Final report : Georgia House of Representatives Study Committee on Historic Site Preservation

Georgia House of Representatives Study Committee on Historic Site Preservation
Final Report
Chairman Chuck Williams Representative 119 h District Vice-Chai1man Debbie Buckner
Representative 137 h District
The Honorable Beth Beskin Representative 54th District The Honorable Buzz Brockway Representative 102"d District The Honorable Trey Rhodes Representative 1201h District
2016 Prepared by the House Budget and Research Office

I. Introduction During the 2016 session of the General Assembly the Georgia House of Representatives created the Study Committee on Historic Site Preservation with the passage of House Resolution 978. HR 978 requested an assessment of state programs in their efforts to preserve historic sites in Georgia for future generations. This assessment was to include the collection of information regarding resources offered by the state the process to obtain the resources and the ability for private entities to utilize state programs. As authorized by House Resolution 978 the membership of the Committee consists of five members as appointed by the Speaker of the House of Representatives. The members appointed by the Speaker are the following Representative Chuck Williams (119 11 District) Chair Representative Debbie Bucker (137 11 District) Vice-Chair Representative Beth Beskin (54 11 District) Representative Buzz Brockway (1 02nd District) and Representative Trey Rhodes (120 11 District). The Committee held four meetings during 2016 occurring on August 2 at the State Capitol October 21 at the State Capitol November 22 in Macon and December 29 at the State Capitol. The Committee gathered testimony from both the state entities that administer historic site preservation programs and the private entities that participate in the efforts. Based on the testimony provided recommendations are proposed regarding the tax incentive programs offered by the state the role state agencies play in the process and the experiences of private organizations that interact with state programs.
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II. Background Information

Georgia is horne to more than 80 000 historic properties found on the National Register of

Historic

Places

1

To

protect

and

preserve

Georgia s

valuable

historical

resources

the

state

funds

certain state agencies including the Department of Natural Resources (DNR) and the

Department of Community Affairs (DCA) to oversee and guide preservation efforts within the

state.

As required by the National Historic Preservation Act of 1966 each state has an operating state historic preservation office. In Georgia the Historic Preservation Division (HPD) ofDNR serves as the state s historic preservation office. In pursuit of preserving the state s historic places HPD s responsibilities include supervising federal agencies operating within the state on projects that could affect historic resources administer economic development programs to encourage private investment in local communities and work with partners both inside and outside state government to encourage regional and local planning neighborhood conservation downtown revitalization heritage tourism and archaeological site preservation.2

Of particular importance to this committee is HPD s involvement with the Georgia State Income Tax Credit Program for Rehabilitated Historic Propetiy. The authorizing legislation was passed by the General Assembly in 2002 and applications for the tax credits were first made available in January of 2004. The current iteration of the program has a sunset provision of December 31 2021.

The program allows for 25% of qualified rehabilitation expenditures on historic homes or

income-producing structures to be compensated for with state income tax credits this coverage

can be 30% of qualified rehabilitation expenditures credit should the propetty be found in a low-

income target area. The program traditionally capped the credit at $100 000 for historic homes

and $300 000 for income-producing property though these caps were revised by the passage of

House Bill308 during the 2015 session of the General Assembly. HB 308 created an additional

category with higher caps up to $5 million in tax credits can be eamed by a qualifying project

or

up

to

$10

million

in

tax

credits

should

a

project

meet

specific

hiring

or

payroll

requirernents

3 .

This additional category is subject to a $25 million aggregate annual cap.

