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Delaware General AssemblyDelaware RegulationsMonthly Register of RegulationsSeptember 2014

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On Tuesday, July 1, 2014, the Division of Historical and Cultural Affairs published proposed changes to its regulations in the Delaware Register of Regulations, Volume 18, Issue 1, pages 24-30. The notice indicated that written comments would be accepted by the Director of the Division for thirty days thereafter. Notice of the proposed amendments to the regulations was also published in both the News Journal and Delaware State News on July 1, 2014.
The Historic Preservation Tax Credit Act (30 Del.C. Ch. 18, Subch. II) was amended in the 147th General Assembly (79 Del. Laws. c. 240). The amendments to the legislation provide that 30% of the state’s yearly allocation of Historic Preservation Tax Credits (HPTCs) will be reserved for projects in Downtown Development Districts (DDDs), and also that any such credits not allocated to projects in DDDs by April 1 of each year will be made available to any eligible project statewide.
Pursuant to 30 Del.C. §1815(b), the Division has the statutory authority to promulgate rules and regulations amending or clarifying specific sections of this statute. Additional regulatory clarifications have also been incorporated at this time to more efficiently administer the Program.
Pursuant to 30 Del.C. §1815(b), Timothy A. Slavin, Director, Division of Historical and Cultural Affairs, Department of State has proposed amendments to the regulations governing the Historic Preservation Tax Credit Act and has published these amendments in Delaware Register of Regulations 18 DE Reg. 24-30 (07/01/2014).
SO ORDERED this 15th day of August, 2014.
DEPARTMENT OF STATE
These regulations are created pursuant to 30 Del.C. Ch. 18, Subch. II, which authorizes the Division of Historical and Cultural Affairs to promulgate regulations for implementation of the provisions of this subchapter (except tax‑related procedures) including, but not limited to, setting of fees and development of standards for the rehabilitation of eligible historic properties. The subchapter further authorizes the Division of Historical and Cultural Affairs to promulgate the application and forms governing participation in the certification program.
Act” shall means the 30 Del.C. Ch. 18, Subch. II.
Applicationshall means the Delaware Historic Preservation Tax Credit application that shall consist of four parts, as follows: the Request for Certification of Historic Property (Part 1); the Request for Certification of Rehabilitation (Part 2); the Request for Certificate of Completion (Part 3), and the Request for Credit Award.
Building” means created principally to shelter any form of human activity.
Certified historic propertyshall means a property located within the State of Delaware that is:
"Certification of Completion", or "Certificate of Completion" shall means the certificate issued by the Delaware State Historic Preservation Officer attesting that the certified rehabilitation, or, if applicable, a phase thereof of the certified rehabilitation project, has been completed, and that the documentation of qualified expenditures and project plans that would be required in order to qualify for tax credits under Section 47 of the Internal Revenue Code (26 USC 47) (whether or not such the project would be eligible for such the federal tax credit) has been obtained.
Certified rehabilitationshall means rehabilitation of a certified historic property, or portion thereof of the property, that has been certified by the Delaware State Historic Preservation Officer as a substantial rehabilitation, and is in conformance with the Secretary of the Interior’s Standards for Rehabilitation (36 CRF 67) or such other standards as the State Office shall from time to time adopt.
Credit awardshall means the amount of qualified expenditures as determined by the State Office as part of the Part 2 approval multiplied by the appropriate percentage as determined in 30 Del.C. §1813.
Delaware State Historic Preservation Officershall means the person designated and appointed in accordance with National Historic Preservation Act of 1966, as amended (16 USC §470a(b)(1)(A)). The Delaware State Historic Preservation Officer is an appointed position held by the Director, Division of Historical and Cultural Affairs.
Downtown Development District” or “DDD” means an area within a municipality or unincorporated area designated by the governor as a Downtown Development District under 79 Del. Laws c. 240.
Federal tax creditshall means the Federal Rehabilitation Tax Credit as defined in the United States Tax Code, Title 26, Subtitle A, Chapter 1, Subchapter A, Part IV, Subpart E, Section 47 (26 USC 47).
Fiscal Yearshall means the State of Delaware’s fiscal year.
National Register of Historic Places” or “National Registershall means the National Register of districts, sites, buildings, structures, and objects significant in American history, architecture, archaeology, engineering, and culture that the United States Secretary of the Interior is authorized to expand and maintain pursuant to Section 101(a)(1) of the National Historic Preservation Act of 1966, as amended (16 USC §470(a)(1)(A)).
"Office" or "State Office" shall means the Delaware State Historic Preservation Office, which is a part of the Division of Historical and Cultural Affairs.
"Owner-occupied historic property" shall means any a certified historic property, or any portion thereof of the property, which is being used, or within a reasonable period will be used, by an applicant as the applicant’s principal residence. Such The property may consist of part of a multiple dwelling or multiple purpose building or series of buildings, including a cooperative or condominium. If only a portion of a building is used as the principal residence, only those qualified expenditures that are properly allocable to such that portion shall be eligible under this subchapter to apply for tax credits calculated at the percentage available to owner-occupants.
"Person" or applicant shall means any an individual; any form of company or corporation which is lawful within the State of Delaware (including limited liability companies and S corporations) whether or not for profit; any form of partnership which is lawful within the State of Delaware (including limited liability partnerships) whether or not for profit; any trust or estate; and any lawful joint venture. "Person" or “applicant” shall also mean any a non-state governmental entity; or any a pass-through entity or person under a lease contract for five years or longer.
Phased rehabilitationshall means any a certified rehabilitation of a certified historic property reasonably expected to be completed in two or more distinct stages of development as more fully described in Treasury Regulation 1-48-12(b)(v) or any a successor provision.
