Provides a tax credit for rehabilitation of historic properties; repeals section 5 of chapter 547 of the laws of 2006

Title of bill

An act to amend the tax law, in relation to providing a tax credit for rehabilitation of historic properties; to repeal section 5 of chapter 547 of the laws of 2006 amending the tax law and the parks, recreation and historic preservation law, relating to establishing a credit against income tax for the rehabilitation of historic properties, in relation to repealing certain administrative requirements relating thereto; and providing for the repeal of such provisions upon expiration thereof

Purpose

The purpose of this legislation is to create an economic stimulus program in distressed communities by leveraging the state's existing inventory of vacant, under utilized, and deteriorating historic buildings. This economic stimulus will be accomplished by improving the NYS Rehabilitation Tax Credit programs while limiting program costs and providing cost certainty to New York State.

Summary of provisions

This legislation amends section 606 of the tax law by adding two new sections (oo) and (pp).

These changes limit the availability of the commercial credit to distressed areas, increase the percent of qualified rehabilitation costs that can be claimed for the credit, and increase the cap on credit value. Proposed changes also limit revenue impacts to New York State by pushing back the date of program implementation and terminating the program after five years availability.

The commercial program is limited to qualified building located in distressed areas, defined as located within a census tract which is identified at or below one hundred percent median family income. The bill increases the rate of credit for these commercial properties from 6 percent to 20 percent, which allows for a higher percentage of qualified rehabilitation costs to be eligible for the program, and increases the credits available for these projects from $100,000 to $5 million.

The cap on the residential credit value is increased from $25,000 to $50,000. Additionally, the rehabilitation tax credit is also to be offered as a rebate to make the program a stronger financial incentive for home-owners without significant income tax liability. The definition of "distressed areas" is changed to include those residential structures located within a census tract which is identified at or below one hundred percent of the state median family income in the most recent federal census. This change would allow a greater number of municipalities and neighborhoods to make use of the residential rehabilitation program.

Justification

In 2006, New York State became the 28th state in the nation to enact a tax incentive (Chapter 547 of the laws of 2006) to encourage the rehabilitation of historic commercial and residential properties. While the Legislature's establishment of this program was welcomed, enhancements are required to assure that this program will match the notable economic stimulus impacts and community redevelopment successes achieved by effective programs in other states. These changes target reinvestment in distressed census tracts and incorporate program features designed to curtail program costs and provide cost certainty to New York State. These changes also provide the New York State program with a level of incentive and flexibility to rehabilitate a significant number of properties above and beyond those that will be funded by use of the current state program. Distressed Upstate municipalities will be a particular beneficiary of the program.

Fiscal implications

No impact in SFY 2009-10.

Legislative history

2007-2008: Similar to A.30000/S.5425 (Veto 159)

Effective date

This act shall take effect immediately and shall apply to taxable years beginning on and after January 1, 2010. Scheduled to sunset December 31, 2014, with projects commenced in 2014 eligible for the credit upon completion.