2016 Colorado Revised Statutes
Title 39 - Taxation
Specific Taxes
Article 22 - Income Tax
Part 5 - Special Rules
§ 39-22-514.5. Tax credit for qualified costs incurred in preservation of historic structures - short title - definitions

CO Rev Stat ยง 39-22-514.5 (2016) What's This?

(1) This section is known and may be cited as the "Colorado Job Creation and Main Street Revitalization Act".

(2) As used in this section, unless the context otherwise requires:

(a) "Certified historic structure" means a property located in Colorado that has been certified by the historical society or other reviewing entity because it has been:

(I) Listed individually or as a contributing property in a district included within the national register of historic places;

(II) Listed individually or as a contributing property in a district that is included within the state register of historic properties pursuant to the provisions of article 80.1 of title 24, C.R.S.;

(III) Designated as a landmark by a certified local government; or

(IV) Listed as a contributing property within a designated historic district of a certified local government.

(b) "Certified local government" means any local government that has been certified by the historical society pursuant to 16 U.S.C. sec. 470a (c) (1), as amended.

(c) "Certified rehabilitation" means repairs or alterations to a certified historic structure that have been certified by the historical society or other reviewing entity as meeting the standards for rehabilitation of the United States secretary of the interior.

(d) "Contributing property" means property that adds to the sense of time, place, and historical development of a historic district as determined by the historical society or other reviewing entity.

(e) "Department" means the Colorado department of revenue or any successor entity.

(f) "Designated" means established by local preservation ordinance.

(g) "Historical society" means the state historical society of Colorado, also known as history Colorado, or any successor entity.

(h) "Office" means the Colorado office of economic development or any successor entity.

(i) "Owner" means any taxpayer filing a state tax return or any entity that is exempt from federal income taxation pursuant to section 501 (c) of the internal revenue code, as amended, that owns:

(I) Title to a qualified structure;

(II) Prospective title to a qualified structure in the form of a purchase agreement or an option to purchase;

(III) A leasehold interest in a qualified commercial structure for a term of not less than thirty-nine years; or

(IV) A leasehold interest in a qualified residential structure for a term of not less than five years.

(j) "Qualified commercial structure" means an income producing or commercial property located in Colorado that is:

(I) At least fifty years old; and

(II) (A) Listed individually or as a contributing property in a district included within the state register of historic properties pursuant to article 80.1 of title 24, C.R.S.;

(B) Designated as a landmark by a certified local government; or

(C) Listed as a contributing property that is included within a designated historic district of a certified local government.

(k) "Qualified rehabilitation expenditures" means:

(I) With respect to a qualified commercial structure, any expenditure as defined under section 47 (c) (2) (A) of the internal revenue code, as amended, and the related regulations thereunder; and

(II) With respect to a qualified residential structure, exterior improvements and interior improvements undertaken to restore, rehabilitate, or preserve the historic character of a qualified property that meet the standards for rehabilitation of the United States secretary of the interior as adopted by the historical society or the certified local government pursuant to federal law. As used in this subparagraph (II), "exterior improvements" is limited to any one or more of the following: roof replacement or repair; exterior siding replacement or repair; masonry repair, re-pointing, or replacement; window repair or replacement; door repair or replacement; woodwork and trim repair or replacement; foundation repair or replacement; and excavation costs associated with foundation work. As used in this subparagraph (II), "interior improvements" is limited to one or more of the following: electrical repairs and upgrades; plumbing repairs and upgrades; heating, venting, and air conditioning repairs and upgrades; repair of existing interior walls and finishes; repair or replacement of existing woodwork and trim; insulation; refinishing or replacing historic floor materials in-kind, excluding carpeting; and reconstructing missing historic elements when there is sufficient historical documentation to guide the reconstruction.

(l) "Qualified residential structure" means a nonincome producing and owner-occupied residential property located in Colorado that is:

(I) At least fifty years old; and

(II) (A) Listed individually or as a contributing property in a district included within the state register of historic properties pursuant to article 80.1 of title 24, C.R.S.;

(B) Designated as a landmark by a certified local government; or

(C) Listed as a contributing property that is included within a designated historic district of a certified local government.

(m) "Qualified structure" means a structure that satisfies the definition of either a qualified residential structure or a qualified commercial structure.

(n) "Rehabilitation plan" means construction plans and specifications for the proposed rehabilitation of a qualified structure that is in sufficient detail to enable the office or the reviewing entity, as applicable, to evaluate whether the structure is in compliance with the standards developed under subsection (4) of this section.

