THE GENERAL ASSEMBLY OF PENNSYLVANIA

HOUSE BILL

INTRODUCED BY FREEMAN, HARPER, ADOLPH, ARGALL, BARRAR, BELFANTI, BEYER, BOYD, BRENNAN, BUXTON, CALTAGIRONE, COHEN, CONKLIN, DALLY, DePASQUALE, FLECK, FRANKEL, GEIST, GEORGE, GIBBONS, GOODMAN, GROVE, HARKINS, HESS, JOSEPHS, KIRKLAND, KORTZ, KOTIK, LENTZ, LEVDANSKY, LONGIETTI, MANDERINO, MANN, McGEEHAN, McILVAINE SMITH, MELIO, MICOZZIE, MILLER, MOUL, MURT, MUSTIO, M. O'BRIEN, O'NEILL, PALLONE, PASHINSKI, PAYNE, PETRI, READSHAW, REED, REICHLEY, ROSS, SAMUELSON, SAYLOR, SCAVELLO, SCHRODER, SIPTROTH, K. SMITH, SONNEY, STURLA, VITALI, WALKO, WATSON, WHITE, YUDICHAK, HORNAMAN, CLYMER AND HARHAI, JANUARY 26, 2009

REFERRED TO COMMITTEE ON LOCAL GOVERNMENT, JANUARY 26, 2009  

AN ACT

Providing for the establishment of the Historic Preservation

Incentive Program for historic commercial and residential

sites, for grants and for tax credits.

The General Assembly of the Commonwealth of Pennsylvania

hereby enacts as follows:

CHAPTER 1

PRELIMINARY PROVISIONS

Section 101.  Short title.

This act shall be known and may be cited as the Historic

Preservation Incentive Act.

Section 102.  Definitions.

The following words and phrases when used in this act shall

have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Commercial applicant."  Any natural person, corporation,

foundation, organization, business trust, estate, limited

liability company, licensed corporation, trust, partnership,

limited liability partnership, association or any other form of

legal business entity that owns an eligible commercial property.

"Commission."  The Pennsylvania Historical and Museum

Commission.

"Eligible building improvements."  Exterior rehabilitation or

restoration work performed on an eligible commercial property or

an eligible residential property, including work involving

windows, consistent with the Standards for Rehabilitation of the

Secretary of the Interior.

"Eligible residential property."  A single-family dwelling or

a building which:

(1)  is a single family dwelling used as the owner's

principal residence or is a building that is divided into no

more than four residential units, one of which is used as the

owner's principal residence;

(2)  is owned by one or more natural persons; and

(3)  either:

(i)  is listed on the National Register of Historic

Places or is a contributing property in a National

Register historic district; or

(ii)  is located in a local government historic

district.

"Elm Street area."  A geographically defined portion of a

municipality designated as an Elm Street area by the Department

of Community and Economic Development in accordance with the

terms and conditions of the act of February 9, 2004 (P.L.61, No.

7), known as the Elm Street Program Act. The term includes an

area which has exited the official program but still has a

program functioning to revitalize the designated areas pursuant

to the department's program guidelines.

"Enterprise zone."  A geographic area designated by the

Department of Community and Economic Development as an

enterprise zone. The term includes an area which has exited the

official program but still has a program functioning to

revitalize the designated areas pursuant to the department's

program guidelines.

"Historic district."  A local government historic district or

an area in this Commonwealth which has been designated as a

historic district under the National Historic Preservation Act

(Public Law 89-665, 80 Stat. 915).

"Historic structure."  A building listed in the National

Register of Historic Places, either individually or as a

contributing building within a historic district.

"Local government historic district."  A historic district

designated by any of the following:

(1)  Section 2 of the act of June 13, 1961 (P.L.282, No.

