A N A C T
RELATING TO HISTORIC STRUCTURES -- TAX CREDITS
It is enacted by the General Assembly as follows:
SECTION 1. Title 44 of the General Laws entitled "Taxation" is hereby amended by adding thereto the following chapter:
HISTORIC STRUCTURES - - TAX CREDIT
44-33.2-1. Declaration of purpose. -- The general assembly finds and declares that Rhode Island's historic structures have experienced high vacancy rates and physical deterioration. Without adding economic incentive, these structures are not viable for the redevelopment and reuse by modern commercial, residential or manufacturing enterprises and will continue their physical deterioration. The redevelopment and reuse of these historic structures are of critical importance to the economic measures and will assist in stimulating the reuse and redevelopment of historic structures and will improve property values, foster civic beauty, and promote public education, pleasure, and welfare. The purpose of this chapter is to create economic incentives for the purpose of stimulating the redevelopment and reuse of Rhode Island's historic structures.
44-33.2-2. Definitions. -- As used in this chapter:
(1) "Certified historic structure" means a property which is located in the State of Rhode Island and is:
(i) listed individually on the National Register of Historic Places; or
(ii) listed individually in the state register of historic places; or
(iii) located in a registered historic district and certified by either the commission or Secretary of the Interior as being of historic significance to the district.
(2) "Certified rehabilitation" means any rehabilitation of a certified historic structure consistent with the historic character of such property or the district in which such property is located as determined by the commission guidelines.
(3) "Commission" means the Rhode Island Historical Preservation and Heritage Commission created pursuant to section 42-45-2.
(4) "Holding Period" means twenty-four (24) months after the commission issues a certificate of completed work to the taxpayer.
(5) "Placed in service" means the substantial rehabilitation work has been completed which would allow for occupancy of the entire structure or some identifiable portion of the structure.
(6) "Qualified rehabilitation expenditures" means any amounts expended in the rehabilitation of a certified historic structure properly chargeable to capital account for property, excluding personal property, which is of a character subject to federal depreciation allowance pursuant to 26 U.S.C. section 167 or 168.
(7) "Registered historic district" means any district listed in the National Register of Historic Places, or the State Register of Historic Places.
(8) "Substantial Rehabilitation" means, with respect to a certified historic structure, that the qualified rehabilitation expenses of the building during the twenty-four (24) month period selected by the taxpayer ending with or within the taxable year exceed fifty percent (50%) of the adjusted basis in such building and its structural components as of the beginning of such period. In the case of any rehabilitation which may reasonably be expected to be completed in phases set forth in architectural plans and specifications completed before the rehabilitation begins, the above definition shall be applied by substituting "sixty (60) month period" for "twenty-four (24) month period".
44-33.2-3. Tax Credit. -- (a) Any person, firm, partnership, trust, estate, limited liability company, corporation or other business entity that incurs qualified rehabilitation expenditures for the substantial rehabilitation of a certified historic structure, provided the rehabilitation meets standards consistent with the standards of the Secretary of the United States Department of the Interior for rehabilitation as certified by the commission, shall be entitled to a credit against the taxes imposed on such person or entity pursuant to Chapter 11, 12, 13, 14, 17 or 30 of Title 44 in an amount equal to thirty percent (30%) of the qualified rehabilitation expenditures.
(b) Tax credits allowed pursuant to this Chapter shall be allowed for the taxable year in which such certified historic structure or an identifiable portion thereof is placed in service provided that the substantial rehabilitation test is met for such year.
(c) If the amount of the tax credit exceeds the taxpayer's total tax liability for the year in which the substantially rehabilitated property is placed in service, the amount that exceeds the taxpayer's tax liability may be carried forward for credit against the taxes imposed for the succeeding ten (10) years, or until the full credit is used, whichever occurs first for the tax credits. Credits allowed to a partnership, a limited liability company taxed as a partnership or multiple owners of property shall be passed through to the persons designated as partners, members or owners respectively pro rata or pursuant to an executed agreement among such persons designated as partners, members or owners documenting an alternate distribution method without regard to their sharing of other tax or economic attributes of such entity.
(d) Taxpayers eligible for such tax credits may assign, transfer or convey the credits, in whole or in part, by sale or otherwise to any individual or entity, including, but not limited to, condominium owners in the event the certified historic structure is converted into condominiums. The assignee of the tax credits may use acquired credits to offset up to one hundred percent (100%) of the tax liabilities otherwise imposed pursuant to Chapter 11, 12, 13, 14, 17 or 30 of Title 44. The assignor shall perfect such transfer by notifying the State of Rhode Island Division of Taxation in writing within thirty (30) calendar days following the effective date of said transfer and shall provide any information as may be required by the Division of Taxation to administer and carry out the provisions of this section.
For purposes of this chapter, any assignment or sales proceeds received by the taxpayer for its assignment or sale of the tax credits allowed hereunder shall be exempt from Title 44 of Rhode Island General Laws, as amended.
(e) Substantial rehabilitation of property that is exempt from real property taxation shall be ineligible for the tax credits authorized under this chapter. In the event a certified historic structure undergoes a substantial rehabilitation pursuant to this Chapter and within twenty-four (24) months after the property is placed in service the property becomes exempt from real property tax, the taxpayer's tax for the year shall be increased by the total credit taken for the qualified rehabilitation expenses.
44-33.2-4. Administration. -- (a) To claim the tax credit authorized in this Chapter, taxpayers shall apply to the commission (i) prior to the certified historic structure being placed in service for a certification that the certified historic structure's rehabilitation will be consistent with the standards of the Secretary of the United States Department of the Interior for rehabilitation; and (ii) after completion of the rehabilitation work of the certified historic structure for a certification that the rehabilitation is consistent with the standards of the Secretary of the United States Department of the Interior for rehabilitation. Such applications shall be developed by the commission and may be amended from time to time.
(b) Within thirty (30) days after the commission's receipt of the taxpayer's application requesting certification for the completed rehabilitation work, the commission shall issue the taxpayer a written determination either denying or certifying the rehabilitation. To claim the tax credit, the commission's certification shall be attached to all state income tax returns on which the credit is claimed. In the event the commission's certification has not been issued at the time the return is filed for a year in which the credit is being taken, a copy of the application set forth in subsection 44-33.2-4(a) (i) signed by the commission must be attached to the income tax returns.
(c) No taxpayer may benefit from the provisions of this chapter unless the owner of the certified historic structure grants a restrictive convenant to the commission, agreeing that during the holding period no alterations to the certified historic structure will be made without the commission's approval and in a manner inconsistent with the standards of the Secretary of the United States of the Interior.
(d) The commission is authorized to establish a schedule of fees for the review of tax credit applications, but said fees shall be no greater than two thousand dollars ($2,000) in total for each project.
44-33.2-5. Examination of taxpayer's records. -- The tax administrator and his or her agents, for the purpose of ascertaining the correctness of any credit claimed under the provisions of this Chapter, may examine any books, paper, records, or memoranda bearing upon the matters required to be included in the return, report, or other statement, and may require the attendance of the person executing the return, report, or other statement, or of any officer or employee of any taxpayer, or the attendance of any other person, and may examine the person under oath respecting any matter which the tax administrator or his or her agent deems pertinent or material in determining the eligibility for credits claimed.
44-33.2-6. Election. -- Taxpayers who elect and qualify to claim tax credits for the substantial rehabilitation of a certified historic structure pursuant to this Chapter are ineligible for any tax credits that may also be available to the taxpayer for the substantial rehabilitation of that particular certified historic structure under Chapter 44-33.1 or Chapter 42-64.7.
SECTION 2. This act shall take effect as of January 1, 2002.