(o) "Reviewing entity" means:

(I) A certified local government that has decided pursuant to subsection (10) of this section to perform the duties specified under this section; or

(II) The historical society if the qualified residential structure either is not located within the territorial boundaries of any certified local government or is located within the territorial boundaries of a certified local government that has decided pursuant to subsection (10) of this section not to perform the duties specified under this section.

(p) "Substantial rehabilitation" means:

(I) With respect to a qualified commercial structure, rehabilitation for which the qualified rehabilitation expenditures exceed twenty-five percent of the owner's original purchase price of the qualified commercial structure less the value attributed to the land; and

(II) With respect to a qualified residential structure, rehabilitation for which the qualified rehabilitation expenditures exceed five thousand dollars.

(3) For income tax years commencing on or after January 1, 2016, but prior to January 1, 2020, there shall be allowed a credit with respect to the income taxes imposed pursuant to this article to each owner of a qualified structure that complies with the requirements of this section.

(4) The office, in consultation with the historical society, shall develop standards for the approval of the substantial rehabilitation of qualified structures for which a tax credit under this section is being claimed. The standards must consider whether the substantial rehabilitation of a qualified structure is consistent with the standards for rehabilitation adopted by the United States department of the interior.

(5) (a) The owner shall submit an application and rehabilitation plan to the office for a qualified commercial structure or to the reviewing entity for a qualified residential structure, along with an estimate of the qualified rehabilitation expenditures under the rehabilitation plan. The owner, at the owner's own risk, may incur qualified rehabilitation expenditures no earlier than twenty-four months prior to the submission of the application and rehabilitation plan but only if satisfactory documentation is submitted to the office or the reviewing entity, as applicable, indicating the condition of the qualified structure prior to commencement of the rehabilitation, including but not limited to photographs of the qualified structure and written declarations from persons knowledgeable about the qualified structure. In connection with any application submitted on or after July 1, 2015, any expenses the owner incurs before July 1, 2015, shall not be counted towards the owner's qualified rehabilitation expenditures. An owner may submit an application and rehabilitation plan and may commence rehabilitation before the property:

(I) Is listed individually or as a contributing property in a district included within the national register of historic places;

(II) Is listed individually or as a contributing property in a district included within the state register of historic properties pursuant to article 80.1 of title 24, C.R.S.;

(III) Has been designated as a landmark by a certified local government; or

(IV) Is listed as a contributing property within a designated historic district of a certified local government.

(b) Notwithstanding the provisions of paragraph (a) of this subsection (5), an owner may incur qualified rehabilitation expenditures at the owner's own risk.

(c) Within ninety days after receipt of the application and rehabilitation plan, the office and the historical society, in the case of a qualified commercial structure, and the reviewing entity, in the case of a qualified residential structure, shall notify the owner in writing if the rehabilitation plan is preliminarily determined to be a certified rehabilitation.

(6) (a) For a qualified commercial structure, the office may impose a reasonable application fee that does not exceed five hundred dollars.

(b) Notwithstanding any other provision of this section, the office shall not impose an application fee under paragraph (a) of this subsection (6) for a project for which the amount of tax credit requested under this section is two hundred fifty thousand dollars or less.

(c) The office may impose on the owner a reasonable issuance fee of up to three percent of the amount of the tax credit issued, which must be paid before the tax credit is issued to the owner. With respect to both an application fee and an issuance fee, the office shall share on an equal basis any such fees collected with the historical society and the department. Moneys collected from such fees must be applied to the administration of the tax credit created by this section.

(d) In the case of a qualified residential structure, the reviewing entity may impose a reasonable application fee. However, the reviewing entity may reduce or eliminate the application fee if the qualified rehabilitation expenditures for the project are less than fifteen thousand dollars.

(7) (a) In the case of a qualified commercial structure, a reservation of tax credits is permitted in accordance with the provisions of this subsection (7). The office and the historical society shall review the application and rehabilitation plan for a qualified commercial structure to determine that the information contained in the application and plan is complete. If the office and the historical society determine that the application and rehabilitation plan are complete, the office shall reserve for the benefit of the owner an allocation of a tax credit as provided in paragraph (a) of subsection (12) of this section and the office shall notify the owner in writing of the amount of the reservation. The reservation of tax credits does not entitle the owner to an issuance of any tax credits until the owner complies with all of the other requirements specified in this section for the issuance of the tax credit. The office must reserve tax credits in the order in which it receives completed applications and rehabilitation plans. The office shall issue any such reservation of tax credits authorized by this subsection (7) within a reasonable time, not to exceed ninety days after the filing of a completed application and rehabilitation plan. The office shall use a lottery process to determine the order in which it will review applications and plans received by the office on the same day. The office shall only review an application and plan submitted in connection with a property for which a property address, legal description, or other specific location is provided in the application and plan. The owner shall not request the review of another property for approval in the place of the property that is the subject of the application and plan. Any application and plan disapproved by the office will be removed from the review process, and the office shall notify the owner in writing of the decision to remove the property from the review process. Disapproved applications and plans lose their priority in the review process. An owner may resubmit a disapproved application and plan, but such resubmitted application and plan is deemed to be a new submission for purposes of the priority procedures described in this paragraph (a). The office may charge a resubmitted application and plan a new application fee in an amount specified in accordance with subsection (6) of this section.