167), entitled "An act authorizing counties, cities,

boroughs, incorporated towns and townships to create historic

districts within their geographic boundaries; providing for

the appointment of Boards of Historical Architectural Review;

empowering governing bodies of political subdivisions to

protect the distinctive historical character of these

districts and to regulate the erection, reconstruction,

alteration, restoration, demolition or razing of buildings

within the historic districts."

(2)  The Historic Preservation Ordinance, Section

14-2007, of the Philadelphia City Code.

(3)  Title 11 of the Pittsburgh City Code, Chapter 1,

Section 3, as amended by City Council on July 22, 1997.

(4)  The City of Scranton under the City of Scranton

Commission for Architectural and Urban Design Review

ordinance.

"Main Street community."  A geographic area designated as a

Main Street community by the Department of Community and

Economic Development. The term includes an area that has exited

the official program but still has a program functioning to

revitalize the designated areas pursuant to the department's

program guidelines.

"National Register."  The National Register of Historic

Places established under section 101 of the National Historic

Preservation Act (Public Law 89-665, 16 U.S.C. § 470a).

"Residential applicant."  One or more natural persons who own

an eligible residential property.

"Standards."  The Secretary of the Interior Standards for the

Treatment of Historic Properties, excluding reconstruction, set

forth at 36 CFR 67.7 (relating to Standards for Rehabilitation).

CHAPTER 3

GRANTS

Section 301.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Department."  The Department of Community and Economic

Development of the Commonwealth.

Section 302.  Historic Preservation Incentive Grant Program.

(a)  Establishment.--There is established a program in the

department to be known as the Historic Preservation Incentive

Grant Program. The program shall provide grants to owners of

eligible properties located within this Commonwealth that

undertake eligible residential building improvements.

(b)  Application.--To participate in the program, a

residential applicant must submit an application to the

department requesting a grant for the reimbursement of costs

associated with eligible building improvements to an eligible

residential property owned by the residential applicant. The

application must be submitted on a form developed by the

department in consultation with the commission and must include

all of the following:

(1)  The name and address of the residential applicant.

(2)  The location of the property.

(3)  Proof of ownership of the property by the

residential applicant. The residential applicant may satisfy

this requirement by providing evidence satisfactory to the

department that the residential applicant will own the

property at some point in time following submission of the

application and has sufficient control of the property at the

time of submission to perform the work described in the

application.

(4)  A description of the property providing sufficient

information to establish that the property meets the criteria

for an eligible residential property, including information

specified in the commission's guidelines.

(5)  A detailed description of the proposed work to be

performed, including plans, drawings and specifications as

appropriate.

(6)  A detailed estimate of the cost of the work to be

performed.

(7)  Proof that the residential applicant is current with

respect to the payment of all real estate taxes assessed

against the property or evidence that the residential 

applicant is contesting the taxes in good faith and has set

aside sums to cover any tax liability in the event the

contest fails.

(8)  Evidence of the source of matching funds to be

utilized for the project. If the source of matching funds is

a loan from a financial institution, the residential 

applicant must provide a copy of the loan application and

commitment or other evidence satisfactory to the department

of the residential applicant's ability to obtain the

necessary financing.

(9)  Any other information required by the department or

the commission.

(c)  Review and recommendation by commission.--The department

shall forward the application to the commission for review. If

the commission determines that the property qualifies as an

eligible residential property and that the proposed improvements

would qualify as eligible building improvements, then the

commission may recommend approval of the property for the

program and shall notify the department of its recommendation

within 45 days following receipt of a completed application by

the commission.

(d)  Award of grant by department.--Upon receipt of the

commission's recommendation for approval as provided in

subsection (c), the department may award the residential 

applicant a grant and shall notify the residential applicant and

the commission of its action.

(e)  Certification and disbursement.--

(1)  Following completion of the work, the residential 

applicant shall file a certification with the commission

stating that the work has been completed. The certification

shall be accompanied by photographs showing the completed

project, evidence of the actual expenditures made by the

residential applicant and evidence, in the form of a letter

or letters from local code enforcement officials, that the

property, as improved, complies with all local building,

fire, safety and health codes.

