Missouri Code of State Regulations › Title 4 - Department of Economic Development › Division 85 - Division of Business and Community › Chapter 5 - Historic Preservation Tax Credit Program › Section 4 CSR 85-5.010 - Overview and Definitions

Current through Register Vol. 49, No. 14, July 15, 2024
PURPOSE: This proposed amendment will ensure
				  consistency in definitions as between the statutes and the regulations, add
				  definitions to reflect the three different stages when applications can be
				  submitted, and update some definitions to reflect technological advancements in
				  filing and processing of applications.
PUBLISHER'S NOTE: The secretary of state has
				  determined that publication of the entire text of the material that is
				  incorporated by reference as a portion of this rule would be unduly cumbersome
				  or expensive. This material as incorporated by reference in this rule shall be
				  maintained by the agency at its headquarters and shall be made available to the
				  public for inspection and copying at no more than the actual cost of
				  reproduction. This note applies only to the reference material. The entire text
				  of the rule is printed here.
(1) The Missouri Historic Preservation Tax
				Credit (HTC) Program was enacted in 1997 and took effect on January 1, 1998.
				The law may be found in sections
				253.545 to
				253.559, RSMo. The law is
				intended to aid in the rehabilitation of historic structures in the state of
				Missouri by providing an incentive in the form of state tax credits equal to
				twenty-five percent (25%) of the qualified rehabilitation expenditures (QREs),
				provided that such expenses exceed fifty percent (50%) of the total basis in
				the property.
(2) As used in this
				chapter, the following terms mean-
(A)
				Applicant. The taxpayer seeking an authorization or issuance of tax credits by
				the department;
(B) Certified
				Historic Structure. Property located in Missouri and listed individually on the
				National Register of Historic Places;
(C) Department. The Department of Economic
				Development;
(D) Developer Fee
				Agreement. A written agreement for services between the developer and the
				applicant;
(E) Director. The
				director of the department;
(F)
				Eligible Property. Property located in Missouri and offered or used for
				residential or business purposes;
(G) Excess Tax Credits. As authorized in
				section 253.559.10, RSMo, excess tax
				credits may be awarded when the amount of QREs for a project exceed the amount
				of QREs attributable to the amount of tax credits the department authorized and
				issued for the project in response to the preliminary application and final
				application. The amount of excess tax credits is based upon the excess amount
				of QREs for the project;
(H) Excess
				Tax Credits Application. A request for issuance of excess tax credits. The
				excess tax credits application must be on the electronic form provided by the
				department;
(I) Final Application.
				A request for issuance of tax credits by an applicant whose project is complete
				after having received an authorization of tax credits for the project. The
				final application must be on the electronic form provided by the
				department;
(J) Final Completion.
				For the purposes of issuing state historic preservation tax credits, the
				project is considered complete when all work has been done on the project. The
				final year construction costs are incurred is the year credits will be issued
				(i.e., if costs are still being incurred in 2007 then regardless of placed in
				service date or date of substantial completion, the credits will be issued as
				2007 credits if those expenses are being claimed for tax credits). Please note:
				completion dates have been established for the state historic program only.
				Federal guidelines vary. Final completion is separately determined for each
				construction period of a phased project. Costs associated with one (1)
				construction period may not be carried to another construction period of a
				project. Each construction period is considered a separate project for audit
				purposes and must stand alone to meet all requirements of the program. Any
				exceptions must be submitted to the department before the final cost
				certification is submitted and must be approved in writing by the
				department;
(K) Hard Costs.
				Qualified rehabilitation expenditures, or QREs, related to the structural
				components of a building, including but not limited to walls, partitions,
				floors, ceilings, windows, doors, components of central air conditioning or
				heating systems, plumbing, electrical wiring and lighting fixtures, chimneys,
				stairs, escalators, elevators, sprinkling systems, fire escapes, and other
				components related to the operation or maintenance of the building;
(L) Identity of Interest, or Related Party.
				An identity of interest, or related party, may exist when-
1. The applicant has any financial interest
				in the other party (i.e., general contractor, subcontractor, or
				vendor);
2. One (1) or more of the
				officers, directors, stockholders, or partners of the applicant is also an
				officer, director, stockholder, or partner of the other party;
3. Any officer, director, stockholder, or
				partner of the applicant has any financial interest whatsoever in the other
				party or has controlling interest in the management or operation of the other
				party;
4. The other party advances
				any funds to the applicant;
5. The
				other party provides and pays on behalf of the applicant the cost of any legal
				services, architectural services, or engineering services other than those of a
				surveyor, general superintendent, or engineer employed by a general contractor
				in connection with obligations under the construction contract;
6. The other party takes stock or any
				interest in the applicant as part of consideration to be paid;
7. There exists or comes into being any side
				deal, agreement, contract, or undertaking entered into thereby altering,
				amending, or canceling any of the original documents submitted to the
				department in the preliminary application, except as approved by the
				department;
8. Any party involved
				in the project would be deemed to constructively own the stock of another party
				involved in the project as set forth in section 304(c) of the Internal Revenue
				Code of 1986, as amended; or
9. Any
				party involved in the project has a stockholder, member, partner, officer, or
				director that is related by blood, adoption, or marriage to a stockholder,
				member, partner, officer, or director of another party involved in the
				project-
(M) Inactive
				Project. Any project deemed pending as described in written communication from
				the department to the applicant or that has received a tax credit authorization
				that, in either case, has remained idle without communication from the
				applicant to the department providing a justified reason for such idleness,
				such justification to be reasonably determined by the department, for a period
				of at least nine (9) months from the date the last written correspondence was
				sent by the department to the applicant regarding the project;
(N) Incurred. Has the same meaning as set
				forth in Title 26, Code of Federal Regulations, section
				1.461-1(a)(2)(i),
				published November 26, 1960, which is hereby incorporated by reference and made
				a part of this rule, as published by the Office of the Federal Register,
				National Archives and Records Administration, United States Government
				Publishing Office, 732 N. Capital Street NW, Washington, DC 20402-0001, phone:
				toll free (866) 512-1800, website:
http://bookstore.gpo.gov
. This rule does
				not incorporate any subsequent amendments or additions;
(O) Non-Qualified Expenditures. All costs included in
				total project costs which are not qualified rehabilitation expenditures are
				considered non-qualified expenditures, including but not limited to a list of
				non-qualified expenditures under the program published by the department in the
				program guidelines, which shall be effective for the state fiscal year
				beginning on July 1 following such publication and may be updated for
				subsequent state fiscal years in the reasonable determination of the
				department. Each project shall be held to the non-qualified expenditures
				effective on the date the project's preliminary application was submitted.