(b) If, for any calendar year, the aggregate amount of reservations for tax credits the office has approved is equal to the total amount of tax credits available for reservation during that calendar year, the office shall notify all owners who have submitted applications and rehabilitation plans then awaiting approval or submitted for approval after the calculation is made that no additional approvals of applications and plans for reservations of tax credits will be granted during that calendar year and the office shall additionally notify the owner of the priority number given to the owner's application and plan then awaiting approval. The applications and plans will remain in priority status for two years from the date of the original application and plan and will be considered for reservations of tax credits in the priority order established in this subsection (7) in the event that additional credits become available resulting from the rescission of approvals under paragraph (a) of subsection (8) of this section or because a new allocation of tax credits for a calendar year becomes available.

(c) Notwithstanding any other provision of this section, this subsection (7) does not apply to a qualified residential structure because no reservation of tax credits is necessary in the case of a qualified residential structure.

(8) (a) Any owner receiving a reservation of tax credits under paragraph (a) of subsection (7) of this section shall commence rehabilitation of the qualified commercial structure, if rehabilitation has not previously begun, within one year after the date of issuance of the written notice from the office to the owner granting the reservation of tax credits. Any owner receiving such reservation of tax credits shall incur not less than twenty percent of the estimated costs of rehabilitation contained in the application and rehabilitation plan not later than eighteen months after the date of issuance of the written notice from the office to the owner granting the reservation of tax credits. Any owner receiving a reservation of tax credits shall submit evidence of compliance with the provisions of this paragraph (a). If the office determines that an owner has failed to comply with the requirements of this paragraph (a), the office may rescind the issuance it previously gave the owner approving the reservation of tax credits and, if so, the total amount of tax credits made available for the calendar year for which reservations may be granted must be increased by the amount of the tax credits rescinded. The office shall promptly notify any owner whose reservation of tax credits has been rescinded and, upon receipt of the notice, the owner may submit a new application and plan for which the office may charge a new application fee in accordance with subsection (6) of this section.

(b) Following the completion of a rehabilitation of a qualified commercial structure, the owner shall notify the office that the rehabilitation has been completed and shall certify the qualified rehabilitation expenditures incurred by the owner under the rehabilitation plan. In addition, the owner shall provide the office with a cost and expense certification, prepared by a licensed certified public accountant that is not affiliated with the owner, certifying the total qualified rehabilitation expenditures and the total amount of tax credits for which the owner is eligible. If the total amount of the anticipated tax credits to be issued the owner exceeds two hundred fifty thousand dollars, the cost and expense certification must be audited by a licensed certified public accountant. The office and the historical society shall review the documentation of the rehabilitation and the historical society shall verify that the documentation satisfies the rehabilitation plan. Within ninety days after receipt of such documentation from the owner, the office shall issue a tax credit certificate in an amount equal to the following subject to paragraph (c) of this subsection (8):

(I) Twenty-five percent of the actual qualified rehabilitation expenditures that are less than two million dollars; plus

(II) Twenty percent of the actual qualified rehabilitation expenditures in excess of two million dollars.

(c) Notwithstanding paragraph (b) of this subsection (8):

(I) The total amount of the tax credit certificate issued for any particular project must not exceed the amount of the tax credit reservation issued for the project under paragraph (a) of subsection (7) of this section;

(II) The amount of a tax credit certificate to be issued for any one qualified commercial structure must not exceed one million dollars in any one calendar year; and

(III) With respect to a certified historic structure that is located in an area that the president of the United States has determined to be a major disaster area under section 102 (2) of the federal "Robert T. Stafford Disaster Relief and Emergency Assistance Act", 42 U.S.C. sec. 5121 et seq., or that is located in an area that the governor has determined to be a disaster area under the "Colorado Disaster Emergency Act", part 7 of article 33.5 of title 24, C.R.S., the tax credit amounts specified in subparagraphs (I) to (III) of paragraph (b) of this subsection (8) must be increased as follows for an application that is filed within six years after the disaster determination:

(A) The twenty-five percent credit amount specified in subparagraph (I) of paragraph (b) of this subsection (8) is increased to thirty percent; and

(B) The twenty percent credit amount specified in subparagraph (II) of paragraph (b) of this subsection (8) is increased to twenty-five percent.