(2)  The commission shall complete its review of the

certification within 90 days of receipt of the certification

by the commission. The commission may request additional

information and conduct a site inspection as it deems

necessary to determine compliance with the requirements of

the program established by this chapter.

(3)  If the commission is satisfied with the

certification submitted, it shall notify the department of

the approved eligible building improvements. The department

shall calculate the amount of the grant and disburse the

grant funds to the residential applicant.

(f)  Agreement.--The department is not required to enter into

a grant agreement with a residential applicant prior to awarding

and disbursing a grant.

(g)  Special rules.--An application for a grant for eligible

building improvements must include one of the following

statements from the residential applicant:

(1)  That the residential applicant has owned the

eligible residential property for at least five years prior

to the date of submission of the application.

(2)  That the residential applicant has owned the

eligible residential property for less than five years prior

to the date of submission of the application but agrees to

continue to own the property for a total of at least five

years.

Section 303.  Exemption from State taxes.

Grant amounts awarded by the department for eligible

residential properties shall not be considered income to the

residential applicant under section 303 of the act of March 4,

1971 (P.L.6, No.2), known as the Tax Reform Code of 1971.

Section 304.  Allocation of grant funds; limitations;

priorities.

(a)  Source.--Funds for this program shall be provided to the

department from funds authorized for this purpose.

(b)  Proration.--If the total amount of grants to be awarded

exceeds the amount of funds available for the program in any

year, the amount of grants may be prorated among the successful

residential applicants.

(c)  Limitations.--

(1)  Subject to the other limitations set forth in this

subsection, a grant awarded to a successful residential 

applicant shall not be more than 70% of the total amount of

expenditures made for eligible building improvements.

(2)  In no event shall any grant be awarded unless:

(i)  the residential applicant is current with

respect to all local real estate taxes assessed against

the residential applicant's eligible residential 

property; or

(ii)  the residential applicant, in good faith, is

contesting local real estate taxes assessed against the

residential applicant's eligible residential property,

provides the department with evidence of the contest and

has set aside sums to cover any tax liability in the

event the contest fails.

(3)  Up to $15,000 may be awarded to a residential

applicant in connection with a single project.

(4)  In order to receive money from a grant, the

residential applicant must complete the project being funded

by the grant within two years of receipt of notification from

the department of the award.

(d)  Priorities.--Priority for the award of grants may be

given to properties located in Elm Street areas, Main Street

communities, enterprise zones and local government historic

districts. The department shall take into account geographical

distribution of grants in making awards.

Section 305.  Administration.

(a)  Guidelines.--The department and the commission shall

jointly develop guidelines for the implementation of the program

established by this chapter.

(b)  Expenditures.--The department may utilize up to an

aggregate of 3% of the funds available for the program annually,

not to exceed $500,000, as allocated by the Governor, for

expenses incurred in administering the program established by

this chapter and Chapter 5. The department and the commission

shall enter into an agreement for the payment to the commission

of a portion of sums for expenses incurred by the commission.

Section 306.  Repayment.

The department, at its discretion, shall be entitled to a

return of all grant funds paid to the residential applicant if,

within five years following completion of the project, any of

the following occur:

(1)  The owner of the eligible residential property makes

improvements to the exterior of the property which do not

meet the standards.

(2)  The eligible residential property is removed from

the National Register, either individually or as a

contributing building within a historic district, whether or

not as a result of the owner making improvements to the

exterior of the property which do not meet the standards.

(3)  The eligible residential property is transferred in

violation of the agreement made by the owner under the

provisions of section 302(g)(2), if applicable, unless the

transfer occurs as a result of the death of the owner or is

otherwise involuntary.

CHAPTER 5

TAX CREDITS

Section 501.  Definitions.

The following words and phrases when used in this chapter

shall have the meanings given to them in this section unless the

context clearly indicates otherwise:

"Certified historic structure."  As defined in section 47(c)

(3) of the Internal Revenue Code of 1986 (Public Law 99-514, 26

U.S.C. § 47(c)(3)).

