, to be issued prior to construction,
29 certifying that the proposed rehabilitation work is consistent with
30 standards established by the commissioner of parks, recreation and
31 historic preservation for rehabilitation; and
32 (iii) a final certification issued when construction is completed,
33 certifying that the work was completed as proposed and that the costs
34 are consistent with the work completed. Such final certification shall
35 be acceptable as proof that the expenditures related to such
36 construction qualify as qualified rehabilitation expenditures for
37 purposes of the credit allowed under either subparagraph (A) or (B) of
38 paragraph one of this subsection.
39 (D) For purposes of this subsection the term "qualified historic
40 structure" means a certified historic structure located within New York
41 state which has been substantially rehabilitated. A certified historic
42 structure shall be considered substantially rehabilitated if the quali-
43 fied rehabilitation expenditures in relation to such structure total
44 five thousand dollars or more.
45 (E) For purposes of this subsection the term "certified historic
46 structure" means any building and its structural components which:
47 (i) is listed in the state or national register of historic places, or
48 (ii) is located in a state or national registered historic district
49 and is certified as being of historic significance in the district.
50 (3) [If the credit allowed the taxpayer pursuant to section 47 of the
51 internal revenue code with respect to a qualified rehabilitation is
52 recaptured pursuant to subsection (a) of section 50 of the internal
53 revenue code, a portion of the credit allowed under this subsection must
54 be added back in the same taxable year and in the same proportion as the
55 federal recapture] (A) If, before the end of the two-year period begin-
56 ning on the date of the final certification referred to in subparagraph
A. 9882 3
1 (C) of paragraph two of this subsection, the taxpayer disposes of such
2 taxpayer's interest in a certified historic structure, or such certified
3 historic structure otherwise ceases to be eligible for the credit
4 allowed under this subsection, the taxpayer's tax imposed by this arti-
5 cle for the taxable year in which such disposition occurs shall be
6 increased by the recapture portion of the credit allowed under this
7 subsection for all prior taxable years with respect to such rehabili-
8 tation.
9 (B) For purposes of subparagraph (A) of this paragraph, the recapture
10 portion shall be the product of the amount of credit claimed by the
11 taxpayer multiplied by a fraction, the numerator of which is equal to
12 twenty-four less the number of months before the disposition or cessa-
13 tion of the structure occurred.
14 (4) If the amount of the credit allowed under this subsection for any
15 taxable year shall exceed the taxpayer's tax for such year, the excess
16 shall be treated as an overpayment of tax to be credited or refunded in
17 accordance with the provisions of section six hundred eighty-six of this
18 article, provided, however, that no interest shall be paid thereon.
19 (5) To be eligible for the credit allowable under this subsection the
20 rehabilitation project shall be in whole or in part located within a
21 census tract which is identified as being at or below one hundred
22 percent of the state median family income as calculated as of [January]
23 April first of each year using the most recent five year estimate from
24 the American community survey published by the United States Census
25 bureau. If there is a change in the most recent five year estimate, a
26 census tract that qualified for eligibility under this subsection before
27 information about the change was released shall remain eligible for a
28 credit under this subsection for an additional eighteen months.
29 (6) Nothing contained in this subsection shall be construed to impose
30 a duty on a local landmark commission established pursuant to section
31 ninety-six-a or one hundred nineteen-dd of the general municipal law or
32 a local government certified pursuant to section 101(c)(1) of the
33 national historic preservation act to undertake any review or approval
34 of an application for the certification of the rehabilitation of histor-
35 ic structures and of rehabilitation expenditures provided for in this
36 subsection.
37 § 2. Paragraph 2 of subsection (pp) of section 606 of the tax law, as
38 added by chapter 547 of the laws of 2006, subparagraphs (A) and (B) as
39 amended by section 1 of part V of chapter 59 of the laws of 2013, is
40 amended to read as follows:
41 (2) (A) With respect to any particular residence of a taxpayer, the
42 credit allowed under paragraph one of this subsection shall not exceed
43 fifty thousand dollars for taxable years beginning on or after January
44 first, two thousand ten and before January first, two thousand [twenty]
45 twenty-five and twenty-five thousand dollars for taxable years beginning
46 on or after January first, two thousand [twenty] twenty-five. In the
47 case of a husband and wife, the amount of the credit shall be divided
48 between them equally or in such other manner as they may both elect. If
49 a taxpayer incurs qualified rehabilitation expenditures in relation to
50 more than one residence in the same year, the total amount of credit
51 allowed under paragraph one of this subsection for all such expenditures
52 shall not exceed fifty thousand dollars for taxable years beginning on
53 or after January first, two thousand ten and before January first, two
54 thousand [twenty] twenty-five and twenty-five thousand dollars for taxa-
55 ble years beginning on or after January first, two thousand [twenty]
56 twenty-five.