(d) If the amount of qualified rehabilitation expenditures incurred by the owner would result in an owner being issued an amount of tax credits that exceeds the amount of tax credits reserved for the owner under paragraph (a) of subsection (7), the owner may apply to the office for the issuance of an amount of tax credits that equals the excess. The owner must submit its application for issuance of such excess tax credits on a form prescribed by the office. The office shall automatically approve the application, which it shall issue by means of a separate certificate, subject only to the availability of tax credits and the provisions concerning priority provided in paragraph (a) of subsection (7) of this section.

(e) (I) Following the completion of a rehabilitation of a qualified residential structure, the owner shall notify the reviewing entity that the rehabilitation has been completed and shall certify that the qualified rehabilitation expenditures incurred in connection with the rehabilitation plan. The owner shall also provide the reviewing entity with a cost and expense certification certifying the total qualified rehabilitation expenditures and the total amount of tax credits for which the owner is eligible. The reviewing entity shall review the documentation of the rehabilitation and verify its compliance with the rehabilitation plan. Except as otherwise provided in subparagraph (II) of this paragraph (e), within ninety days after receipt of the foregoing documentation from the owner, the reviewing entity shall issue a tax credit certificate in an amount equal to twenty percent of the actual qualified rehabilitation expenditures; except that the amount of the tax credit certificate shall not exceed fifty thousand dollars for each qualified residential structure, which amount is to be calculated over a ten-year rolling period that commences with each change in ownership of the qualified residential structure.

(II) With respect to a qualified residential structure located in an area that the president of the United States has determined to be a major disaster area under section 102 (2) of the federal "Robert T. Stafford Disaster Relief and Emergency Assistance Act", 42 U.S.C. sec. 5121 et seq., or that is located in an area that the governor has determined to be a disaster area under the "Colorado Disaster Emergency Act", part 7 of article 33.5 of title 24, C.R.S., the amount of the tax credit specified in subparagraph (I) of this paragraph (e) is increased to twenty-five percent for an application that is filed within six years after the disaster determination.

(9) In order to claim the credit authorized by this section, the owner shall file the tax credit certificate with the owner's state income tax return. The amount of the credit claimed that the owner may claim under this section is the amount stated on the tax credit certificate.

(10) For the purposes of this section, a certified local government may act as a reviewing entity only for a qualified residential structure. Each certified local government shall adopt a resolution or ordinance stating whether the government will act as a reviewing entity for the purposes of this section. The local government shall send a copy of the resolution or ordinance to the historical society. Any certified local government that decides to act as a reviewing entity for any given year for the purposes of this section shall perform all duties and responsibilities in connection with a certified rehabilitation that receives preliminary approval from such entity during the year.

(11) The entire tax credit to be issued under this section may be claimed by the owner in the taxable year in which the certified rehabilitation is placed in service. If the amount of the credit allowed under this section exceeds the amount of income taxes otherwise due on the income of the owner in the income tax year for which the credit is being claimed, the amount of the credit not used as an offset against income taxes in said income tax year may be carried forward as a credit against subsequent years' income tax liability for a period not to exceed ten years and will be applied to the earliest income tax years possible. Any amount of the credit that is not used after such period shall not be refunded to the owner.

(12) (a) Except as otherwise provided in this section, the aggregate amount of all tax credits in any tax year that may be reserved by the office upon the certification of all rehabilitation plans under paragraph (a) of subsection (7) of this section must not exceed:

(I) For qualified commercial structures estimating qualified rehabilitation expenditures in the amount of two million dollars or less, two and one-half million dollars in the aggregate for the 2016 calendar year, and five million dollars in the aggregate for each of the 2017, 2018, and 2019 calendar years, in addition to the amount of any previously reserved tax credits that were rescinded under paragraph (a) of subsection (8) of this section during the applicable calendar year;

(II) For qualified commercial structures estimating qualified rehabilitation expenditures in excess of two million dollars, two and one-half million dollars in the aggregate for the 2016 calendar year and five million dollars in the aggregate for each of the 2017, 2018, and 2019 calendar years, in addition to the amount of any previously reserved tax credits that were rescinded under paragraph (a) of subsection (8) of this section during the applicable calendar year.

