Enhanced Iowa State Historic Credit Program Launches

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Iowa’s state historic tax credit program has been strengthened and made more predictable for developers by legislative changes that took effect July 1, 2014.

The program amendments were made by a bill (House File 2453) signed on May 27 by Gov. Terry Branstad. Revised program instructions, application forms, and related materials have been posted online by the State Historical Society of Iowa and the State Historic Preservation Office (go to http://tinyurl.com/m66u58t).

Under the program, developers can receive a state income tax credit that is equal to up to 25% of the amount of qualified rehabilitation expenditures for the renovation of historic buildings. For income-producing commercial buildings, minimum rehab expenditures must be $50,000 or 50% of the pre-rehab assessed value of the building (excluding land), whichever is less. Renovation work must satisfy the U.S. Interior Secretary’s Standards for Rehabilitation. Developers must submit state Part 1, 2, and 3 applications to receive the state tax credit. Projects don’t have to seek or receive the federal historic tax credit to be eligible for the state credit.

To qualify for the state historic tax credit, commercial buildings must:

  • Be individually listed, or determined eligible for listing, on the National Register of Historic Places;
  • Contribute to the significance of an historic district listed on, or eligible for listing, on the National Register of Historic Places; or,
  • Be a local landmark, as designated by a city or county ordinance.

Program Changes

Until now, the state tax credit has been awarded to projects through a lottery under a three-year reservation cycle without regard to readiness to proceed.

The program changes eliminate the lottery-based reservation system in favor of a more predictable application process under which credits will be reserved based on the merits of projects and their readiness to proceed. More advance planning is required as well, with a mandatory meeting required prior to submitting a Part 2 application. Part 1, 2, and 3 applications will be accepted year-round for projects of $750,000 or less.

For larger projects, Part 2 applications, establishing a project’s planning and financial readiness, must be submitted in the FY 2015 filing window during January 5-21, 2015.

The legislation didn’t change the program’s annual volume cap of $45 million in state historic tax credits.

Since the program’s inception in 2001, the state has provided $177 million in historic tax credits for the rehabilitation of 283 historic buildings, leveraging $890 million in total investment.