State Historic Preservation and Cultural and Entertainment District ...

State Historic Preservation and
Cultural and Entertainment District
Tax Credit Program
Changes in SF 481
Proposed changes to Admin Rule
May 18, 2009

Agenda for May 18, 2009 – 1:30-3:00pm
1. Summary of legislation & proposed rules
2. Change in yearly cap & fund allocations
3. Where & when available credits flow
4. Sequencing and review prioritization
5. Readiness tests: project start/end
6. Shifting time for claiming the credits
7. Fee structure
8. General questions & comments

1. Summary of Legislation
• Raises the yearly cap to $50 million!
• Creates two new funds and dictates where
and when they flow, if they are not used:
• disaster recovery fund
• new permanent job fund
• Codifies readiness tests for project start/end
for all projects (new and old)
• Shifts timing on when credits can be claimed
• Other code corrections & clarifications

Summary of Proposed Rule Changes
• Clarifies handling of small project overruns
• Sets fund self-selection process
• Prioritizes master review sequence list
according to code
• Provides guidance for project start/end
• Clarifies project abandonment & reservation
recapture process
• Clarifies appeal process for eligibility & scope
• Other rule corrections & clarifications

2. Change in Yearly Cap and Allocations
Fund
Small Project
CED-GP
Disaster Recovery
New Permanent Jobs
Statewide
Previous Code
$20 Million
10%
$2 Million
40%
$8 Million
-0-
-0-
50%
$10 Million
New Legislation
$50 Million
10%
$5 Million
30%
$15 Million
20%
$10 Million
20%
$10 Million
20%
$10 Million

Disaster Recovery Fund
• Disaster declared by governor or president beginning
January 1, 2008, and thereafter
• Property must be physically impacted by disaster, as
documented in application by:
• Insurance claim
• Paperwork from FEMA, SBA, or eligible lender
• Form signed by county emergency manager, city or
county official, or representative of COG
• Must submit initial application before or during the
first “filing window” that occurs following the 5-year
anniversary of the start date of the disaster’s incident
period (e.g., FEMA-1763-DR declared May 27, 2008
has until July 1913 to apply).

New Permanent Jobs Fund
• Property must be home to 500 new permanent jobs
• Employment base measured on the date the tax
credit is reserved
• New permanent jobs measured two years after the
date the tax certificate is issued; verified by IDED
• Contract between SHPO, applicant, and any
leaseholders/tenants, if applicable
• If contract requirements are not met, credits are
repaid to State

3. How Available Credits Flow to Other Funds
“If, in any fiscal year, an amount of tax credits … goes unclaimed, the tax
credits shall, during the same fiscal year, be reallocated to ...”
Disaster Recovery
Statewide
Small Projects
CED-GP
New Permanent Jobs
Available credits transferred in the same
state fiscal year for which the credit is
allocated, essentially as part of yearly
sequencing and review of Part 2 applications.
Credits remain in
small project fund.
They no longer
flow to statewide.

Credit Flow and Timing of Roll-over
2010 Credits
Disaster Recovery Statewide Small Projects
Transferred Summer 2009
CED-GP New Permanent Jobs
2011 Credits
Disaster Recovery Statewide Small Projects
Transferred Summer 2010
CED-GP New Permanent Jobs
2012 Credits
Disaster Recovery Statewide Small Projects
Transferred Summer 2011
CED-GP New Permanent Jobs

4. Sequencing and Review Prioritization
Categories for Master Sequence List
A. “Underfunded” and cost overruns
1) Projects underfunded in previous year’s sequencing
2) Projects with final costs over estimated costs
B. Projects submitted during previous filing windows
1) Projects submitted in July 2007 and July 2008
2) Projects first submitted in July 2008
3) Projects submitted in July 2007 only
C. New projects

Sequencing and Review Prioritization
Review Prioritization
• Category A
• Small Projects, CED-GP, and Jobs
• Disaster Recovery
• Statewide
It is up to you to select
the appropriate fund.
Disaster Recovery Statewide Small Projects
CED-GP
New Permanent Jobs

