Commerce Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-1131

Title:

AN ACT CONCERNING CHANGES TO THE CONNECTICUT HISTORIC HOME TAX CREDIT.

Vote Date:

3/26/2013

Vote Action:

Joint Favorable Substitute Change of Reference to Finance, Revenue and Bonding

PH Date:

3/19/2013

File No.:

SPONSORS OF BILL:

Commerce Committee

REASONS FOR BILL:

- Under current law, home owners and nonprofit organizations that rehabilitate historic homes qualify for a business tax credit that equals 30% of qualified rehabilitation expenditures up to $30,000 per dwelling unit.

The credit applies to the insurance premium, corporation business, air carrier, railroad companies, community antenna and satellite TV companies, and utility companies' taxes.

- The bill expands the tax credit by:

Making the credit available statewide, not just in statutorily designated areas,

Reduces the minimum amount of money a property owner must spend on rehabilitating a home to qualify for a credit from $25,000 to $15,000,

Raising the maximum amount of credit a nonprofit corporation can claim for rehabilitating a unit in an historic home from $30,000 to $50,000.

The bill makes technical changes.

SUBSTITUTE:

The substitute deletes changes the underlying bill makes to the historic tax credit that:

Extend the credit to the personal income tax and pass-through entities

Allow credit holders to transfer the credit

Current law allows them to carry forward unused credits for up to four years

Ties the credit amount available to home owners their income.

RESPONSE FROM ADMINISTRATION/AGENCY:

None

NATURE AND SOURCES OF SUPPORT:

Linda Feczko, Connecticut Preservation Action,

Ms. Feczko testified in support of this bill stating “This bill can only serve to enhance and expand an already successful Historic Home Tax Credit program that creates rehabilitation of historic structures, as well as additional housing options, for many constituents throughout the state.” She added, “The changes in the tax credit program language, and in particular, the reduction of $25K to $15K in qualified rehabilitation expenditures, I believe will be an important component in the decision and ability of many owners in urban communities to restore their homes.”

Robert Tod Bryant, President, Norwalk Preservation Trust

Mr. Bryant testified in support of this bill stating “The current amount of tax credits reserved for this program will remain the same, but the changes proposed in this act update the existing program to reflect today's cost and make it easier to use.” He later added, “The revised Connecticut Historic Home Tax Credit program will benefit the entire state by helping to preserve our historic towns and cities, while supporting local business.”

Anita Meilert, President, Connecticut Preservation Act

Having initiated the bill, the CPA testified in its support stating “CT's Historic Homes Tax Credit has been in effect since 2000 and has served as an economic stimulus, triggering private investment and jobs, preserving historic resources, and returning building to local tax rolls. CPA feels the requested changes to the law will result in a greater utilization and public benefit, without raising the budgetary limit.”

Frank Hagaman, Executive Director, Hartford Preservation Alliance

Mr. Hagaman testified in support of the bill stating “historic preservation is about jobs. Of every $100 invested in rehabilitation $83 ends up 'in the pockets of Connecticut workers'. I will hasten to say that many of the jobs are skilled labor. Here is historic preservation investment by the numbers in Connecticut during the period of 2000-2010: $450 million in private sector investment, $242 million in direct salaries and wages, $128 million in indirect salaries and wages, 99% historic preservation projects in areas identified as a priority development, 83 communities receiving benefits, 75% in neighborhoods with median household income of less than $25,000.”

Helen Higgins, Executive Director, Connecticut Trust for Historic Preservation

Ms. Higgins testified in support of the bill stating “The Historic Homes Tax Credit stimulates investment in smaller historic homes, up to four units of owner occupied hosing. It works.” She went on to say, “So, why do we need revisions to our Historic Homes Tax Credit? Because the credit needs to be accessible to many more owners of historic houses than it is now, it needs to have a process that is simpler than now exists, and it needs to have more realistic eligible costs numbers so that those with smaller projects and smaller budgets can partake in the credit.”

John Herzan, Preservation Services Officer, New Haven Preservation Trust

Mr. Herzan testified in support of the bill stating “The proposed changes would allow individuals to apply on their own and take the credit on their CT income tax return. We feel that this change will encourage more applications and thus enable more investment opportunity.” He added, “Lowering the qualifying minimum to $15,000 per unit will make the credit available to homeowners in lower income ranges. Conversely, increasing the credit maximum to $50,000 per unit/application for nonprofit corporations which specialize in affordable housing will help thes4e organizations tackle difficult revitalization projects in the inner city, thus reducing blight and stabilizing neighborhoods.”

Henry P. Dynia, Jr. Director, Design/Construction, Neighborhood Housing Services of New Haven testified in support of the bill.

NATURE AND SOURCES OF OPPOSITION:

Wade Gibson, J.D., Fiscal Policy Center at CT Voices for Children

Mr. Gibson testified in opposition to this bill stating “Senate Bills 1131(and 1132) threaten to erode the state's strongest revenue source. The bill would expand the Historic Home Tax Credit to the owner of pass-through entities and allow venture capital companies to receive the Angel Investor Tax Credit, one of only three business tax credits currently permitted against the personal income tax. Expanding these credits risks diminishing the income tax at a time when revenues are at a premium.”

Reported by: Jonathan McDonald

Date: March 27, 2013