Ala. Admin. Code r. 460-X-25-.02

Current through Register Vol. 43, No. 1, October 31, 2024

Section 460-X-25-.02 - [Effective 12/15/2024] Definitions

(a) Act. Act 2017-380, Act 2021-431, and Act 2023-522 of the Alabama legislature and its amendments and successor legislation.

(b) Aggregate Tax Credit Allocation Amount. The cumulative limit on tax credit allocations as set forth in the Act per calendar year. As of January 1, 2018, the aggregate amount shall be twenty million dollars ($20,000,000) per year plus any amount of previous reservations of tax credits that were rescinded. For tax years 2024 through 2027, for counties with 175,000 or more in population, the Commission may utilize the original yearly allocation amount of $12 million plus an additional $5 million, provided that in no event shall a total of $200 million be reserved by the Commission during May 25, 2017, through December 31, 2027.

(c) Applicant. For the purpose of this Program, the Applicant shall be the Owner of the Certified Historic Structure for which tax credits are being applied.

(d) Application. The Application shall consist of three parts: Part A: Evaluation of Program Eligibility, to be used by the Commission for making a determination whether a project meets the basic criteria for the 2017-2027 Alabama Historic Rehabilitation Tax Credit Program and to determine if a building is a Certified Historic Structure; Part B: Description of Rehabilitation, to be used by the Commission for reviewing proposed Projects for compliance with the Secretary of the Interior's Standards (Standards); and Part C: Request for Certification of Completed Work, to be used by the Commission for reviewing completed Projects for compliance with the Standards and Rehabilitation Plan approved under Part B. The Commission staff will develop the parts of the Application and may modify them as needed over time. All required forms, including Parts A, B, C, and Amendment Sheet, are available from the Commission at no cost.

(e) Application Period. The duration of receiving Complete Applications, as provided in Rule 460-X-25-.12, to be considered in the following Review Cycle.

(f) Appraisal. An opinion of value for the Property after rehabilitation is complete, prepared by a licensed real estate appraiser who is a Member of the Appraisal Institute.

(g) Certified Historic Structure. A building located in Alabama which is at least seventy-five years old, unless the building is an historic building located within the boundaries of a National Monument or Park as declared by the United States Congress or the President of the United States, in which case the federal age provisions shall apply, and that is certified by the Commission as being individually listed in the National Register, eligible for listing in the National Register, or certified by the Commission as contributing to the significance of a Registered Historic District. For the purpose of this Program, this term refers to a structure that is not occupied by an Owner and is not used exclusively as a primary or secondary residence.

(h) Certified Rehabilitation. Repairs or alterations to a Certified Historic Structure that is certified by the Commission as meeting the Standards, which means that it is consistent with the historic character of such property or the district in which such property is located.

(i) Commencement of Rehabilitation. Within 18 months of the date of issuance of written notice of a Tax Credit Allocation Reservation, the Applicant shall incur no less than 20 percent of the estimated costs of rehabilitation described in the Application. Within 36 months of the date of issuance of the written notice of a Tax Credit Allocation Reservation, the Applicant must have incurred an additional 50 percent of the estimated costs of rehabilitation provided in the application. Within 60 months of the date of issuance of the written notice of a Tax Credit Allocation Reservation, the Project must be completed.

(j) Commission. The Executive Director and staff of the Alabama Historical Commission, a state agency, and or any successor to the Alabama Historical Commission. For the purpose of notifications or filing of any Applications or other correspondence, delivery shall be made to: Alabama Historic Rehabilitation Tax Credit Program, Alabama Historical Commission, 468 South Perry Street, Montgomery, Alabama 36130-0900 (US Mail) or 36104 (Courier delivery).

(k) Committee. The Historic Tax Credit Evaluating Committee which reviews Qualifying Projects, approves credits for Projects, and ranks Projects in the order in which the projects should receive tax credit reservations. Members shall consist of the following: Director of the Governor's Office of Minority Affairs, Executive Director of the Alabama Historical Commission, Finance Director, Director of the Alabama Department of Economic and Community Affairs (ADECA), Secretary of Commerce, one Republican House member, one Democrat House Member, one Republican Senator, one Democrat Senator, the Chair of the Senate Finance Taxation Education Committee, and the Chair of the House Ways and Means Education Committee, and the Commissioner of Revenue (non-voting advisory member). The Committee shall meet quarterly unless no credits remain or no Qualifying Projects are recommended by the Commission.

