– Nonprofits would be eligible to join development groups in rehabilitating and re-using historic buildings under the state Historic Preservation Tax Credit Program thanks to legislation introduced by Reps. Lee James (R-Venango/Butler) and Robert Freeman (D-Northampton).
Projects that include a nonprofit partner have been part of the program and received allocations since the program’s inception in 2012.
“However, in a 2019 review of applications for the tax credit program, the Pennsylvania Department of Revenue determined that some applicants affiliated with a nonprofit organization were not eligible for the program. They were flagged as a ‘disregarded entity of a nonprofit group’ and their applications were rejected,” said Freeman.
“No other state has made this determination, and several states have included specific language in their laws that allows nonprofits to be part of a development group for a historic preservation project. Our legislation would specifically allow nonprofits to be part of a development group for a historic preservation project,” Freeman said.
A nonprofit does not have a tax liability, which makes it tax exempt. To use historic tax credits, the nonprofit must create a for-profit entity. If the nonprofit plans to complete a syndication deal, this same for-profit will also be used as a member of the entity formed between the nonprofit and the investor. The purpose of this partnership is for the nonprofit to raise construction equity from the investors in the partnership, and for the investors to use the tax credits to reduce tax liability. Many affordable housing and senior housing projects, commercial and office development projects, and social service projects have been funded this way throughout the Commonwealth.
“Our colony dates back to 1681, when William Penn named the large land grant ‘Pennsylvania,’ meaning ‘Penn’s Woods.’ So much rich history has passed here in the Keystone State since then. It is so important that we do all we can to preserve our history and historical structures for future generations,” said James.
House Bill 1253
has been referred to the House Finance Committee for consideration.