COLORADO'S HISTORIC PRESERVATION COMMERCIAL TAX CREDITS
Colorado has a generous Historic Preservation Tax Credit program to encourage and support the historic preservation projects in communities all over the state. In this session you will learn about the tax credit application process and what is needed for a successful application. A walk through of how the tax credits are calculated and sold will be given. We will discuss the types of improvements that can be made and the requirements for property owners and tenants to qualify for the tax credit. We will help you to plan for using the Colorado State Historic Tax Credits the best way possible for your project!
Speakers: Ariel Steele, Tax Credit Connection, Inc. & Joe Saldibar, History Colorado
Last Thursday, DCI welcomed Ariel Steele from Tax Credit Connection, Inc. and Joe Saldibar from History Colorado to speak at our event, “Colorado’s Historic Preservation Commercial Tax Credits 201." Joe and Ariel shared with the audience what tax credits are, who’s qualified for them, and how to apply.
What is the Historic Preservation Tax Credit Program?
The Historic Preservation Tax Credit program provides a dollar-for-dollar reduction of tax owed to the government for rehabilitation projects in Colorado communities. “Rehabilitation” in this context simply means making spaces useful again. Think: restoring, repairing, and keeping properties in service or bringing them back into service. Tax credits aren’t used for preservation projects but instead for projects that rehabilitate and repurpose previously unused buildings in Colorado. Tax credits can be applied to any size of project in structures that are Colorado properties, at least 50 years old, have local, state, or national landmarking, and are not owned by the government.
Individuals, non-profit organizations, limited liability companies (LLCs), general partnerships (GPs), limited partnerships (LPs), and S and C corporations are all eligible for rehabilitation tax credits, while governments are not. Tax credits are not just for big projects - they can also be used for small-scale endeavors. In fact, of the $44 million in tax credits distributed to projects since the program’s foundation in 2015, $16 million have been used for small projects (defined as projects costing less than $2 million).
There are two main types of tax credits: federal and state. Federal tax credits are used for commercial projects only, while state tax credits can be used for commercial or residential projects. Commercial projects must be income-producing compared to residential projects which create affordable housing in the heart of Colorado communities. Examples of income-producing commercial projects include house museums that charge an admission fee or churches that rent out their space for weddings or events.
Tax credits can be used directly for rehabilitation projects, but they can also be sold for cash if the project does not need all the credits it was initially approved for. Projects can also keep their excess tax credits to use against their tax bill. This unique program creates local affordable housing and repurposes historic buildings to be put back into use in communities across Colorado.
What Are the Impacts of Tax Credits?
The tax credit program is unique in that it enables locals within Colorado communities to rehabilitate the areas and buildings they know and love. In addition, the program directly reduces the amount of tax owed to the government, allowing for revitalization projects to happen that otherwise may not have.
Since July 2015, owners have invested more than $300 million in project costs. That’s enough to cover a 7-acre field in a blanket of $1 bills! Applicants have received or are eligible to receive $44 million in state historic tax credits since the program started. $44 million in $1 bills would be 15,767 feet high, towering over Mount Elbert!
The best way to see the impact of tax credits is to explore projects that have already taken advantage of the generous program. Below are some examples of projects that have been completed with the help of the Historic Preservation Tax Credit program.
Tammen Hall — Denver
Tammen Hall in Denver used to house nurses that worked at the local hospital in dormitories. Thanks to the tax credit program, the building was repurposed to create 264 new affordable and market-rate housing units, including 49 units of affordable senior housing.
Stanley Marketplace — Aurora
Stanley Marketplace in Aurora was repurposed to create over 1,300 new full-time jobs. The renovated properties house offices, service organizations, retail, professional and management organizations, and more. Over $64.5 million in new payroll have been created as a result of the revitalization of the building. Stanley Marketplace is now home to over 200 workers and small business owners!
Museum of Friends — Walsenburg
The Museum of Friends in Walsenburg is located in what was once the 1910 Roof & Dick building. What used to house national chain stores such as J.C. Penney and Ben Franklin is now home to a beautiful contemporary art museum in Southern Colorado.
How to Apply for Tax Credits
To apply, applicants must first create an account with the Colorado Office of Economic Development and International Trade (OEDIT). There are three applications to submit in total. The first is a short Qualifying Questionnaire that determines a building’s eligibility for tax credits. The second application is a Reservation Application that outlines the project’s Rehabilitation Plan. This application has a fee and lays out the plans and budget for the rehabilitation project. This application is submitted before starting the project and requires period progress reports as the project advances. Lastly is the Issuance Application for Tax Credit. This application also requires a fee and confirms the project’s eligibility for tax credits upon completion.
DCI would like to thank Ariel Steele and Joseph Saldibar for sharing their insights on Colorado's Historic Preservation Tax Credit program. Hearing their expertise and learning more about this generous, unique program for Colorado communities was a pleasure.
If you have any questions, please feel free to contact Morgan Pierce, Relations Manager AmeriCorps VISTA, at [email protected].
ABOUT THE SPEAKERS
Ariel Steele, Tax Credit Connection, Inc.
Ariel Steele helps landowners preserve their land and gain financial rewards through conservation easement income tax credits in Colorado and New Mexico.
Ariel became the owner of Tax Credit Connection, Inc., in 2005 where she has built expertise in several transferable tax credit programs including environmental remediation (brownfields) credits and historic preservation credits.
Ariel makes presentations throughout Colorado and New Mexico on topics ranging from the state and federal tax benefits when donating a conservation easement, how to avoid conservation easement audits, and the environmental remediation and historic preservation tax credit programs.
Joseph Saldibar, History Colorado
Mr. Saldibar has worked for History Colorado since January 2000. He oversees the state and federal historic tax credit programs for History Colorado, and conducts reviews of federally-funded projects under the National Historic Preservation Act of 1966. He holds a Masters in Historic Preservation from Ball State University and a Masters in Urban and Regional Planning from the University of Colorado-Denver.