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Minnesota Legislature

Office of the Revisor of Statutes

SF 2712

as introduced - 85th Legislature (2007 - 2008) Posted on 12/15/2009 12:00am

KEY: stricken = removed, old language.
underscored = added, new language.

Current Version - as introduced

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A bill for an act
relating to taxation; providing an income tax credit for expenditures for certain
historic structure rehabilitation; proposing coding for new law in Minnesota
Statutes, chapter 290.

BE IT ENACTED BY THE LEGISLATURE OF THE STATE OF MINNESOTA:

Section 1.

new text begin [290.0678] CREDIT FOR HISTORIC STRUCTURE
REHABILITATION.
new text end

new text begin Subdivision 1. new text end

new text begin Definitions. new text end

new text begin (a) As used in this section, the terms defined in this
subdivision have the meanings given.
new text end

new text begin (b) "Certified historic structure" means a property located in the Fergus Falls
Historical Zone and listed individually on the National Register of Historic Places
or a historic property designated by either a certified local government or a heritage
preservation commission created under the National Historic Preservation Act of 1966
and whose designation is approved by the state historic preservation officer.
new text end

new text begin (c) "Eligible property" means a certified historic structure or a structure in a certified
historic district that is offered or used for residential or business purposes.
new text end

new text begin (d) "Structure in a certified historic district" means a structure located in the
Fergus Falls Historical Zone that is certified by the State Historic Preservation Office as
contributing to the historic significance of a certified historic district listed on the National
Register of Historic Places or a local district that has been certified by the United States
Department of the Interior.
new text end

new text begin (e) "Fergus Falls Historical Zone" means property located in the area of the campus
of the former state regional treatment center in the city of Fergus Falls, including the five
buildings and associated land that were acquired by the city prior to January 1, 2007.
new text end

new text begin Subd. 2. new text end

new text begin Credit allowed. new text end

new text begin A taxpayer who incurs costs for the rehabilitation of
eligible property may take a credit against the tax imposed under this chapter in an amount
equal to 25 percent of the total costs of rehabilitation. Costs of rehabilitation include,
but are not limited to, qualified rehabilitation expenditures as defined under section
47(c)(2)(A) of the Internal Revenue Code, provided that the costs of rehabilitation must
exceed 50 percent of the total basis in the property at the time the rehabilitation activity
begins and the rehabilitation must meet standards consistent with the standards of the
Secretary of the Interior for rehabilitation as determined by the State Historic Preservation
Office of the Minnesota Historical Society.
new text end

new text begin Subd. 3. new text end

new text begin Carryback and carryforward. new text end

new text begin If the amount of the credit under
subdivision 2 exceeds the tax liability under this chapter for the year in which the cost is
incurred, the amount that exceeds the tax liability may be carried back to any of the three
preceding taxable years or carried forward to each of the ten taxable years succeeding the
taxable year in which the expense was incurred. The entire amount of the credit must
be carried to the earliest taxable year to which the amount may be carried. The unused
portion of the credit must be carried to the following taxable year.
new text end

new text begin Subd. 4. new text end

new text begin Partnerships; multiple owners; transfers. new text end

new text begin (a) Credits granted to a
partnership, a limited liability company taxed as a partnership, or multiple owners of
property shall be passed through to the partners, members, or owners, respectively, pro
rata or pursuant to an executed agreement among the partners, members, or owners
documenting an alternate distribution method.
new text end

new text begin (b) A taxpayer eligible for credits may transfer, sell, or assign the credits in whole
or part. An assignee may use acquired credits to offset up to 100 percent of the taxes
otherwise imposed by this chapter. The assignee shall perfect such transfer by notifying
the Department of Revenue in writing within 30 calendar days following the effective
date of the transfer in such form and manner as shall be prescribed by the Department
of Revenue. The proceeds of any sale or assignment of a credit shall be exempt from
taxation under this chapter.
new text end

new text begin Subd. 5. new text end

new text begin Process. new text end

new text begin To claim the credit, the taxpayer must apply to the State Historic
Preservation Office of the Minnesota Historical Society before a historic rehabilitation
project begins. The State Historic Preservation Office shall determine the amount of
eligible rehabilitation costs and whether the rehabilitation meets the standards of the
United States Department of the Interior. The State Historic Preservation Office shall issue
certificates verifying eligibility for and the amount of credit. The taxpayer shall attach
the certificate to any income tax return on which the credit is claimed. The State Historic
Preservation Office of the Minnesota Historical Society may collect fees for applications
for the historic preservation tax credit. Fees shall be set at an amount that does not exceed
the costs of administering the tax credit program.
new text end

new text begin Subd. 6. new text end

new text begin Mortgage certificates; credit for lending institutions. new text end

new text begin (a) The taxpayer
may elect, in lieu of the credit otherwise allowed under this section, to receive a historic
rehabilitation mortgage credit certificate.
new text end

new text begin (b) For purposes of this subdivision, a historic rehabilitation mortgage credit is a
certificate that is issued to the taxpayer according to procedures prescribed by the State
Historic Preservation Office with respect to the certified rehabilitation and which meets
the requirements of this paragraph. The face amount of the certificate must be equal to
the credit that would be allowable under subdivision 2 to the taxpayer with respect to
the rehabilitation. The certificate may only be transferred by the taxpayer to a lending
institution, including a nondepository home mortgage lending institution, in connection
with a loan:
new text end

new text begin (1) that is secured by the building with respect to which the credit is issued; and
new text end

new text begin (2) the proceeds of which may not be used for any purpose other than the acquisition
or rehabilitation of the building.
new text end

new text begin (c) In exchange for the certificate, the lending institution must provide to the
taxpayer an amount equal to the face amount of the certificate discounted by the amount
by which the federal income tax liability of the lending institution is increased due to its
use of the certificate in the manner provided in this section. That amount must be applied,
as directed by the taxpayer, in whole or in part, to reduce:
new text end

new text begin (1) the principal amount of the loan;
new text end

new text begin (2) the rate of interest on the loan; or
new text end

new text begin (3) the taxpayer's cost of purchasing the building, but only in the case of a qualified
historic home that is located in a poverty-impacted area as designated by the State Historic
Preservation Office.
new text end

new text begin The lending institution may take as a credit against the tax due under this chapter
an amount equal to the amount specified in the certificate. If the amount of the discount
retained by the lender exceeds the amount by which the lending institution's federal
income tax liability is increased due to the use of a mortgage credit certificate, the excess
shall be refunded to the borrower with interest at the rate prescribed by the State Historic
Preservation Office. The lending institution may carry forward all unused credits under
this subdivision until exhausted. Nothing in this subdivision requires a lending institution
to accept a historic rehabilitation certificate from any person.
new text end

Sec. 2. new text beginDETERMINATION OF ECONOMIC IMPACT.
new text end

new text begin The Minnesota Historical Society shall annually determine the economic impact
to the state from the rehabilitation of eligible property for which credits are provided
under section 1 and report on the impact to the committees on taxes of the senate and
house of representatives.
new text end

Sec. 3. new text beginEFFECTIVE DATE.
new text end

new text begin Section 1 is effective for taxable years beginning after December 31, 2007.
new text end