5. “Readiness Test”: Project commencement
• Before the end of the state fiscal year in which credits
are reserved (June 30), applicants must notify SHPO
of project start date or receipt of low income housing
tax credit award
• Applicants with projects over $500,000 must include
a CPA statement certifying 10% qualified
rehabilitation costs spent
• If project not started, SHPO recaptures reservation

“Readiness Test”: Project completion
• For projects with credits reserved before
July 1, 2009, property must be placed in service by
June 30, 2011
• For projects with credits reserved July 1, 2009 and
after, property must be placed in service within 36
months (3 years) of tax credit reservation
• Part 3 must be submitted within 6 months of date
property placed in service
• If project not completed on time, SHPO recaptures
reservation

*Hypothetical* Project Timeline
SFY
2010
SFY
2011
SFY
2012
SFY
2013
Part 3 Submitted
Part 2 Submitted
Part 2 Approved
10% Spent
“Placed in Service”
April 1, 2013
July 1, 2009
Oct. 1, 2009
June 30, 2010
Oct. 1, 2012
Part 3 Approved July 1, 2013
* Based on maximum review periods and maximum project start/end dates.

*Hypothetical* Project Timeline
For credits reserved
before July 1, 2009,
“Placed in Service”
June 30, 2011.
SFY
2010
SFY
2011
SFY
2012
SFY
2013
Part 3 Submitted
by Dec 30, 2011.
Part 3 Approved
by March 30, 2012.
* Based on maximum review periods and maximum project start/end dates.

6. Shifting time for claiming credits
SFY
2010
2011
2012
Year in which tax credit can be claimed:
First $20 M can be claimed on return for
Tax Year beginning Jan. 1, 2009
Add’l $30 M can be claimed on return for
Tax Year beginning Jan. 1, 2010
First $20 M can be claimed on return for
Tax Year beginning Jan. 1, 2010
Add’l $30 M can be claimed on return for
Tax Year beginning Jan. 1, 2011
First $20 M can be claimed on return for
Tax Year beginning Jan. 1, 2011
Add’l $30 M can be claimed on return for
Tax Year beginning Jan. 1, 2012
This will apply to credits:
already reserved
reserved after July 1*
already reserved
reserved after July 1*
reserved after July 1*
reserved after July 1*
* reservations will be sequentially awarded

Shifting time for claiming credits
• If you have an existing reservation, nothing
changes. Your tax credit certificate, if issued
after July 1, 2009, will indicate the tax year for
which you can claim the credits.
• Applicants with new reservations will know
when they can claim the credit by information
provided in:
• Reservation letter issued after Part 2 review
• Certificate issued upon Part 3 review and
approval

7. Current Fee Structure
Rehab Cost
Fee
Part 2
Res (1-2) & Barns
Res (1-2) & Barns
Under $50K
$50K +
-0-
$250
Commercial
$500
Part 3
Res (1-2) & Barns
Res (1-2) & Barns
Under $50K
$50K +
-0-
$250
Commercial
Under $50K
$250
Commercial
$50K - $1M
0.5% rehab cost
Commercial
$1M +
$5,000

7. Current Fee Structure
Iowa
Colorado
Kansas
Maryland
Michigan
Mississippi
Missouri
Virginia
West Virginia
Part 3
$0 - $5,000
$0 - $750
-0-
-0-
1% of credit
$0 - $5000+ ($2.5M+ cost,
fee is 2% of credit)
$150 - $2,000
2.5% of credit
$100 - $1,500
Part 2
$0 - $500
$0 - $250
$200 - $2000
$10
$25 - $5,000
$100 - $250
-0-
$0 - $1500
$50 - $500

Comments
Written comments may be submitted to:
Elizabeth Foster Hill, Tax Incentives Program Manager
State Historic Preservation Office
600 East Locust
Des Moines, Iowa 50319
Beth.Foster@iowa.gov
Comments must be received by:
Noon on Tuesday, May 26, 2009