Strengthening the Historic Preservation Tax Credit Program
December 5, 2022 01:20 PM to All Senate Members
Circulated By
Senator David Argall
R Senate District 29
Memo
As you may be aware, the Historic Preservation Tax Credit Program encourages private sector investment in the rehabilitation and re-use of historic buildings since its creation in 2012. Projects that included a nonprofit partner have been included in the program and received allocations since the program’s inception.
As a 501(c)(3) organization, a nonprofit does not have a tax liability, which makes them tax exempt. To use historic tax credits, the nonprofit must create a for-profit entity. If the nonprofit plans to complete a syndication deal, this same for-profit will also be used as a member of the entity formed between the nonprofit and the investor. The purpose of this partnership is for the nonprofit to raise construction equity from the investors in the partnership, and for the investors to use the tax credits to reduce tax liability. Many affordable and senior housing projects, commercial and office development projects, and social service projects have been funded this way throughout the Commonwealth.
However, in a 2019 review of applications for the Historic Preservation Tax Credit Program, the Department of Revenue determined that some applicants affiliated with a nonprofit organization were not eligible for the program. They were flagged as a “disregarded entity of a nonprofit group” and their applications were rejected.
No other state has made this determination, and in fact, several states have included specific language in their laws that allows nonprofits to be part of a development group for a historic preservation project. The legislation I plan on re-introducing will ensure that same thing.
I hope you will join me in co-sponsoring this bill.
As a 501(c)(3) organization, a nonprofit does not have a tax liability, which makes them tax exempt. To use historic tax credits, the nonprofit must create a for-profit entity. If the nonprofit plans to complete a syndication deal, this same for-profit will also be used as a member of the entity formed between the nonprofit and the investor. The purpose of this partnership is for the nonprofit to raise construction equity from the investors in the partnership, and for the investors to use the tax credits to reduce tax liability. Many affordable and senior housing projects, commercial and office development projects, and social service projects have been funded this way throughout the Commonwealth.
However, in a 2019 review of applications for the Historic Preservation Tax Credit Program, the Department of Revenue determined that some applicants affiliated with a nonprofit organization were not eligible for the program. They were flagged as a “disregarded entity of a nonprofit group” and their applications were rejected.
No other state has made this determination, and in fact, several states have included specific language in their laws that allows nonprofits to be part of a development group for a historic preservation project. The legislation I plan on re-introducing will ensure that same thing.
I hope you will join me in co-sponsoring this bill.
Legislation
Document - Introduced as SB 251
Last updated on December 5, 2022 01:21 PM
Strengthening the Historic Preservation Tax Credit Program
December 5, 2022 01:20 PM to All Senate Members
Circulated By
ARGALL
Memo
As you may be aware, the Historic Preservation Tax Credit Program encourages private sector investment in the rehabilitation and re-use of historic buildings since its creation in 2012. Projects that included a nonprofit partner have been included in the program and received allocations since the program’s inception.
As a 501(c)(3) organization, a nonprofit does not have a tax liability, which makes them tax exempt. To use historic tax credits, the nonprofit must create a for-profit entity. If the nonprofit plans to complete a syndication deal, this same for-profit will also be used as a member of the entity formed between the nonprofit and the investor. The purpose of this partnership is for the nonprofit to raise construction equity from the investors in the partnership, and for the investors to use the tax credits to reduce tax liability. Many affordable and senior housing projects, commercial and office development projects, and social service projects have been funded this way throughout the Commonwealth.
However, in a 2019 review of applications for the Historic Preservation Tax Credit Program, the Department of Revenue determined that some applicants affiliated with a nonprofit organization were not eligible for the program. They were flagged as a “disregarded entity of a nonprofit group” and their applications were rejected.
No other state has made this determination, and in fact, several states have included specific language in their laws that allows nonprofits to be part of a development group for a historic preservation project. The legislation I plan on re-introducing will ensure that same thing.
I hope you will join me in co-sponsoring this bill.
As a 501(c)(3) organization, a nonprofit does not have a tax liability, which makes them tax exempt. To use historic tax credits, the nonprofit must create a for-profit entity. If the nonprofit plans to complete a syndication deal, this same for-profit will also be used as a member of the entity formed between the nonprofit and the investor. The purpose of this partnership is for the nonprofit to raise construction equity from the investors in the partnership, and for the investors to use the tax credits to reduce tax liability. Many affordable and senior housing projects, commercial and office development projects, and social service projects have been funded this way throughout the Commonwealth.
However, in a 2019 review of applications for the Historic Preservation Tax Credit Program, the Department of Revenue determined that some applicants affiliated with a nonprofit organization were not eligible for the program. They were flagged as a “disregarded entity of a nonprofit group” and their applications were rejected.
No other state has made this determination, and in fact, several states have included specific language in their laws that allows nonprofits to be part of a development group for a historic preservation project. The legislation I plan on re-introducing will ensure that same thing.
I hope you will join me in co-sponsoring this bill.
Document
Introduced as SB 251
Last Updated
December 5, 2022 01:21 PM
Generated 04/18/2025 09:09 AM