(l) Complete Application. Submission of completely filled out Parts A and B that are signed and dated by the Applicant and accompanied by the Application fee, as provided in Rule 460-X-25-.05, photographs and site plan(s), floor plan(s), elevation drawings, and any other supporting exhibits necessary to accurately convey to the Commission the significance of the building and the scope of all work that is proposed to the building.

(m) Condition of Work. A qualifier for the approval of proposed work based on the Commission staff's review of an Application where the staff determines that certain aspects of the proposed Rehabilitation Plan shall be modified or deleted before a determination can be made to consider it a Qualifying Project.

(n) Cost and Expense Certification. Based upon a complete schedule of qualified and non-qualified expenditures, grouped by categories of work; a licensed and independent Certified Public Accountant prepares the certification report.

(o) Department. The Alabama Department of Revenue or its successor.

(p) Disqualifying Use. Any use of a certified historic residential structure that is occupied by an Owner and used exclusively as a primary or secondary residence.

(q) National Register. The National Register of Historic Places, which is the official list of the nation's historic places worthy of preservation authorized by the National Historic Preservation Act of 1966 and administered by the National Park Service, a bureau of the U.S. Department of the Interior.

(r) Owner. A taxpayer filing a State of Alabama tax return or any entity that is exempt from federal income taxation pursuant to Section 501(c) of the Internal Revenue Code, as amended, that owns title to a Certified Historic Structure or owns a leasehold interest in a Certified Historic Structure for a term of not less than 39 years. An Owner shall not be considered a private user as defined in Section 40-9A-1, Code of Ala. 1975.

(s) Project. A Project includes all work to a Certified Historic Structure and its site and landscape features, the scope of which is fully described in a Part B and a Rehabilitation Plan. For the purpose of this Program, all work completed on a building and its site and landscape features is subject to review for compliance with the Standards during the period beginning six (6) months before the Application is submitted and continuing through the end of the recapture period.

(t) Program. The Alabama Historic Rehabilitation Tax Credit Program as authorized by Act 2017-380 and Act 2021-431 and described in these regulations.

(u) Qualified Rehabilitation Expenditures. Any expenditure as defined under Section 47(c)(2)(A) of the Internal Revenue Code, as amended, and the related regulations thereunder, and other reasonable expenses and costs expended in the rehabilitation of a Certified Historic Structure. For Certified Historic Structures, this term shall mean expenses incurred by the taxpayer in the Certified Rehabilitation of a Certified Historic Structure, including but not limited to: preservation and rehabilitation work done to the exterior of a Certified Historic Structure; repair and stabilization of historic structural systems; restoration of historic plaster; energy efficiency measures except insulation in frame walls; repairs or rehabilitation of heating, air conditioning, or ventilation systems; repairs or rehabilitation of electrical or plumbing systems exclusive of new electrical appliances and electrical or plumbing fixtures; and architectural, engineering, and land surveying fees. Qualified Rehabilitation Expenditures do not include the cost of acquisition of the Certified Historic Structure, the personal labor by the Applicant, enlargement of the Certified Historic Structure, or any cost associated with the rehabilitation of an outbuilding of the Certified Historic Structure, unless the outbuilding is certified by the Commission to contribute to the historical significance of the Certified Historic Structure.

(v) Qualified Structure. Certified Historic Structures that have been substantially rehabilitated.

(w) Qualifying Project. A Certified Historic Structure with a Complete Application and a Rehabilitation Plan that the Commission determines will meet the Standards, either as submitted or with Conditions of Work, and is recommended to the Committee for approval and ranking.

(x) Recapture Period: the 5-year period of time that a rehabilitation tax credit can be taken back by the Department if the property is disposed of, ceases to be investment credit property, or fails to meet the definition of a Certified Historic Structure during the recapture period. The recapture percentage is 100 percent for property that ceases to be investment credit property within one full year after it is placed in service, reduced by 20 percentage points for each year held during the 5-year recapture period. Recapture and any related adjustments of basis due to recapture shall be governed by principles which correspond to those applicable to the Federal Historic Credit under Title 26 Section 50 of the Internal Revenue Code pursuant to the Department's Administrative Code Chapter 810-3-137.03.

(y) Rehabilitation. The process of returning a building or buildings to a state of enhanced utility, through repair or alteration, which makes possible an efficient use while preserving those portions and features of the building and its site and environment which are significant as defined by Part A of the Application approved by the Commission.

