Mo. Code Regs. tit. 4 § 85-5.010

Current through Register Vol. 49, No. 24, December 16, 2024

Section 4 CSR 85-5.010 - Overview and Definitions

PURPOSE: This proposed amendment will ensure consistency in definitions as between the statutes and the regulations, add definitions to reflect the three different stages when applications can be submitted, and update some definitions to reflect technological advancements in filing and processing of applications.

PUBLISHER'S NOTE: The secretary of state has determined that publication of the entire text of the material that is incorporated by reference as a portion of this rule would be unduly cumbersome or expensive. This material as incorporated by reference in this rule shall be maintained by the agency at its headquarters and shall be made available to the public for inspection and copying at no more than the actual cost of reproduction. This note applies only to the reference material. The entire text of the rule is printed here.

(1) The Missouri Historic Preservation Tax Credit (HTC) Program was enacted in 1997 and took effect on January 1, 1998. The law may be found in sections 253.545 to 253.559, RSMo. The law is intended to aid in the rehabilitation of historic structures in the state of Missouri by providing an incentive in the form of state tax credits equal to twenty-five percent (25%) of the qualified rehabilitation expenditures (QREs), provided that such expenses exceed fifty percent (50%) of the total basis in the property.

(2) As used in this chapter, the following terms mean-

(A) Applicant. The taxpayer seeking an authorization or issuance of tax credits by the department;

(B) Certified Historic Structure. Property located in Missouri and listed individually on the National Register of Historic Places;

(C) Department. The Department of Economic Development;

(D) Developer Fee Agreement. A written agreement for services between the developer and the applicant;

(E) Director. The director of the department;

(F) Eligible Property. Property located in Missouri and offered or used for residential or business purposes;

(G) Excess Tax Credits. As authorized in section 253.559.10, RSMo, excess tax credits may be awarded when the amount of QREs for a project exceed the amount of QREs attributable to the amount of tax credits the department authorized and issued for the project in response to the preliminary application and final application. The amount of excess tax credits is based upon the excess amount of QREs for the project;

(H) Excess Tax Credits Application. A request for issuance of excess tax credits. The excess tax credits application must be on the electronic form provided by the department;

(I) Final Application. A request for issuance of tax credits by an applicant whose project is complete after having received an authorization of tax credits for the project. The final application must be on the electronic form provided by the department;

(J) Final Completion. For the purposes of issuing state historic preservation tax credits, the project is considered complete when all work has been done on the project. The final year construction costs are incurred is the year credits will be issued (i.e., if costs are still being incurred in 2007 then regardless of placed in service date or date of substantial completion, the credits will be issued as 2007 credits if those expenses are being claimed for tax credits). Please note: completion dates have been established for the state historic program only. Federal guidelines vary. Final completion is separately determined for each construction period of a phased project. Costs associated with one (1) construction period may not be carried to another construction period of a project. Each construction period is considered a separate project for audit purposes and must stand alone to meet all requirements of the program. Any exceptions must be submitted to the department before the final cost certification is submitted and must be approved in writing by the department;

(K) Hard Costs. Qualified rehabilitation expenditures, or QREs, related to the structural components of a building, including but not limited to walls, partitions, floors, ceilings, windows, doors, components of central air conditioning or heating systems, plumbing, electrical wiring and lighting fixtures, chimneys, stairs, escalators, elevators, sprinkling systems, fire escapes, and other components related to the operation or maintenance of the building;

(L) Identity of Interest, or Related Party. An identity of interest, or related party, may exist when-

1. The applicant has any financial interest in the other party (i.e., general contractor, subcontractor, or vendor);

2. One (1) or more of the officers, directors, stockholders, or partners of the applicant is also an officer, director, stockholder, or partner of the other party;

3. Any officer, director, stockholder, or partner of the applicant has any financial interest whatsoever in the other party or has controlling interest in the management or operation of the other party;

4. The other party advances any funds to the applicant;

5. The other party provides and pays on behalf of the applicant the cost of any legal services, architectural services, or engineering services other than those of a surveyor, general superintendent, or engineer employed by a general contractor in connection with obligations under the construction contract;

6. The other party takes stock or any interest in the applicant as part of consideration to be paid;

7. There exists or comes into being any side deal, agreement, contract, or undertaking entered into thereby altering, amending, or canceling any of the original documents submitted to the department in the preliminary application, except as approved by the department;

8. Any party involved in the project would be deemed to constructively own the stock of another party involved in the project as set forth in section 304(c) of the Internal Revenue Code of 1986, as amended; or

9. Any party involved in the project has a stockholder, member, partner, officer, or director that is related by blood, adoption, or marriage to a stockholder, member, partner, officer, or director of another party involved in the project-

(M) Inactive Project. Any project deemed pending as described in written communication from the department to the applicant or that has received a tax credit authorization that, in either case, has remained idle without communication from the applicant to the department providing a justified reason for such idleness, such justification to be reasonably determined by the department, for a period of at least nine (9) months from the date the last written correspondence was sent by the department to the applicant regarding the project;