"Property" shall means real estate and shall include any building or structure which meets the definition in this section, including multiple-unit structures buildings.
Qualified expenditureshall means any an amount properly expended by a person for the certified rehabilitation of a certified historic property, but shall not include:
acquisition of real property or acquiring an interest in real property, or any costs associated with the acquisition of the property;
any additions to an existing structure except where the combined square footage of all additions is 20% or less than the total square footage of the historic portion of the property and each such addition is approved by the Delaware State Historic Preservation Officer, pursuant to federal guidelines, as:
Reasonable periodshall means that an owner must shall occupy the rehabilitated property as their principal residence within six months of the issuance of the Certificate of Completion. The State Office, in its sole discretion, may offer one extension, not to exceed three months, for cause.
Resident Curatorshall means a person who has entered into a contractual agreement with the owner of a certified property in which the person agrees to pay for full restoration of the owner’s property in exchange for a life tenancy in the property without remunerative compensation to the owner for the life tenancy.
Substantial rehabilitation” or “full restorationshall means rehabilitation of a certified historic property for which the qualified expenditures, during the 24-month period, or the 60-month period for a phased rehabilitation, selected by the applicant exceeds:
Taxpayershall means any a person, as defined in this section, and shall include any an individual or corporation taxable under Title 5, or taxable under either 30 Del.C. Ch. 11, or 30 Del.C. Ch. 19.
4.5 The Delaware State Historic Preservation Officer may certify as historic any a property for which an applicant has obtained a Part 1 certification from the federal government pursuant to 36 CFR 67. Under this provision, an applicant shall file only the cover page of the Delaware Part 1 application.
5.7 The Delaware State Historic Preservation Officer may issue a Part 2 approval to an applicant who has obtained a Part 2 certification from the federal government pursuant to 36 CFR 67. Under this provision, an applicant shall file only the cover page of the Delaware Part 2 application.
5.8 Applicants must shall begin construction on the approved certified rehabilitation plan within one year of receiving the Part 2 approval. If construction on the rehabilitation plan is not substantially commenced and diligently pursued within this time period, the State Historic Preservation Officer may require that the applicant shall forfeit any assigned credit award. Any forfeited tax credits may become available for award to other applicants. Substantially commenced and diligently pursued shall mean the applicant can demonstrate that at a minimum, 25% of the estimated rehabilitation costs was expended within the first year after the tax credits are assigned. The State Office reserves the right to obtain documentation from the applicant supporting the expenditure.
6.1 Upon completion of the rehabilitation work outlined in the Part 2 application, or an approved project phase thereof, the applicant must shall submit to the State Office a Part 3 application with documentation supporting any conditions in the Part 2 application approval, the form(s) required in the Division of Revenue’s regulations indicating the name of the taxpayer who will claim the tax credit, and a final accounting of qualified expenditures.
6.3 Upon approval by the State Office that the completed rehabilitation, or an approved phase thereof, meets the definition of a certified rehabilitation, the State Office shall submit the documentation of qualified expenditures to the Division of Revenue and request a determination of the value of the tax credit for the completed project or an approved phase thereof, meets the definition of a certified rehabilitation, the Delaware State Historic Preservation Officer shall issue a Certificate of Completion for the project, or approved phase thereof. For approved phased rehabilitations, each phase must receive a Certificate of Completion in order for the overall project to be considered a certified rehabilitation.
6.4 After a project, or an approved phase thereof, receives its Certificate of Completion, the State Office shall submit the documentation outlined in 6.3 of these regulations to the Division of Revenue, and request a determination of the value of the tax credit for the completed project or an approved phase. For all projects in which the tax credits are to be applied against franchise taxes, and at other times as requested by the Division of Revenue, the forms and documentation will also be submitted to the State Bank Commissioner’s Office.
6.5 The Division of Revenue will return the forms certifying the value of the tax credit for the project, or an approved phase thereof, to the State Officer which shall transmit the Certificate of Completion and the Revenue form(s) to the taxpayer who will claim the tax credits.
7.2 If submitted with the Part 2 application, Tthe applicant shall support the amount of qualified expenditures indicated on the Request for Credit Award by submitting a cost estimate prepared by a licensed architect or engineer; an accountant; a contractor or a certified construction cost estimator. Where the rehabilitation work is complete, documentation of costs may be prepared by a licensed architect or engineer; an accountant; a contractor or a certified construction cost estimator; or may be documented by paid invoices or cancelled checks for contractual work; and store invoices for material purchases. The State Office may prescribe the format in which the documentation of qualified expenditures is submitted. The cost estimate is verified by and may be adjusted by the State Office if documentation is inadequate or costs are disallowed.
7.3 The State Office will not process an incomplete Request for Credit Award application until all documentation as required in Section 7.32 of the regulations is received. Where adequate documentation is not provided, the State Office shall notify the applicant of the additional information needed to undertake or complete the review.
The State Historic Preservation Officer shall notify the applicant of the amount of their credit award.
7.5 The State Historic Preservation Officer shall notify the applicant of the amount of the credit award. The Delaware State Historic Preservation Officer will may consider increasing the an increase in a credit award where there has been an increase in qualified costs of greater than 5% of the total.
7.68 Each fiscal year, $2 $1.5 million of the $5 million assigned to make credit awards under these regulations is reserved for projects receiving a credit award of not more than $300,000. After April 1, any unassigned portion of the $2 $1.5 million is released to be available for credit awards to any eligible project.
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 any 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.
11.1 Annually, on or before January 31st, the Delaware State Historic Preservation Officer shall issue an annual report on the restoration and rehabilitation status of all tax credit projects approved in the previous calendar fiscal year.
Last Updated: December 31 1969 19:00:00.
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