The economic impact of this program is significant. In FY 2016 HPD received 125 preliminary certification applications and 54 final cetiification applications. Of the prelirninaty cettification applications 37 were for historic homes and 88 for income-producing structures. These 125 properties amount to a $254.5 million investment the creation of 4 607 jobs and $191 million in

1 National Register of Historic Places. Historic Preservation Division Department of Natural Resources. http //www.georgiashpo.org/sites/uploads/hpd/imagefield_default_images/NationaiRegisterFactSheet.pdf 2 Who we are and what we do. Historic Preservation Division Department of Natural Resources. http //georgiashpo. org/about 3 Georgia State Income Tax Credit For Rehabilitated Historic Property. Historic Preservation Division Department of Natural Resources. Page 1.
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salary and wages. The state will provide $10 million in credits at the $300 000 cap while offering $45.4 million at the new higher caps. Of the 54 completed projects that applied for final certification 21 are historic homes and 33 are income-producing properties. These projects amounted to $429.7 million in investments 7 778 jobs created and $322 million in wages and salaries. The potential tax credits attached to these projects will total $6.5 million. 4
Historic Site preservation effmis are ftuthered aided by the Department of Community Affairs which provides training and educational oppmiunities as well as financial assistance to local organizations through the Downtown Development program. DCA plays an important role in guiding investors and developers through the various state programs while helping local communities revitalize downtown areas.
III. Committee Findings
The committee held three meetings with the purpose of gathering testimony from the various historic preservation stakeholders throughout the state a fourth was held to approve the committee s report. The following minutes for the meetings are provided
Note all individuals marked with an asterisk presented during public comment.
First Meeting
Date August 2 2016
Location Coverdell Legislative Office Building Atlanta Georgia
Presenters
Becky Kelley Director State Parks and Historic Sites Division Georgia Department of Natural Resources David Crass Division Director Georgia Department of Natural Resources Margaret "Meg" Pirkle Chief Engineer Georgia Department of Transportation Eric Duff Administrator Environmental Services Georgia Department of Transpmiation Hirai Patel Director Division of Engineering Georgia Department of Transportation Jessica Reynolds Director Downtown Development Georgia Department of Community Affairs Leigh Bums Education and Outreach Coordinator Downtown Development Georgia Department of Conrnmnity Affairs John Foster Assistant Director oflncome Tax Policy Legal Affairs and Tax Policy
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Georgia Department of Revenue *James Langford President and Founder Coosawattee Foundation
Second Meeting
Date October 21 2016
Location Coverdell Legislative Office Building Atlanta Georgia
Presenters
Jessica Reynolds Director Downtown Development Georgia Department of Community Affairs Leigh Bums Education and Outreach Coordinator Downtown Development Georgia Department of Community Affairs David Crass Division Director Georgia Department of Natural Resources Lynne Riley State Revenue Commissioner Georgia Department of Revenue *James Langford President and Founder Coosawattee Foundation *John Campo Principal Campo Architects *Regina Brewer Brewer Preservation Consultants *Ben Dupuy Managing Director Enhanced Capital *Kim Campbell Preservation and Education Coordinator Historic Macon
Third Meeting
Date November 22 2016
Location Johnston-Felton-Hay House Macon Georgia
Presenters
Jonathan Poston Sr. Director of Properties and Hay House Director The Georgia Trust Mark McDonald President and CEO The Georgia Trust *Josh Rogers President and CEO NewTown Macon *Gene Dunwody Dunwody/Beeland Architects Inc. *Greg Boike Director of Public Administration Middle Georgia Regional Commission *Lee Hughes Patiner Hughes Public Affairs *Kim Campbell Preservation and Education Coordinator Historic Macon
FOlllih Meeting
Date December 29 2016
Location Coverdell Legislative Office Building Atlanta Georgia
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These meetings allowed for state agencies the organizations that utilize the programs and the members of this Committee to gather. Together these individuals have worked towards preserving Georgia s historical resources while creating jobs and bringing business to communities across the state. While listening to the testimonies from the numerous stakeholders on how Georgia can better serve those seeking to preserve the state s historic properties the following trends and issues were the most significant and commonly discussed
Return on Georgia s investment HPD highlights the significant return on investment for the state citing the ratio of committed financial investment by developers to committed state tax credits.5
The annual $25 million aggregate program cap Both private and state entities have encouraged a reexamination of the aggregate program cap. The cap has been reached for both 2017 and 2018. Private stakeholders argue it is a disincentive to potential investors and can delay projects that depend on receiving tax credits.