				Costs of acquisition shall constitute a non-qualified expenditure;
(P) Not-for-profit. A not-for-profit entity,
				including but not limited to a not-for-profit corporation formed under Chapter
				355, RSMo;
(Q) Phased Project. A
				project for which the preliminary application submitted to the department
				provides for the project to be completed and reviewed in more than one (1)
				construction period, as described in 4 CSR 855.080;
(R) Postmark. For applications received by
				the department through a web application, the postmark shall be the date the
				application was submitted, as recorded by the web application;
(S) Preliminary Application. A request by an
				applicant for an authorization of tax credits, on the electronic form provided
				by the department;
(T) Program.
				The Missouri Historic Preservation Tax Credit Program authorized in sections
				253.545 to
				253.559, RSMo;
(U) Project. A certified historic structure
				or structure in a certified historic district that is eligible
				property;
(V) Projected Net Fiscal
				Benefit. The total net fiscal benefit to the state or municipality, less any
				state or local benefits offered to the taxpayer for a project. The projected
				net fiscal benefit shall be determined as provided in
				4 CSR
				85-5.030;
(W) Qualified Census Tract, or QCT. A census
				tract with a poverty rate of twenty percent (20%) or higher as determined by a
				map and listing of census tracts which shall be published by the department and
				updated on a five- (5-) year cycle, and which map and listing shall depict
				census tracts with twenty percent (20%) poverty rate or higher, grouped by
				census tracts with twenty percent (20%) to forty-two percent (42%) poverty, and
				forty-two percent (42%) to eighty-one (81%) percent poverty as determined by
				the most current five- (5-) year figures published by the American Community
				Survey conducted by the United States Census Bureau;
(X) QCT Tax Credit Cap. The maximum amount of
				tax credits the department may authorize solely for projects located in QCTs in
				a state fiscal year, which is up to thirty million dollars ($30 million) as set
				forth in subdivision (2) of subsection 2 of section
				253.550, RSMo;
(Y) Qualified Rehabilitation Expenditures,
				or QREs. Those expenditures that are used as eligible basis on which to
				calculate tax credits. Such costs include but shall not be limited to qualified
				rehabilitation expenditures as defined under section 47(c)(2)(A) of the
				Internal Revenue Code of 1986, as amended, as determined by the
				department;
(Z) Soft Costs. QREs
				other than hard costs, including but not limited to architect fees, engineering
				fees, construction management costs, utilities incurred during rehabilitation,
				property taxes, reasonable developer fees, construction period interest,
				financing costs related to construction financing, contractor overhead, and
				contractor profit;
(AA) State. The
				state of Missouri;
(BB) State
				Fiscal Year. The time period beginning July 1 of one year through June 30 of
				the following year;
(CC) Statewide
				Tax Credit Cap. The maximum amount of tax credits the department may authorize
				for projects located in the state, as set forth in subdivision (1) of
				subsection 2 of section
				253.550, RSMo, adjusted as
				authorized in subdivision (3) of subsection 2 of section
				253.550, RSMo. The statewide tax
				credit cap and the QCT tax credit cap are separate caps;
(DD) Structure in a Certified Historic
				District. A structure located in Missouri which is certified by the State
				Historic Preservation Office as contributing to the historic significance of a
				certified historic district listed on the National Register of Historic Places,
				or a local district that has been certified by the United States Department of
				the Interior;
(EE) Substantial
				Completion. One (1) of the following-
1. An
				architect's certificate of substantial completion;
2. An architect's certificate of final
				completion; or
3. A local political
				subdivision's issuance of a certificate of occupancy;
(FF) Tax Credits. State historic
				preservation tax credits authorized under the program;
(GG) Taxpayer. Any person, firm, partnership,
				trust, estate, limited liability company, or corporation; and
(HH) Total Project Costs. All costs, whether
				accrued or paid, pertaining to the redevelopment of the property for which an
				application for tax credits has been submitted. Total project costs include all
				QREs and all non-qualified expenditures, including the shell acquisition cost.
				It does not include any cash reserves established or to be established for the
				project, such as replacement reserves, lease-up reserves, lease commission
				reserves, or other cash held by, or for, the applicant.