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RTC tax credits driven by plan, cost [UPDATED]
Published 1:32pm Monday, April 23, 2012 Updated 2:22pm Monday, April 23, 2012In recent city discussions about the Fergus Falls Kirkbride building, several advocates of its reuse have claimed that the property could be eligible for up to $40 million in historical tax credits if it was redeveloped.
That is potentially true, but it depends on the cost and the nature of the project.
A building redevelopment is eligible for historical tax credits if it meets three qualifications, according to Linda Pate, preservation specialist at the State Historic Preservation Office.
First, the building must be on the National Register of Historic Places. Second, it must meet the Secretary of the Interior’s standards for the treatment of historic properties (much of this is concerned with maintaining historic integrity).
Finally, the building must be put to use as a profitable venture.
“Tax credits are based on something called qualified rehabilitation expenses,” Pate said.
Those expenses are qualified as money spent within the footprint of the building to make it suitable for modern uses, as well as code compliance and accessibility.
“The tax credit is 20 percent of what you spend on qualified rehabilitation,” she explained.
However, tax credits can be awarded at the state and federal level, allowing for 40 percent of the overall cost to be covered.
Under this scenario, the estimated $100 million Kirkbride development plan submitted by Geitso Export Management would have been eligible for $40 million tax credits if none of the work was outside of the original building footprints (i.e., no additions were built) and if all of the improvements were done to get the building’s conditions up-to-date for its eventual occupants.
However, at a recent city council meeting, multiple aldermen expressed that the city is not going to use the tax credits, a developer is – but right now, the city does not have a developer.
Mayor Hal Leland said that he has been in contact with a few developers interested in the building.
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