The caps on individual projects The Committee heard similar concerns regarding the individual project caps of $100 000 $300 000 $5 million and $10 million investors and developers looking to fund large projects can be discouraged by the cap placed on potential tax credits.
Limitations on tax credit transfers A number of individuals cited the inconvenience of only being able to sell or assign tax credits once as stipulated by law.
Property ownership requirements To apply for a tax credit a potential investor must already be in possession of the property. Some revealed that not having tax credit assurances from the Department of Revenue can lead to difficulties in securing the necessary financing for the project to proceed.
Unutilized tax credits Some stakeholders noted that tax credits that are not utilized whether by choice or due to not meeting requirements are not redistributed.
Processing and review times The work provided by the state entities involved in the process including HPD has been praised by those that benefit fi om it. However a number of individuals described the complications that arise due to the lengthy application process. HPD noted that retaining experienced employees to review the applications has been a dilemma for the division.
Project completion date requirement Certain private stakeholders discussed the difficulties with meeting the pre-dete1mined project completion dates within the allowable window. The Department of Revenue acknowledged this and instituted a 6month grace period before and after the completion dates provided on applications.
Application fees Noting the benefits that can be received through the tax credit program there was little objection to raising the progressive rate of the fees to apply for the credits.
5 Please refer to II. Background Information.
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IV. Committee Recommendations
In light of the findings of this Committee the following recommendations are presented with the hope to improve the programs and resources offered by the state to preserve Georgia s valuable historic sites
I. Eliminate or raise the annual $25 million aggregate program cap. Eliminate or raise the aggregate cap to encourage more organizations to invest more in Georgia s historic sites using the Georgia State Income Tax Credit Program for Rehabilitated Historic Property.
2. Eliminate or raise the per project caps of $5 million and $10 million for incomeproducing projects. Allow state resources to match the investments made by organizations in state historic sites based on qualified rehabilitation expenditures.
3. Eliminate tax credit transfer limitations. Eliminate the tax credit limit of one transfer to allow for tax credits to remain with historic properties as the properties are purchased.
4. Modify requirement for ownership before qualification for tax credits. Modify the requirement for a potential developer to own a property to qualify for tax incentives under the Georgia State Income Tax Credit Program for Rehabilitated Historic Prope1ty.
5. Change the sunset provision of existing law. Extend the sunset provision beyond the CUlTent date of December 31 2021 found under O.C.G.A. 48-7-29.8.
6. Allow for unutilized credits to not be held against the aggregate program cap. Allow for the tax credits that are not utilized or are forfeited due to inability to meet program requirements to not be held against the aggregate program cap assuming a cap is maintained. Subsequently encourage the redistribution of the unused tax credits.
7. Allow for simultaneous use of state historic property rehabilitation tax credits and low-income tax credits. Allow for historic property tax credits and any low-income tax credits to be used simultaneously to facilitate mixed-use redevelopment of properties.
8. Increase funding for the Historic Preservation Division of the Department of Natural Resources. Increase funding for retention of experienced staff and/or the ability to obtain additional staff to aid in the revision of applications for potentially qualifying projects.
9. Increase tax credit application fees. Increase fees attached to applications for tax credits provided by the Georgia State Income Tax Credit Program for Rehabilitated Historic Property.
I 0. Codify the project completion date window created by Department of Revenue. Provide legislation that codifies the 6-month grace period before and after the provided completion date on an application.
11. Encourage the Department of Revenue Department of Natural Resources and Department of Community Affairs to investigate ways to simplify tax credit application processing. Ask agencies to identify methods to make internal processes at
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each agency more efficient. Consider consolidation of certain steps under particular agencies to remove any potential for repetition in the process.
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Mr. Speaker these are the findings and recommendations of your Study Committee on Historic Site Preservation. Respectfully submitted
The Honorable Chuck Williams Representative 1191h District
Chairman
Prepared by David Hartman Budget and Policy Analyst House Budget and Research Office
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