"Department."  The Department of Revenue of the Commonwealth.

"Pass-through entity."  Any of the following:

(1)  A partnership, as defined in section 301(n.0) of the

act of March 4, 1971 (P.L.6, No.2), known as the Tax Reform

Code of 1971.

(2)  A Pennsylvania S corporation as defined in section

301(n.1) of the Tax Reform Code of 1971.

"Qualified rehabilitation expenditure."  A qualified

rehabilitation expenditure, as defined in section 47(c)(2) of

the Internal Revenue Code of 1986 (Public Law 99-514, 26 U.S.C.

§ 47(c)(2)), incurred after December 31, 2008.

"Qualified tax liability."  The liability for taxes imposed

under Article III, IV or VI of the act of March 4, 1971 (P.L.6,

No.2), known as the Tax Reform Code of 1971. The term does not

include any tax withheld by an employer from an employee under

Article III of the Tax Reform Code of 1971.

Section 502.  Tax credit certificate.

(a)  Application.--

(1)  A commercial applicant may apply to the Department

of Community and Economic Development for a tax credit

certificate under this section.

(2)  The application must be on the form required by the

Department of Community and Economic Development.

(3)  The application must be filed on or before February

1 for qualified rehabilitation expenditures incurred in the

prior calendar year.

(b)  Review, recommendation and approval.--

(1)  The Department of Community and Economic Development

shall forward the application to the commission for review.

(2)  If the commission determines that the commercial

applicant has incurred qualified rehabilitation expenditures,

the commission may recommend approval of the application and

shall notify the Department of Community and Economic

Development of its recommendation within 30 days following

receipt of a completed application by the commission.

(3)  Upon receipt of the commission's recommendation for

approval, the Department of Community and Economic

Development:

(i)  may approve the application; and

(ii)  by April 1, shall notify the commercial

applicant and the commission of its action.

(4)  If the Department of Community and Economic

Development approves the application, it shall issue the

commercial applicant a tax credit certification by April 1.

In granting tax credit certificates, the Department of

Community and Economic Development:

(i)  shall give priority to properties located in Elm

Street areas, enterprise zones, local government historic

districts and Main Street communities;

(ii)  shall take into account the geographical

distribution of tax credit certificates; and

(iii)  shall not grant more than $10,000,000 in tax

credit certificates in a single fiscal year.

Section 503.  Claiming the credit.

(a)  Claim.--Upon presenting a tax credit certificate to the

department, the commercial applicant may claim a tax credit

against the qualified tax liability of the commercial applicant.

(b)  Amount and qualification.--

(1)  A commercial applicant is allowed a tax credit under

this chapter in the amount of 25% of a qualified

rehabilitation expenditure:

(i)  which is incurred in connection with

rehabilitation of a certified historic structure located

in this Commonwealth; and

(ii)  for which a credit is received under section 47

of the Internal Revenue Code of 1986 (Public Law 99-514,

26 U.S.C. § 47).

(2)  The tax credit may not exceed $500,000 for a single

commercial applicant in a single fiscal year.

Section 504.  Carryover, carryback and sale or assignment of

credit.

(a)  General rule.--If the commercial applicant cannot use

the entire amount of the tax credit for the taxable year in

which the tax credit certificate was issued, then the excess may

be carried over to succeeding taxable years and used as a credit

against the qualified tax liability of the commercial applicant

for those taxable years. Each time the tax credit is carried

over to a succeeding taxable year, it shall be reduced by the

amount that was used as a credit during the immediately

preceding taxable year. The tax credit provided by this chapter

may be carried over and applied to succeeding taxable years for

no more than three taxable years following the first taxable

year for which the taxpayer was entitled to claim the credit.

