The House omnibus taxes bill is up for debate, amendment, and passage this afternoon. In it is a provision that extends the Historic Tax Credit for 8 years and makes it payable as a single credit, reversing a change from the 2019 tax bill. The HTC enjoys broad bipartisan support from all regions of the state, so it should be a shoo-in . . . right? Fingers crossed! In the meantime, refresh your memory about the House taxes committee hearing where the HTC extension bill was heard in early March - a summary follows thanks to Rethos' Capitol Pathways intern, Alejandra Kelly.
What is this bill about?
What did the bill sponsor say when introducing their bill and responding to questions?
This bill extends the state historic tax credit for 8 more years, provides smoother transition by allowing one full payment once the qualified rehabilitated building is placed in service (instead of spreading out payment over 5 years.
The economic impact of projects in 2021 that utilized the credit: $1.4 billion of future economic activity was generated, created 9,600 jobs, $890 million of spending planned by project developers
The past 10 years that the credit has been in place in MN, $5 billion in economic activity was generated, supported 20,000 jobs, and produced $1.9 billion in labor income. 50% of credit costs were repaid immediately following completed construction. It's paired with federal historic tax credit thus bringing in more federal financial resources that otherwise wouldn't be accessed.
Included were letters of support from the MN Realtors, the League of Minnesota Cities, and the City of Rochester.
Rep. Youakim thanked the committee for extending the historic tax credit last year for another year (now expires June 30th 2022).
The revenue estimate for fiscal year 2023 is $31.8 million, 2024 is $14.6 million, 2025 is $19.5 million.
Rep. Youakim closed by reiterating the important role the credit plays in MN communities and asked the committee for their support.
Who testified in support or opposition to the bill?
Taylor Smrikarova
Director of Property Development for Seward Redesign
David Ybarra
President of Minnesota Pipe Trades Association
Erin Hanafin Berg
Policy & Deputy Director of Rethos
Heidi Swank
Executive Director of Rethos
Shawn Smith
Public Policy Committee Chair for NAIOP
What did the testifiers say?
Did they cite or reference any data, statistics, or research?
Did they share any personal stories?
Taylor Smrikarova - stated mission of Seward Redesign and how the historic tax credit allows developers like herself to partner with communities and preserve and use community assets. Many projects made possible, notes that historic tax credit allows them to buy property that exists and redevelop it in a more sustainable approach than demolition and keep it affordable for the community. Creates $10 of economic development for every $1 invested by the state.
David Ybarra - The credit has supported 28,000 jobs since 2011, many for tradespeople. In 2021, created 9,000 jobs and generated more than $693 million in labor income. Construction makes up 5% of jobs across state. Development is more important than ever for job security because of COVID-19.
Erin Hanafin Berg - presented video from RevitalizeMN showing restored buildings and developers that support extending the historic tax credit.
Heidi Swank - since 2010, 170 of the completed tax credit projects across MN generated $5 billion in economic activity and funded public services. The impact is significant in greater Minnesota where every $1 of tax credit yields $16 in economic activity. Positive impact was seen only 2 years into program - before state historic tax credit, only had 1-2 projects yearly that were undertaken using the federal historic tax credit, now it's 10-15 projects yearly. An 8-year extension as opposed to 1 year renewal gives communities, developers and local governments security to pursue historic redevelopment
Shawn Smith - notes that the application process review can be lengthy, thus the uncertainty of renewal makes it difficult to invest in historic buildings.
Which committee members seemed in favor of the bill? Which ones seemed opposed? What did other Legislators have to say, whether positive or negative? Did discussion of the bill lead to tangents (that we’d be interested in) or did other concerns/issues come up?
Rep. Greg Davids -
stated strong support of bill
Rep. Bob Dettmer -
stated support of bill. Asked testifiers if a certain 501c3 facility would qualify, Erin Hanafin Berg said is possible but must be an income-producing property to receive the credit. Erin mentioned that more 501c3 buildings would be eligible through the Federal Historic Tax Credit Growth and Opportunity Act that has been introduced in Congress.
Rep. Kaohly Vang Her -
Mentioned tour of open house for the Korean Immersion school in her district that also utilized money from the historic tax credit, building was produced by developer of color. Stated support of bill.
What are the next steps for the bill?
Laid over for possible inclusion: ✔
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