Source: http://regulations.delaware.gov/register/november2018/final/22%20DE%20Reg%20409%2011-01-18.htm
Timestamp: 2019-03-18 22:30:47
Document Index: 514160023

Matched Legal Cases: ['§10118', '§1815', '§1815', '§10118', 'art 1', 'art 2', 'art 2', '§1816', '§10118', 'art 1', 'art 1', 'art 2', 'art 1', 'art 2', 'art 2', 'art 2', 'art 2']

In accordance with 29 Del.C. §10118 and 30 Del.C. Ch.18, Subch. II, §1815(b), for the reasons set forth herein, the Delaware Department of State, Division of Historical and Cultural Affairs enters this Order amending the Historic Preservation Tax Credit Program regulation.
Pursuant to its authority under 30 Del.C. Ch.18, Subch. II, §1815(b), the Division proposes to adopt an amended regulation for the Historic Preservation Tax Credit Program to specify under what circumstances a Credit Award would be withdrawn, establish a time frame during which rehabilitation work may qualify for a Credit Award, amend the fee schedule, and make other clarifications and technical corrections to the regulation. The amended regulation also reflects changes to the program made in the 149th General Assembly. The Historic Preservation Tax Credit Act (30 Del.C. Ch. 18, Subch. II) was amended to increase the maximum tax credit available for owner-occupied historic properties (81 Del. Laws. c. 390), and the Bond and Capital Improvements Act increased the total amount of credits available in each state fiscal year through state fiscal year 2024 (81 Del. Laws. c. 303).
The Division gave notice of its intent to amend the regulation in the August 1, 2018 issue of the Delaware Register of Regulations. At that same time, the Division submitted a Regulatory Flexibility Analysis and Impact Statement for this proposed revised regulation, as required by 29 Del.C. Ch. 104. The Division solicited written comments from the public for thirty (30) days as mandated by 29 Del.C. §10118(a).
In accordance with Delaware law, public notice regarding the proposed amendment of the regulation governing the Historic Preservation Tax Credit Program was published in the Delaware Register of Regulations. The public comment period was open from August 1, 2018 through September 4, 2018. Notice of the proposed amendment was also published in the News Journal on August 8, 2018 and the Delaware State News on August 5 and August 7, 2018, was posted on the Division's website, and was distributed to recipients of the Division's e-newsletter. The Division received written comments.
The Division received written comments from five homeowners, three non-profit organizations, one municipality, and three developers including one large corporation and two individuals. The Division of Historical and Cultural Affairs has reviewed and considered each comment, summarized below, and responds as follows:
First, Fee Increases: The Division received several written comments requesting reconsideration of the new fee structure established in Section 8.0 of the regulation. Comments included: the proposed fee structure is not comparable with fees charged by other state programs or with the federal historic tax credit program (examples given); the fee would place an undue burden on non-profit organizations and applicants for resident-occupied properties; and the increase in costs would diminish the value of the credits and discourage application to the program.
Division Response: The Division amended subsection 8.1.1 of the regulation, reducing the application fee for resident-occupied properties and resident-curators from $250 to $100. The Division has reviewed and considered comments concerning the other aspects of the fee structure and determined to retain subsection 8.1.2 of the proposed regulation as posted. The fee schedule has not been adjusted since it was established in 2002.
Second, Fee Cap: The Division received written comments requesting imposition of a cap on the total fee charged, stating that the Division's proposed fee structure is not in alignment with the federal historic tax credit program which has a cap.
Division Response: The Division has reviewed and considered these comments and determined to retain subsection 8.1.2 of the proposed regulation as posted.
Third, "Grandfathering" Previously Approved Projects: The Division received written comments questioning the applicability of the new regulation to projects that have been previously initiated and/or are already underway. Commenters specifically requested that such projects be "grandfathered" and exempted from the new fee structure established in Section 8.0 and from the new subsection 5.5 limiting applications to only proposed work. A definition of the term "initiated" was suggested. Homeowners with completed projects that had planned to apply for a subsequent award (allowed under the previous program guidelines) also considered new subsection 5.5 detrimental and asked that it be removed from the regulation, modified to allow completed work within a reasonable period or if the work meets the Secretary of the Interior's Standards for Rehabilitation.
Division Response: The Division added a new subsection 4.6 to provide a definition of "initiated" projects, and a new subsection 4.7 citing circumstances when approval of a Part 1 application will expire. The Division then added a new Section 12.0 Transition Provisions that allows applicants to proceed under the previous regulation (18 DE Reg. 237) and guidance under specific circumstances. References to Section 12.0 were added to subsections 5.5 and 8.1, accordingly. However, the Division maintains that the limitations imposed by subsection 5.5 are necessary to ensure that the program is in keeping with its original intent, and notes that the program as a whole already requires that work meet the Secretary of the Interior's Standards.
