Tax credit for historic building restoration amended, advanced

Senators amended and advanced a bill from select file March 24 that would provide a nonrefundable tax credit to people restoring historically significant property.

Under LB191, as originally introduced by Omaha Sen. Jeremy Nordquist, owners returning a historically significant property to service would have qualified for a tax credit equal to 20 percent of eligible expenditures up to $10 million and 10 percent of expenditures over $10 million.

Nordquist introduced an amendment, adopted 27-0, which replaced the bill and would impose stronger restrictions on those applying for the credit.

The amended bill would allow owners to apply for a tax credit equal to 20 percent of eligible expenditures up to $1 million. The total amount of credits available per year would be limited to $15 million. Taxpayers would be eligible for the credit beginning Jan. 1, 2015, and applications would be accepted until Dec. 31, 2018.

The amendment also would allow recipients of credits to transfer, sell or assign up to 50 percent of the credits to any person or legal entity. If the credits are transferred to a political subdivision or a tax-exempt entity, the 50 percent restriction would not apply.

The Nebraska State Historical Society — in conjunction with the state Department of Revenue — would be required to electronically file a report by Dec. 31, 2017, detailing the number of applications and credits approved or denied under the program.

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 were 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.

Omaha Sen. Burke Harr introduced an amendment, adopted 26-0, which incorporated provisions of his LB885.

Under the amendment, in counties of at least 150,000 people, two or more vacant or unimproved lots owned by the same person in the same tax district and held for sale or resale could be included in one parcel for property tax purposes.

The amendment also would direct county assessors to use the discounted cash-flow analysis method, in addition to the income approach, when determining property taxes.

Columbus Sen. Paul Schumacher supported the Harr amendment, saying it was a suggestion made to the Legislature’s Tax Modernization Committee.

“[This amendment] gives [county assessors] an opportunity have a fair way to tax empty lots that won’t sell for a long time,” he said, “while still maintaining a framework that allows developers to develop large tracts of land.”

Following the adoption of a technical amendment, senators advanced the bill to final reading on a voice vote.