(z) Rehabilitation Plan. Descriptions, construction plans, and specifications for the proposed rehabilitation of a Certified Historic Structure in sufficient detail to enable the Commission to evaluate compliance with the Standards.

(aa) Registered Historic District. Any district listed in the National Register or any district which is:

a) designated under Alabama or local law as containing criteria which substantially achieves the purpose of preserving and rehabilitating buildings of historic significance to the district; or

b) certified by the U.S. Secretary of the Interior as meeting substantially all of the requirements for the listing of districts in the National Register of Historic Places.

(bb) Request for a Tax Credit Allocation Reservation. The submittal of Parts A and B of the Application and Application fee, as provided in Rule 460-X-25-.05.

(cc) Review Cycle. The continuous review of Complete Applications in preparation for and including the quarterly meetings of the Committee to evaluate Qualifying Projects.

(dd) Standards. The Secretary of the Interior's Standards for Rehabilitation as defined by Title 36 Code of Federal Regulations (CFR) Part 67.7. The Standards are as follows:

1. A property shall be used for its historic purpose or be placed in a new use that requires minimal change to the defining characteristics of the building and its site and environment.

2. The historic character of a property shall be retained and preserved. The removal of historic materials or alteration of features and spaces that characterize a property shall be avoided.

3. Each property shall be recognized as a physical record of its time, place, and use. Changes that create a false sense of historical development, such as adding conjectural features or architectural elements from other buildings, shall not be undertaken.

4. Most properties change over time; those changes that have acquired historical significance in their own right shall be retained and preserved.

5. Distinctive features, finishes, and construction techniques or examples of craftsmanship that characterize a property shall be preserved.

6. Deteriorated historic features shall be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature shall match the old in design, color, texture, or other visual qualities and, where possible, materials. Replacement of missing features shall be substantiated by documentary, physical, or pictorial evidence.

7. Chemical or physical treatments, such as sandblasting, that cause damage to historic materials shall not be used. The surface cleaning of structures, if appropriate, shall be undertaken using the gentlest means possible.

8. Significant archaeological resources affected by a Project shall be protected and preserved. If such resources must be disturbed, mitigation measures shall be undertaken.

9. New additions, exterior alterations, or related new construction shall not destroy historic materials that characterize a property. The new work shall be differentiated from the old and shall be compatible with the massing, size, scale, and architectural features to protect the historic integrity of the property and its environment.

10. New Additions and adjacent or related new construction shall be undertaken in such a manner that if removed in the future, the essential form and integrity of the historic property and its environment would be unimpaired.

(ee) Substantial Rehabilitation. Rehabilitation of a Certified Historic Structure for which the qualified rehabilitation expenditures exceed 50 percent of the Owner's original purchase price of the building or twenty-five thousand dollars ($25,000), whichever is greater. For the purpose of this Program, the Owner's original purchase price of the Certified Historic Structure shall mean the original purchase price minus the value of the underlying land and any buildings other than the Certified Historic Structure for which rehabilitation tax credits are being applied.

(ff) Tax Credit Allocation. The dollar amount of tax credits apportioned for the Substantial Rehabilitation of a Qualified Structure based on a Rehabilitation Plan approved by the Commission.

(gg) Tax Credit Allocation Reservation. A portion of the Aggregate Tax Credit Allocation Amount reserved by the Commission after approval and ranking of projects by the Committee. The Commission notifies the Owner in writing of the amount of the reservation.

(hh) Tax Credit Certificate. A certificate issued by the Commission via a written form or letter to the Applicant providing information about the Project and the amount of its Tax Credit Allocation to be filed with the Applicant's Alabama state tax return.

Ala. Admin. Code r. 460-X-25-.02

Adopted by Alabama Administrative Monthly Volume XXXV, Issue No. 11, August 31, 2017, eff. 9/24/2017.

Amended by Alabama Administrative Monthly Volume XL, Issue No. 03, December 30, 2021, eff. 2/13/2022.

Amended by Alabama Administrative Monthly Volume XLI, Issue No. 09, June 30, 2023, eff. 8/14/2023.

Amended by Alabama Administrative Monthly Volume XLIII, Issue No. 01, October 31, 2024, eff. 12/15/2024.

Author: Chloe Mercer; Lee Anne Hewett

Statutory Authority: Act 2017-380; Act 2021-431; Act 2023-522.