A. 9882 4
1 (B) For taxable years beginning on or after January first, two thou-
2 sand ten and before January first, two thousand [twenty] twenty-five, if
3 the amount of credit allowable under this subsection shall exceed the
4 taxpayer's tax for such year, and the taxpayer's New York adjusted gross
5 income for such year does not exceed sixty thousand dollars, the excess
6 shall be treated as an overpayment of tax to be credited or refunded in
7 accordance with the provisions of section six hundred eighty-six of this
8 article, provided, however, that no interest shall be paid thereon. If
9 the taxpayer's New York adjusted gross income for such year exceeds
10 sixty thousand dollars, the excess credit that may be carried over to
11 the following year or years and may be deducted from the taxpayer's tax
12 for such year or years. For taxable years beginning on or after January
13 first, two thousand [twenty] twenty-five, if the amount of credit allow-
14 able under this subsection shall exceed the taxpayer's tax for such
15 year, the excess may be carried over to the following year or years and
16 may be deducted from the taxpayer's tax for such year or years.
17 § 3. Subdivision 26 of section 210-B of the tax law, as added by
18 section 17 of part A of chapter 59 of the laws of 2014, is amended to
19 read as follows:
20 26. Credit for rehabilitation of historic properties. (a) Application
21 of credit. (i) For taxable years beginning on or after January first,
22 two thousand ten, and before January first, two thousand [twenty] twen-
23 ty-five, a taxpayer shall be allowed a credit as hereinafter provided,
24 against the tax imposed by this article, in an amount equal to [one
25 hundred percent of the amount of credit allowed the taxpayer for the
26 same taxable year with respect to a certified historic structure under
27 subsection (c)(2) of section 47 of the internal revenue code] twenty
28 percent of the qualified rehabilitation expenditures with respect to a
29 certified historic structure located within the state. Provided, howev-
30 er, the credit shall not exceed five million dollars.
31 (ii) For taxable years beginning on or after January first, two thou-
32 sand [twenty] twenty-five, a taxpayer shall be allowed a credit as here-
33 inafter provided, against the tax imposed by this article, in an amount
34 equal to thirty percent of the [amount of credit allowed the taxpayer
35 for the same taxable year with respect to a certified historic structure
36 under subsection (c)(3) of section 47 of the internal revenue code]
37 qualified rehabilitation expenditures with respect to a certified
38 historic structure located within the state. Provided, however, the
39 credit shall not exceed one hundred thousand dollars.
40 [(B)] (b) If the taxpayer is a partner in a partnership or a share-
41 holder in a New York S corporation, then the credit caps imposed in
42 [subparagraph (A)] paragraph (a) of this [paragraph] subdivision shall
43 be applied at the entity level, so that the aggregate credit allowed to
44 all the partners or shareholders of each such entity in the taxable year
45 does not exceed the credit cap that is applicable in that taxable year.
46 [(b)] (c) Tax credits allowed pursuant to this subdivision shall be
47 allowed in the taxable year [that the qualified rehabilitation is placed
48 in service under section 167 of the federal internal revenue code] in
49 which the final certification step of the certified rehabilitation is
50 completed pursuant to subparagraph (C) of paragraph two of subsection
51 (oo) of section six hundred six of this chapter.
52 [(c) If the credit allowed the taxpayer pursuant to section 47 of the
53 internal revenue code with respect to a qualified rehabilitation is
54 recaptured pursuant to subsection (a) of section 50 of the internal
55 revenue code, a portion of the credit allowed under this subsection must
56 be added back in the same taxable year and in the same proportion as the
A. 9882 5
1 federal credit] (d)(i) If, before the end of the two-year period begin-
2 ning on the date of the final certification referred to in paragraph (b)
3 of this subdivision, the taxpayer disposes of such taxpayer's interest
4 in a certified structure, or such certified historic structure otherwise
5 ceases to be eligible for the credit allowed under this subdivision, the
6 taxpayer's tax imposed by this article for the taxable year in which
7 such disposition occurs shall be increased by the recapture portion of
8 the credit allowed under this paragraph for all prior taxable years with
9 respect to such rehabilitation.
10 (ii) For purposes of subparagraph (i) of this paragraph, the recapture
11 portion shall be the product of the amount of credit claimed by the
12 taxpayer multiplied by a fraction, the numerator of which is equal to
13 twenty-four less the number of months before the disposition or cessa-
14 tion of the structure occurred.
15 [(d)] (e) The credit allowed under this subdivision for any taxable
16 year shall not reduce the tax due for such year to less than the amount
17 prescribed in paragraph (d) of subdivision one of section two hundred
18 ten of this article. However, if the amount of the credit allowed under
19 this subdivision for any taxable year reduces the tax to such amount or
20 if the taxpayer otherwise pays tax based on the fixed dollar minimum
21 amount, any amount of credit thus not deductible in such taxable year
22 shall be treated as an overpayment of tax to be recredited or refunded
23 in accordance with the provisions of section one thousand eighty-six of
24 this chapter. Provided, however, the provisions of subsection (c) of
25 section one thousand eighty-eight of this chapter notwithstanding, no
26 interest shall be paid thereon.
