Historic tax credit change jeopardizing projects say developers
KENT DARR Sep 17, 2015 | 8:15 pm
1 min read time
316 wordsAll Latest News, Government Policy and Law, Real Estate and Development
Developers involved in the renovation of historic buildings say they are losing tens of thousands of dollars a month as bankers and state officials are meeting to work out a controversy surrounding Iowa’s historic tax credit program.
At issue is a change in rules for administering the program that requires an Iowa Department of Revenue audit of expenses. Those reviews are delaying the issuance of tax credits for up to a year after a project is completed and qualifies for the allocation of credits. Once issued, the credits, which provide a reduction in tax liability and, in some cases, result in tax refunds, help developers pay bank loans for the projects and meet other expenses.
The credits can be the difference between a thin profit margin on a high-risk project and no profit at all. In some cases, developers are paying monthly interest penalties of $30,000 to $60,000 while they wait for the credits to be issued.
The delays are prompting investors to flee the Iowa historic tax credit market, say some developers, who add that they are looking for projects in other states. Several projects that are underway or in the planning process are jeopardized by the controversy as well.
Developers, consultants and others familiar with the controversy say that the revenue department review seems to have been prompted by a fear that the state will suffer a repeat of the film tax credits fiasco that resulted in criminal prosecutions and the ultimate demise of the program in 2010, amid allegations of fraud and mismanagement.
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