You asked for a summary of Rhode Island's Mill Building and Economic Revitalization Act. Specifically, you want to know what types of tax credits it provides to businesses occupying certified mill buildings.

Rhode Island's 1996 Mill Building and Economic Revitalization act established a tax incentive program for owners of certified mill buildings, businesses located in the buildings, and lenders making loans to these businesses, to promote their redevelopment and reuse by modern commercial and manufacturing enterprises. The law required municipalities to follow a building certification process in order to qualify buildings for the program.

Under the law, certified mill building owners are eligible for a tax credit equal to 10% of certain rehabilitation costs. Lenders making loans to businesses for expenditures within a certified building are eligible for a tax credit equal to 10% of the interest earned on the loans and a 100% credit for interest on loans made for substantial rehabilitation costs. Certain businesses that occupy mill buildings are eligible for a business tax credit equal to 100% of wages paid to new employees, up to $3,000 per new employee. If the certified mill building is located in an enterprise zone, the businesses may elect to use either the business tax credit or a credit equal to 50% of the wages paid to new employees, up to $10,000 per new employee.

The Rhode Island legislature passed the Mill Building and Economic Revitalization Act in 1996. The law established a tax incentive program for certified mill building owners, businesses located in the building, and lenders making loans to these businesses, to promote the their redevelopment and reuse by modern commercial and manufacturing enterprises. It required municipalities to apply to the state's Enterprise Zone Council to designate a mill complex or building as a certified mill building. And it required owners of certified mill buildings to request an expedited permit process from the council. The law sunsets on August 8, 2009.

In order to qualify for tax incentives under the law, the state's Enterprise Zone Council must certify the mill complex or building. The law required municipalities to submit, by December 1, 2000, a list of industrial mill structures for the council's consideration.

Under the law, a certifiable building must:

1. have been constructed before January 1, 1950;

2. have at least 2 floors, excluding a basement;

3. be or plan to be used primarily for manufacturing, wholesale trade, and other commercials uses;

4. conform to the comprehensive plan and local land use management ordinances of the municipality in which it is located;

5. be proposed for substantial rehabilitation;

6. have been at least 75% vacant for at least 24 months at the time the municipality applies for certification;

7. be designated by the municipality for consideration as a certifiable building;

8. meet the council's other requirements; and

9. be designated by the council as a certified building.

In order for the council to grant a preliminary certification, the municipality must agree that within six months of this designation it will promulgate local regulations and ordinances:

1. providing favorable local property tax treatment for rehabilitated certified industrial mill buildings;

2. expediting the building permit review and approval process for rehabilitating certified buildings;

3. waiving all building permit fees for the certified buildings' rehabilitation;

4. adopting design standards that encourage certified buildings' historic preservation, or alternatively, adopting standards developed and recommended by the state's Historic Preservation Commission; and

5. requiring that it obtain the Historic Preservation Commission's advice in rehabilitating any certified building.

It must also agree to establish a program for eligible businesses that coordinates state and local business assistance programs' and agencies' economic development activities. The building cannot receive its final designation as a certified building until the municipality satisfies these requirements. The Rhode Island Economic Development Corporation's website includes a list of participating communities and eligible mill locations.

The law established a tax incentive program for certified mill building owners, businesses located in certified mill buildings, and the lenders making loans to these businesses.

The rehabilitation must occur within 2 years of the building's market value assessment. The credit is granted in the year the rehabilitated building is first placed in service, and the owner may carry forward any unused credits for up to seven taxable years.

Lenders. Lenders making loans to businesses for expenditures in a certified building are eligible for a tax credit equal to 10% of the interest earned on the loans, up to a maximum of $10,000 per tax year. The credit may be applied against corporation, personal service corporation (e.g. utility, telecommunications, and cable companies), bank, insurance, personal income, beverage container, and hard-to-dispose material taxes.

Lenders are also eligible for a 100% credit against these enumerated taxes, up to $20,000 per tax year, for interest on loans made for substantial rehabilitation costs.

Eligible Businesses. Certain businesses that occupy mill buildings are eligible for a business tax credit against the corporation or personal income tax equal to 100% of wages paid to new employees, up to a maximum credit of $3,000 per new employee. If the certified mill building is located in an enterprise zone, businesses in it may elect to use the business tax credit or a credit equal to 50% of the wages paid to new employees, up to a maximum of $10,000 per new employee.

An eligible businesses is one:

1. located in a certified building after it has undergone substantial rehabilitation,

2. primarily engaged in manufacturing, wholesale trade, or other commercial business activities,

3. whose total Rhode Island salaries and wages exceed the total paid to its employees in the prior calendar year,

4. that has been certified by the Enterprise Zone Council, and

5. meets the council's year end certification requirements.

The law required the owner of any building certified by the Enterprise Zone Council to immediately notify the governor and the Rhode Island Economic Development Corporation for consideration as a “critical economic concern” project in order to secure any necessary licenses or permits expediently. Rhode Island law defines critical economic concern projects as those the Economic Development Corporation designates to be significant, in its operational stage, by its ability to (1) enhance, promote, and encourage business, commerce, and industry and (2) stimulate jobs and relieve underemployment and unemployment in the state.

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