27 [(e)] (f) To be eligible for the credit allowable under this subdivi-
28 sion, the rehabilitation project shall be in whole or in part located
29 within a census tract which is identified as being at or below one
30 hundred percent of the state median family income as calculated as of
31 January first of each year using the most recent five year estimate from
32 the American community survey published by the United States Census
33 bureau.
34 § 4. Paragraphs 1, 2 and 3 of subdivision (y) of section 1511 of the
35 tax law, as added by chapter 472 of the laws of 2010, subparagraph (A)
36 of paragraph 1 as amended by section 4 of part F of chapter 59 of the
37 laws of 2013, are amended to read as follows:
38 (1) (A) For taxable years beginning on or after January first, two
39 thousand ten and before January first, two thousand [twenty]
40 twenty-five, a taxpayer shall be allowed a credit as hereinafter
41 provided, against the tax imposed by this article, in an amount equal to
42 [one hundred percent of the amount of credit allowed the taxpayer with
43 respect to a certified historic structure under subsection (a)(2) of
44 section 47 of the federal internal revenue code] twenty percent of the
45 qualified rehabilitation expenditures with respect to a certified
46 historic structure located within the state. Provided, however, the
47 credit shall not exceed five million dollars. For taxable years begin-
48 ning on or after January first, two thousand [twenty] twenty-five, a
49 taxpayer shall be allowed a credit as hereinafter provided, against the
50 tax imposed by this article, in an amount equal to thirty percent of the
51 [amount of credit allowed the taxpayer with respect to a certified
52 historic structure under subsection (a)(2) of section 47 of the federal
53 internal revenue code] qualified rehabilitation expenditure with respect
54 to a certified historic structure located within the state. Provided,
55 however, the credit shall not exceed one hundred thousand dollars.
A. 9882 6
1 (B) If the taxpayer is a partner in a partnership, then the cap
2 imposed in subparagraph (A) of this paragraph shall be applied at the
3 entity level, so that the aggregate credit allowed to all the partners
4 of such partnership in the taxable year does not exceed the credit cap
5 that is applicable in that taxable year.
6 (2) Tax credits allowed pursuant to this subsection shall be allowed
7 in the taxable year [that the qualified rehabilitation is placed in
8 service under section 167 of the federal internal revenue code] in which
9 the final certification step of the certified rehabilitation is
10 completed pursuant to subparagraph (C) of paragraph two of subsection
11 (oo) of section six hundred six of this chapter.
12 (3) [If the credit allowed the taxpayer pursuant to section 47 of the
13 internal revenue code with respect to a qualified rehabilitation is
14 recaptured pursuant to subsection (a) of section 50 of the internal
15 revenue code, a portion of the credit allowed under this subsection in
16 the taxable year the credit was claimed must be added back in the same
17 taxable year and in the same proportion as the federal recapture] (A)
18 If, before the end of the two-year period beginning on the date of the
19 final certification referred to in paragraph two of this subdivision,
20 the taxpayer disposes of such taxpayer's interest in a certified struc-
21 ture, or such certified historic structure otherwise ceases to be eligi-
22 ble for the credit allowed under this subdivision, the taxpayer's tax
23 imposed by this article for the taxable year in which such disposition
24 occurs shall be increased by the recapture portion of the credit allowed
25 under this paragraph for all prior taxable years with respect to such
26 rehabilitation.
27 (B) For purposes of subparagraph (A) of this paragraph, the recapture
28 portion shall be the product of the amount of credit claimed by the
29 taxpayer multiplied by a fraction, the numerator of which is equal to
30 twenty-four less the number of months before the disposition or cessa-
31 tion of the structure occurred.
32 § 5. Subdivision 6 of section 13.15 of the parks, recreation and
33 historic preservation law, as added by chapter 547 of the laws of 2006,
34 is amended to read as follows:
35 6. The office may establish a fee or fees for its processing and
36 review of applications for the certification of the rehabilitation of
37 historic buildings and the approval of rehabilitation expenditures and
38 related work pursuant to [subsection] subsections (oo) and (pp) of
39 section six hundred six of the tax law. All revenues from these fees
40 shall be deposited by the comptroller in the miscellaneous special
41 revenue fund to be credited to the agency's patron services account and
42 shall be used to support the office's historic preservation program.
43 Nothing in this subdivision shall be construed to limit the ability of a
44 local landmark commission established pursuant to section ninety-six-a
45 or one hundred nineteen-dd of the general municipal law or a local
46 government certified pursuant to section 101(c)(1) of the national
47 historic preservation act to establish and charge fees for its process-
48 ing and review of applications for the certification of the rehabili-
49 tation of historic buildings and the approval of rehabilitation expendi-
50 tures.
51 § 6. This act shall take effect immediately and shall apply to taxable
52 years beginning on and after January 1, 2018.
