57 RI Bar J., No. 3, Pg. 35. Salvaging the Historic Tax Credit Program.

• Author: John M. Boehnert, Esq.

Rhode Island Bar Journal

Volume 57.

57 RI Bar J., No. 3, Pg. 35.

Salvaging the Historic Tax Credit Program

Rhode Island Bar Journal 57 RI Bar J., No. 3, Pg. 35November/December 2008 Salvaging the Historic Tax Credit ProgramJohn M. Boehnert, Esq.Practices with Partridge Snow & Hahn LLP in Providence.Bowing to budgetary constraints, the 2008 session of the Rhode Island General Assembly effectively terminated the Rhode Island Historic Tax Credit Program for all projects for which an application was not filed prior to January 1, 2008.

Rhode Island's Historic Tax Credit Program, established pursuant to R.I. Gen. Laws §§ 44-33.2-1 to -6, provided a generous credit against Rhode Island state income taxes in an amount equal to thirty percent of qualified rehabilitation expenditures (QRE's) incurred in rehabilitating and placing in service certified historic structures. The tax credits were assignable, and therefore, saleable, allowing developers to sell the tax credits to generate equity for rehabilitation development projects.

Since its effective date, January 1, 2002, the historic tax credit program enrolled 277 projects through June, 2007, representing an aggregate investment of $1.53 billion in QRE's, according to a study released by Grow Smart Rhode Island on behalf of the 57 member Coalition for Neighborhood & Economic Renewal. See Grow Smart Rhode Island, "Rhode Island Historic Preservation and Investment Tax Credit, Economic & Fiscal Analysis" (2007) (Grow Smart Rhode Island is a state-wide non-profit organization which promotes alternatives to suburban sprawl and urban decay). The study concluded that as of June, 2007, the program is generating thousands of jobs and approximately $2.5 billion in economic activity for a state-estimated investment of $460 million through the year 2012. Id. Projects have been certified in 23 Rhode Island communities. Id.

Amendments

However, the Tax Credit Program became a victim of its own success, with the Governor and the General Assembly focusing on the annual cost to the State Treasury. For that reason, the program was effectively ended by the General Assembly, providing eligibility in the program is limited to applicants who submitted a Part I application certified as a certified historic structure by the Rhode Island Historical Preservation and Heritage Commission through its historic tax credit application process prior to January 1, 2008. See 2008 R.I. Pub. Laws 6 (2008-H8016 Substitute A, AN ACT RELATING TO TAXATION-HISTORIC STRUCTURE-TAX CREDITS) (the "Amendments"); R.I. Gen. Laws § 44-33.2-3(a)(2008). The thirty percent tax credit is now available only for projects completed on or before December 31, 2007. The Governor had proposed that projects...