Tax credit for historic building restoration advances

Senators gave first-round approval Feb. 20 to a bill that would provide a nonrefundable tax credit to people restoring historically significant property.

Under LB191, introduced by Omaha Sen. Jeremy Nordquist, owners returning a historically significant property to service would qualify for a tax credit equal to 20 percent of eligible expenditures up to $10 million and 10 percent of expenditures over $10 million. Nordquist said cities and towns across the state would benefit from the credit.

“Areas and buildings of historic value can be found in all of our districts,” he said. “Too often these properties can be an eyesore, but they all have the potential to be valuable and fill a need in the community.”

A Revenue Committee amendment, adopted 29-0, reduced the eligible expenditures limit from $10 million to $5 million. As amended, the bill would require the Nebraska State Historical Society — in conjunction with the state Department of Revenue — to file a report detailing the number of applications and credits approved or denied under the program.

A Nordquist amendment to the committee amendment, adopted 25-0, would require the report to be filed electronically by Dec. 31, 2017.

Fullerton Sen. Annette Dubas supported the bill, saying it would allow communities to turn historic buildings into assets.

“When you travel across the state, we have some very beautiful historic buildings,” she said. “This bill would allow us to look at these buildings as resources rather than liabilities.”

Ogallala Sen. Ken Schilz also supported the bill. He said it would unite communities with a common goal.

“This gives people of those communities the opportunity to do something and step up,” he said. “It brings ownership to communities and gives them a reward for doing it.”

In order to be eligible for the credit, an application must be filed with the state historic preservation officer prior to beginning work. Within 12 months of the project’s completion, a final approval request must be made, after which the final credit would be awarded.

If a property restored under the tax credit program is significantly changed within five years of completion — including, but not limited to, work done out of compliance with standards or demolition — the department would employ a sliding scale to recapture credits.

If recapture occurs within:
• one year of project completion, 100 percent of the credit may be recaptured;
• two years of project completion, 80 percent of the credit may be recaptured;
• three years of project completion, 60 percent of the credit may be recaptured;
• four years of project completion, 40 percent of the credit may be recaptured; or
• five years of project completion, 20 percent of the credit may be recaptured.

Taxpayers would be eligible for the credit beginning Jan. 1, 2015, and applications would be accepted until Jan. 1, 2020.

Columbus Sen. Paul Schumacher expressed concerns about the state’s potential liability if the bill were passed, saying it does not have enough restrictions in place to protect taxpayers from an influx of credit applications. Nordquist agreed to work with Schumacher to address his concerns in an amendment that lawmakers could consider during the next stage of debate.

“As well meaning as this is, it’s a state-of-the-art Trojan horse in the people’s vault,” he said. “There is no limit to the state’s exposure, no budgetary control whatsoever and no guidance as to what a historically significant district is.”

Senators advanced the bill to select file on a 32-0 vote.