Lynne,

 

The Kansas Rehabilitation Tax Credit program was signed into law in 2001 and has become one of the most progressive historic preservation incentive programs in the nation.  Amendments to the original statute (K.S.A. 79-32,211) in 2002 clarified that these tax credits were transferable and could be utilized by any owner of a historic building including private homeowners, non-profit organizations, and local governments.  Further clarification by the Kansas Department of Revenue in recent years has allowed agencies of the State itself to utilize this program including the Kansas Army National Guard and the University of Kansas.  The program allows qualified property owners to claim a state income tax credit equal to 25% of a certified rehabilitation project's qualifying expenses.  In 2007, the Kansas State Legislature increased that percentage to 30% for certified 501c3 organizations that own and rehabilitate their historic buildings making this program even more valuable to those non-profit organizations.

 

This program was enacted to help relieve owners of historic properties of some of the costs associated with rehabilitation of their buildings. 

However, the legislature also knew that by helping property owners afford rehabilitations they were also encouraging property owners and developers to invest in our state's historic resources.  That investment in the rehabilitation of historic buildings generates an incredible impact on the local economy.  For smaller projects like the Lawrence Carnegie Library rehabilitation completed in 2004 at a cost of $346,682, the investment by the local government generated approximately 15 new jobs, approximately $728,032 in gross domestic product, and over $63,000 in state and local taxes.  This is not to mention the direct benefit back to the City of Lawrence from the sale of the tax credits.  The 2004 project generated $86,670 in state income tax credits (25% of the qualifying expenses).  Those credits were sold to Commerce Bank in 2004 for $71,069.40 or eighty-two cents on the dollar.  The money from that sale went directly back to the City of Lawrence for public use.

 

The currently proposed project at the Carnegie Library is expected to exceed $1.2 million dollars in total.  While most of that expense will be non-qualifying for the rehabilitation tax credits because the work involves a new addition and portions of the work will be covered by a federal grant, there will still be considerable expenses for the rehabilitation of the existing historic portions of the library that will indeed qualify for this program.  Twenty-five percent of those expenses would be awarded back the City of Lawrence in the form of state income tax credits that could then be sold to any other Kansas state taxpayer for a negotiated price.

 

If there are any questions about the program, feel free to have people contact me at the number or e-mail below.  They are also welcome to contact my colleague in the Kansas Department of Revenue if they have questions related to tax issues.  Kathleen Smith of the Department of Revenue can be reached at 785-296-3070 or kathleen_smith@kdor.state.ks.us.

 

Thank you,

Katrina

 

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Katrina L. Ringler

Tax Credit Programs Coordinator

Cultural Resources Division

Kansas State Historical Society

6425 SW 6th Avenue

Topeka KS  66615-1099

(785) 272-8681 ext.213

kringler@kshs.org

 

Save the Date!

Kansas Statewide Preservation Conference to be held in Hutchinson    April 24-26, 2008!

 

Visit the Kansas Downtown Development Association website at http://kddadowntown.org/