(b)  Application.--A tax credit certificate issued by the

department shall first be applied against the commercial

applicant's qualified tax liability for the current taxable year

as of the date on which the tax credit certificate was issued

before the tax credit can be applied against any tax liability

under subsection (a).

(c)  No carryback or refund.--A commercial applicant is not

entitled to carry back or obtain a refund of all or any portion

of an unused tax credit granted to the taxpayer under this

chapter.

(d)  Sale or assignment.--

(1)  A commercial applicant, upon application to and

approval by the department, may sell or assign, in whole or

in part, a tax credit granted to the commercial applicant

under this chapter.

(2)  A credit may not be sold or assigned for a period of

one year following the date the tax certificate was issued by

the department.

(3)  Before an application is approved, the department

must make a finding that the commercial applicant has filed

all required State tax reports and returns for all applicable

taxable years and paid any balance of State tax due as

determined by assessment or determination by the department.

(e)  Purchasers and assignees.--The purchaser or assignee of

all or a portion of a tax credit under subsection (d) shall

immediately claim the credit in the taxable year in which the

purchase or assignment is made. The amount of the tax credit

that a purchaser or assignee may use against a single qualified

tax liability may not exceed 50% of that qualified tax liability

for the taxable year. The purchaser or assignee may not carry

forward, carry back or obtain a refund of or further sell or

assign the tax credit. The purchaser or assignee shall notify

the department of the seller or assignor of the tax credit in

compliance with procedures specified by the department.

Section 505.  Pass-through entity.

(a)  General rule.--If a pass-through entity has any unused

tax credit under section 504(a), it may elect in writing,

according to procedures established by the department, to

transfer all or a portion of the credit to shareholders, members

or partners in proportion to the share of the entity's

distributive income to which the shareholder, member or partner

is entitled.

(b)  Limitation.--A pass-through entity and a shareholder,

member or partner of a pass-through entity may not claim the

credit under subsection (a) for the same qualified

rehabilitation expenditure.

(c)  Application.--A shareholder, member or partner of a

pass-through entity to which a credit is transferred under

subsection (a) shall immediately claim the credit in the taxable

year in which the transfer is made. The shareholder, member or

partner may not carry forward, carry back, obtain a refund of or

sell or assign the credit.

Section 506.  Cancellation.

(a)  Cancellation of tax credit certificate.--The Department

of Community and Economic Development may cancel a tax

certificate issued under section 502 if, within five years

following completion of the project, any of the following occur:

(1)  The owner of the certified historic structure makes

improvements to the exterior of the property which do not

meet the standards.

(2)  The certified historic structure is removed from the

National Register, either individually or as a contributing

building within a historic district, whether or not as a

result of the owner making improvements to the exterior of

the property which do not meet the standards.

(b)  Notices.--The Department of Community and Economic

Development shall notify the commercial applicant to whom the

tax credit was granted and the department of cancellation of

that tax credit, including the amount of the tax credit

canceled. The commercial applicant shall pay the amount of the

canceled tax credit on the application notice to the department

within 30 days of the date of the cancellation notice.

(c)  Appeals.--

(1)  A party aggrieved by the cancellation of a tax

credit certificate may appeal the cancellation to the

Department of Community and Economic Development.

(2)  The appeal must be made within 30 days of the date

of the cancellation notice.

(3)  The appeal is subject to:

(i)  2 Pa.C.S. Ch. 5 Subch. A (relating to practice

and procedure of Commonwealth agencies), 1 Pa. Code Pt.

II (relating to general rules of administrative practice

and procedure) and procedural regulations promulgated by

the Department of Community and Economic Development; and

(ii)  2 Pa.C.S. Ch. 7 Subch. A (relating to judicial

review of Commonwealth agency action).

Section 507.  Administration.

The Department of Community and Economic Development and the

department shall jointly develop guidelines for the

implementation of the program established in this chapter.

CHAPTER 31

MISCELLANEOUS PROVISIONS

Section 3101.  Effective date.

This act shall take effect in 120 days.