Fourth, "Moratorium" on Applications: The Division received several written comments concerned that applicants were not made aware of the impending changes until after the proposed regulation was posted, at which time the Division was not accepting new applications, and under the new regulations their projects may no longer be eligible for the program.
Division Response: The Division added a new Section 12.0 Transition Provisions, which allows applicants to proceed under the previous regulation (18 DE Reg. 237) and guidance under specific circumstances, and cites the provisions of Section 10 that gives applicants the ability to appeal the Division's disapproval of an application.
Fifth, Conditional Approvals and Timeframes for Approval: The Division received written comments requesting clarification of when a Part 2 application is considered approved, pertaining to the interpretation of new subsection 5.5. It was noted that the regulation does not mention conditional approvals, though they occur. Related issues concerning the federal tax credit program were cited. It was suggested that a specific timeframe for approval or rejection of an application be included in the regulation.
Division Response: The Division added language to subsection 5.7 specifying that the Division may apply conditions to a Part 2 approval. The timeframe for review is currently in program guidance and the Division finds it is not necessary to add it to the regulation. The Division also finds it best to address in program guidance the unique issues that may arise when applicants are seeking both federal and state tax credits.
Sixth, Clarify Wording in subsections 5.5, 7.4 and 7.6: The Division received written comments suggesting specific language changes in these subsections.
Division Response: The Division amended subsection 5.5, changing "carried out" to "completed." The Division will use updated guidance to address provide further discussion of subsection 7.4, regarding circumstances when an increase in a credit award can be considered. The Division finds that new subsection 7.6 of the regulation, as written, reflects the allocation of credits to certain pools as specified by Delaware Code, 30 Del.C. Ch. 18, Subch. II, §1816, and allows sufficient flexibility for changes to the total credits allowed.
Seventh, Expedite Document Circulation for Final Approvals: The Division received written comments recommending the agency consider use of e-copies to obtain signatures from state government officials, including the Division of Historical and Cultural Affairs and Division of Revenue, and correspondence with applicants to expedite final approvals.
Division Response: The Division will explore this recommendation in the future.
The public was given the required notice of the Division's intention to amend the Historic Preservation Tax Credit Program regulation and was given opportunity to provide the Division with comments. The required Regulatory Flexibility Analysis and Impact Statement for this proposed revised regulation was submitted. Public comments were received. The Division has responded to the public comments in the Summary of Comments Received with Agency Response and Explanation of Changes. Thus, the Division finds that the proposed regulation, which adds subsections 4.6 and 4.7 and adds Section 12.0, should be adopted in the best interest of the general public of the State of Delaware. Additionally, some grammatical amendments and edits were made to the proposed regulations.
THEREFORE, IT IS SO ORDERED, this 1st day of November 2018 that the proposed Division of Historical and Cultural Affairs Amendment to the Historic Preservation Tax Credit Program Regulation 901 is adopted and shall become effective ten (10) days from the date of its publication in the November 2018 Delaware Register of Regulations, in accordance with 29 Del.C. §10118(e) and (g).
“Act” means the [“Historic Preservation Tax Credit Act”, under] 30 Del.C. Ch. 18, Subch. II.
[4.6	Once the State Office has approved the Part 1 application, the project is considered initiated for the purpose of this program.
4.7	The Part 1 application shall expire if a Part 2 application is not received by the State Office within one calendar year from the date of issue of the approved Part 1.]
5.5 The Part 2 application shall include any proposed rehabilitation work. Any rehabilitation work that has been [carried out completed] prior to the approval of the Part 2 application is not eligible for consideration[, except as provided for under Section 12.0].
5.67	The Delaware State Historic Preservation Officer shall determine whether the proposed rehabilitation for which a complete application is received under Section subsection 5.1 of this regulation meets the definition of a certified rehabilitation and shall send the applicant notice of the determination. The State Office may require modifications to the plan work as described in the Part 2 application in order to meet the definition of a certified rehabilitation. [The State Office may also apply conditions to a Part 2 approval so as to insure the work meets the definition of a certified rehabilitation.]
8.1	The fee for review of rehabilitation work for projects where the qualified expenditures are over $100,000 is $250 for each separate application. Final action will not be taken on an application until the appropriate remittance is received. No fee will be charged for rehabilitation projects where the qualified expenditures are less than $100,000. [All Except as provided for under Section 12.0, all] applicants who seek a Credit Award for their certified rehabilitation are subject to a fee.
8.1.1	The fee for applicants of owner-occupied properties and resident curators is [$250 $100]. The fee is due at the time the applicant submits their Request for Certification of Historic Property application. All fees are non-refundable.
8.1.5	This fee schedule is applicable to all projects initiated after the effective date of these rules[, except as provided for under Section 12.0].
[12.0	Transitional Provisions
12.4	A taxpayer whose application is disapproved under subsection 12.2 may appeal in accordance with the administrative review process established in Section 10.0 of this regulation.]
22 DE Reg. 409 (11/01/18) (Final)