(N) Incurred. Has the same meaning as set forth in Title 26, Code of Federal Regulations, section 1.461-1(a)(2)(i), published November 26, 1960, which is hereby incorporated by reference and made a part of this rule, as published by the Office of the Federal Register, National Archives and Records Administration, United States Government Publishing Office, 732 N. Capital Street NW, Washington, DC 20402-0001, phone: toll free (866) 512-1800, website: http://bookstore.gpo.gov. This rule does not incorporate any subsequent amendments or additions;

(O) Non-Qualified Expenditures. All costs included in total project costs which are not qualified rehabilitation expenditures are considered non-qualified expenditures, including but not limited to a list of non-qualified expenditures under the program published by the department in the program guidelines, which shall be effective for the state fiscal year beginning on July 1 following such publication and may be updated for subsequent state fiscal years in the reasonable determination of the department. Each project shall be held to the non-qualified expenditures effective on the date the project's preliminary application was submitted. Costs of acquisition shall constitute a non-qualified expenditure;

(P) Not-for-profit. A not-for-profit entity, including but not limited to a not-for-profit corporation formed under Chapter 355, RSMo;

(Q) Phased Project. A project for which the preliminary application submitted to the department provides for the project to be completed and reviewed in more than one (1) construction period, as described in 4 CSR 855.080;

(R) Postmark. For applications received by the department through a web application, the postmark shall be the date the application was submitted, as recorded by the web application;

(S) Preliminary Application. A request by an applicant for an authorization of tax credits, on the electronic form provided by the department;

(T) Program. The Missouri Historic Preservation Tax Credit Program authorized in sections 253.545 to 253.559, RSMo;

(U) Project. A certified historic structure or structure in a certified historic district that is eligible property;

(V) Projected Net Fiscal Benefit. The total net fiscal benefit to the state or municipality, less any state or local benefits offered to the taxpayer for a project. The projected net fiscal benefit shall be determined as provided in 4 CSR 85-5.030;

(W) Qualified Census Tract, or QCT. A census tract with a poverty rate of twenty percent (20%) or higher as determined by a map and listing of census tracts which shall be published by the department and updated on a five- (5-) year cycle, and which map and listing shall depict census tracts with twenty percent (20%) poverty rate or higher, grouped by census tracts with twenty percent (20%) to forty-two percent (42%) poverty, and forty-two percent (42%) to eighty-one (81%) percent poverty as determined by the most current five- (5-) year figures published by the American Community Survey conducted by the United States Census Bureau;

(X) QCT Tax Credit Cap. The maximum amount of tax credits the department may authorize solely for projects located in QCTs in a state fiscal year, which is up to thirty million dollars ($30 million) as set forth in subdivision (2) of subsection 2 of section 253.550, RSMo;

(Y) Qualified Rehabilitation Expenditures, or QREs. Those expenditures that are used as eligible basis on which to calculate tax credits. Such costs include but shall not be limited to qualified rehabilitation expenditures as defined under section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended, as determined by the department;

(Z) Soft Costs. QREs other than hard costs, including but not limited to architect fees, engineering fees, construction management costs, utilities incurred during rehabilitation, property taxes, reasonable developer fees, construction period interest, financing costs related to construction financing, contractor overhead, and contractor profit;

(AA) State. The state of Missouri;

(BB) State Fiscal Year. The time period beginning July 1 of one year through June 30 of the following year;

(CC) Statewide Tax Credit Cap. The maximum amount of tax credits the department may authorize for projects located in the state, as set forth in subdivision (1) of subsection 2 of section 253.550, RSMo, adjusted as authorized in subdivision (3) of subsection 2 of section 253.550, RSMo. The statewide tax credit cap and the QCT tax credit cap are separate caps;

(DD) Structure in a Certified Historic District. A structure located in Missouri which is certified by the State Historic Preservation Office as contributing to the historic significance of a certified historic district listed on the National Register of Historic Places, or a local district that has been certified by the United States Department of the Interior;

(EE) Substantial Completion. One (1) of the following-

1. An architect's certificate of substantial completion;

2. An architect's certificate of final completion; or

3. A local political subdivision's issuance of a certificate of occupancy;

(FF) Tax Credits. State historic preservation tax credits authorized under the program;

(GG) Taxpayer. Any person, firm, partnership, trust, estate, limited liability company, or corporation; and

(HH) Total Project Costs. All costs, whether accrued or paid, pertaining to the redevelopment of the property for which an application for tax credits has been submitted. Total project costs include all QREs and all non-qualified expenditures, including the shell acquisition cost. It does not include any cash reserves established or to be established for the project, such as replacement reserves, lease-up reserves, lease commission reserves, or other cash held by, or for, the applicant.

4 CSR 85-5.010

AUTHORITY: section 135.487, RSMo 2000 and section 620.010, HB 788, Second Regular Session, Ninety-fourth General Assembly, 2008.* Original rule filed July 8, 2008, effective Feb. 28, 2009.

Amended by Missouri Register October 1, 2019/Volume 44, Number 19, effective 11/30/2019

Amended by Missouri Register February 1, 2024/volume 49, Number 03, effective 3/31/2024.

*Original authority: 135.487, RSMo 1999 and 620.010, RSMo 1971, amended 1981, 1983, 1986, 1989, 1990, 1993, 1994, 1995, 1999, 2001, 2007, 2008.