(b) Notwithstanding any other provision of this subsection (12), if the entirety of the allowable tax credit amount for any tax year is not requested and reserved under subparagraphs (I) and (II) of paragraph (a) of this subsection (12), the office may use any such unreserved tax credits in issuing tax credits in another category for that same income tax year, and the office may also use any remaining unreserved tax credits for that tax year in issuing tax credits in subsequent income tax years.

(c) Any tax credits issued under this section to a partnership, a limited liability company taxed as a partnership, or multiple owners of a property must be passed through to the partners, members, or owners, including any nonprofit entity that is a partner, member, or owner, respectively, on a pro rata basis or pursuant to an executed agreement among the partners, members, or owners documenting an alternate distribution method.

(d) Any tax credits issued under this section for a qualified commercial structure are freely transferable and assignable, subject to any notice and verification requirements to be determined by the office; except that the owner or a subsequent transferee may only transfer the portion of the tax credit that has neither been applied against the income tax imposed by this article nor used to obtain a refund. Any transferee of a tax credit issued under this section may use the amount of tax credits transferred to offset against any other tax due under this article or the transferee may freely transfer and assign all or any portion of the tax credits that have neither been applied against the income taxes imposed by this article nor used to obtain a refund to any other person or entity, including an entity that is exempt from federal income taxation pursuant to section 501 (c) of the internal revenue code, as amended, and the other person or entity may freely transfer and assign all or any portion of the tax credits that have neither been applied against the income taxes imposed by this article nor used to obtain a refund to any other person or entity. The tax credits may be transferred or assigned on multiple occasions until such time as the credit is claimed on a state tax return. The transferor and the transferee of the tax credits shall jointly file a copy of the written transfer agreement with the office within thirty days after the transfer. Any filing of the written transfer agreement with the office perfects the transfer. The office shall develop a system to track the transfers of tax credits and to certify the ownership of tax credits. A certification by the office of the ownership and the amount of tax credits may be relied on by the department and the transferee as being accurate, and the office shall not adjust the amount of tax credits as to the transferee; except that the office retains any remedies it may have against the owner. The office shall promulgate rules to permit verification of the ownership and amount of the tax credits; except that, any rules promulgated shall not unduly restrict or hinder the transfer of the tax credits.

(e) (I) Notwithstanding any other provision of this section, the aggregate amount of tax credits issued under this section must not exceed:

(A) For the tax year beginning January 1, 2016, five million dollars;

(B) For the tax year beginning January 1, 2017, ten million dollars;

(C) For the tax year beginning January 1, 2018, ten million dollars; and

(D) For the tax year beginning January 1, 2019, ten million dollars.

(II) A tax credit authorized under this section may be earned before July 1, 2016, but the office shall not issue a tax credit under this section prior to July 1, 2016.

(13) Any owner or any duly authorized representative of an owner may appeal any final determination made by the office or the department, including, without limitation, any preliminary or final reservation, or any approval or denial, in accordance with the "State Administrative Procedure Act", article 4 of title 24, C.R.S. The owner or the owner's representative shall submit any such appeal within thirty days after receipt by the owner or the owner's representative of the final determination that is the subject of the appeal.

(14) Notwithstanding any other provision of this section, the tax credits authorized by this section for the substantial rehabilitation of a qualified structure are not available to an owner of a qualified structure that submits an application and rehabilitation plan after December 31, 2019. No action or inaction on the part of the general assembly has the effect of limiting or suspending the issuing of tax credits authorized by this section in any past or future income tax year with respect to a qualified structure if the owner of the structure submits an application and rehabilitation plan with the office on or prior to December 31, 2019, even if the qualified structure is placed into service after December 31, 2019.

(15) (a) The office shall, in consultation with the department, report to the general assembly by March 1, 2017, and by March 1, 2019, on the overall economic activity, usage, and impact to the state from the substantial rehabilitation of qualified structures for which tax credits have been allowed under this section. On or before March 15, 2016, and on a quarterly basis thereafter, the office shall provide a report to the department specifying the ownership and transfers of tax credits under this section.

(b) The office, in consultation with the historical society, shall promulgate any and all rules necessary to further implement this section and shall solicit advice from the department in promulgating rules for transfers. Any such rules must be promulgated in accordance with article 4 of title 24, C.R.S.

(c) Notwithstanding any other provision of law, a taxpayer shall not claim a credit under this section in connection with the rehabilitation of a historic structure for which the taxpayer is also claiming a credit under section 39-22-514.

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