Introduced by Representatives Keenan of St. Albans City, Bostic of St. Johnsbury, Condon of Colchester, Houston of Ferrisburgh, Howard of Rutland City, Kitzmiller of Montpelier, Marcotte of Coventry, Milkey of Brattleboro, Morley of Barton, Reese of Pomfret, Schiavone of Shelburne, Shand of Weathersfield and Trombley of Grand Isle
Subject: Vermont downtowns and village centers; tax credits
Statement of purpose: This bill proposes to consolidate and simplify the administration and use of the code improvement, facade improvement, and historic rehabilitation tax credits available through the Vermont downtown and village center tax credit program.
AN ACT RELATING TO THE VERMONT DOWNTOWN AND VILLAGE CENTER TAX CREDIT PROGRAM
It is hereby enacted by the General Assembly of the State of Vermont:
Sec. 1. 32 V.S.A. chapter 151, subchapter 11J is added to read:
Subchapter 11J. Vermont Downtown and Village Center Tax Credits
§ 5930aa. DEFINITIONS
As used in this subchapter:
(1) “Qualified applicant” means an owner or lessee, other than a religious entity operating with a primarily religious purpose, or a state or federal agency, political subdivision of the state or federal government, or instrumentality of the United States, of a qualified building involving a qualified project.
(2) “Qualified building” means an income‑producing building built prior to 1983, located within a designated downtown or village center, and not used solely as a single‑family residence.
(3) “Qualified code improvement project” means a project:
(A) To install or improve platform lifts suitable for transporting a personal mobility device, elevators, sprinkler systems, and capital improvements in a qualified building that are required to bring the building into compliance with the statutory requirements and related rules concerning fire prevention, life safety, electrical, plumbing, and accessibility, and are determined by the department of labor and industry to meet such requirements;
(B) To abate or make safe lead paint conditions or other substances hazardous to human health or safety in a qualified building;
(C) To redevelop a contaminated property located within a designated downtown or village center under a plan approved by the secretary of natural resources pursuant to 10 V.S.A. § 6615a.
(4) “Qualified expenditures” means construction-related expenses directly related to the project for which the tax credit is sought.
(5) “Qualified facade improvement project” means the rehabilitation of the facade of a qualified building that contributes to the integrity of the designated downtown, established pursuant to 24 V.S.A. § 2793, or designated village center, established pursuant to 24 V.S.A. § 2793x. Facade improvements to qualified buildings listed, or eligible for listing, in the State or National Register of Historic Places must be consistent with Secretary of the Interior Standards, as determined by the Vermont division for historic preservation.
(6) “Qualified historic rehabilitation project” means a historic rehabilitation project that has received federal certification for the rehabilitation project.
(7) “Qualified project” means a qualified code improvement, facade improvement, or historic rehabilitation project as defined by this subchapter.
(8) “State board” means the Vermont downtown development board established pursuant to chapter 76A of Title 24.
§ 5930bb. ELIGIBILITY AND ADMINISTRATION
(a) Qualified applicants may apply to the state board to obtain the tax credits provided by this subchapter for qualified code improvements, facade improvements, or historic rehabilitation projects meeting the criteria of this subchapter within one year of completion of the qualified project.
(b) To qualify for any of the tax credits under this subchapter, expenditures for the qualified project must exceed $5,000.00.
(c) Application shall be made in accordance with the guidelines set forth by the state board.
§ 5930cc. AVAILABLE PROGRAM TAX CREDITS
(a) Historic rehabilitation tax credit. The owner or lessee of a qualified historic rehabilitation project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit of ten percent of qualified rehabilitation expenditures as defined in the Internal Revenue Code, 26 U.S.C. § 47(c), properly chargeable to the federally certified rehabilitation.
(b) Facade improvement tax credit. The owner or lessee of a qualified facade improvement project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit of 25 percent of qualified expenditures up to a maximum tax credit of $25,000.00.
(c) Code improvement tax credit. The owner or lessee of a qualified code improvement project shall be entitled, upon the approval of the state board, to claim against the taxpayer’s state individual income tax, state corporate income tax, bank franchise or insurance premiums tax liability a credit of 50 percent of qualified expenditures up to a maximum tax credit of $12,000.00 for installation or improvement of a platform lift, a maximum tax credit of $50,000.00 for installation or improvement of an elevator, a maximum tax credit of $50,000.00 for installation or improvement of a sprinkler system, and a maximum tax credit of $25,000.00 for the combined costs of all other qualified code improvements.
§ 5930dd. CLAIMS, AVAILABILITY, REFUNDABLE PROVISIONS
(a) A taxpayer claiming credit under this subchapter shall submit to the department of taxes with the first return on which a credit is claimed a copy of the state board downtown program tax credit allocation.
(b) A credit under this subchapter shall be available for the first tax year in which the qualified project is complete.
(c) Credits awarded by the state board under this subchapter shall be refundable. The commissioner of taxes shall provide for a procedure allowing persons awarded credits on or after July 1, 2005 that otherwise have no state individual income, state corporate income, bank franchise, or insurance premiums tax liability for the year in which the credit is granted to receive the refundable credit.
§ 5930ee. LIMITATIONS
In any fiscal year after 2005, the state board may award tax credits to all qualified applicants under this subchapter, provided that:
(1) The total amount of tax credits awarded annually, together with sales tax reallocated under section 9819 of this title, does not exceed $1,500,000.00;
(2) A total annual allocation of no more than 30 percent of these tax credits in combination with sales tax reallocation may be awarded in connection with all of the projects in a single municipality;
(3) Facade tax credits shall not be available for projects that qualify for the federal rehabilitation tax credit;
(4) No credit shall be allowed under this subchapter for the cost of acquiring any building or interest therein;
(5) No credit shall be allowed under this subchapter to both an owner and a lessee on the same leasable unit for which either the owner or the lessee has claimed a tax credit under this subchapter; and
(6) Qualified buildings receiving tax credits under this subchapter are ineligible to apply for the same tax credits for a two-year period from the initial award date.
§ 3590ff. RECAPTURE
If within five years after completion of the qualified project any of the following events occur, the taxpayer shall be liable for a recapture penalty in an amount equal to the total tax credit awarded if:
(1) The state board finds that the taxpayer performed any work on the qualified project inconsistent with the approved application knowingly failed to supply any information, or true information, required by the state
board; or failed to comply with any award condition required by the state board; or
(2) The National Park Service has revoked certification for unapproved alterations or for work not done as described in the certified historic preservation application.
Sec. 2. EFFECTIVE DATE; CARRYFORWARD PROVISIONS
(a) This act shall take effect July 1, 2005.
(b) On and after July 1, 2005 no new credits may be awarded by the Vermont Downtown Development Board established under chapter 76A of Title 24 under the following sections in Title 32:
(1) Section 5930n, tax credit for substantial rehabilitation of historic buildings also claiming federal rehabilitation credit.
(2) Section 5930p, rehabilitation tax credit for older or historic buildings.
(3) Section 5930q, tax credit for platform lifts, elevators, or sprinkler systems.
(4) Section 5930r, tax credit for code improvements to commercial buildings.
(c) Credits awarded by the Vermont Downtown Development Board established under chapter 76A of Title 24 before July 1, 2005 are not refundable, but any unused credit may be carried forward to reduce the taxpayer’s tax liability according to the statute that governed at the time of the award.
The Vermont General Assembly
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