The Florida Senate
BILL ANALYSIS AND FISCAL IMPACT STATEMENT
(This document is based on the provisions contained in the legislation as of the latest date listed below.)
Prepared By: The Professional Staff of the Committee on Finance and Tax
BILL: CS/SB 288
INTRODUCER: Finance and Tax Committee; and Senator DiCeglie and others
SUBJECT: Florida Main Street Program and Historic Preservation Tax Credits
DATE: March 14, 2023
ANALYST STAFF DIRECTOR REFERENCE ACTION
1. Renner McKay CM Favorable
2. Gross Babin FT Fav/CS
3. AP
Please see Section IX. for Additional Information:
COMMITTEE SUBSTITUTE - Substantial Changes
I. Summary:
CS/SB 288 creates the Main Street Historic Tourism and Revitalization Act, which provides a
tax credit against corporate income taxes and insurance premium taxes for qualified expenses
incurred in the rehabilitation of a certified historic structure.
The tax credit may not exceed 20 percent of qualified expenses incurred in the rehabilitation of a
certified historic structure that has been approved by the National Park Service to receive the
federal historic rehabilitation tax credit or 30 percent of the total qualified expenses incurred in
the rehabilitation of a certified historic structure that has been approved by the National Park
Service to receive the federal historic rehabilitation tax credit and that is located within a local
program area of an Accredited Main Street Program.
Any unused amount may be carried forward for a period of up to five taxable years. Tax credits
may also be sold or transferred. There is no limit on the total number of transactions for the sale
or transfer of all or part of a tax credit. However, qualified expenses may only be counted once in
determining the amount of an available tax credit, and no more than one taxpayer may claim a
tax credit for the same qualified expenses.
The Revenue Estimating Conference (REC) has not analyzed the committee substitute. The REC
analysis for the prior version of the bill was estimated to reduce recurring General Revenue Fund
receipts in Fiscal Year 2023-2024 by $39.3 million. Beginning in Fiscal Year 2024-2025,
General Revenue Fund receipts are estimated to reduce by $39.7 million, cash and recurring.
REVISED: BILL: CS/SB 288 Page 2
The bill takes effect on January 1, 2024. The emergency rulemaking authority granted to the
Department of Revenue takes effect upon the bill becoming a law.
II. Present Situation:
National Register of Historic Places
The National Register of Historic Places,
1
under the National Park Service, is “part of a national
program to coordinate and support public and private efforts to identify, evaluate, and protect
America’s historic and archeological resources.”
2
The program reviews property nominations
and lists eligible properties in the National Register; offers guidance on evaluating, documenting,
and listing historic places; and helps qualified historic properties receive preservation benefits
and incentives.
3
Properties listed in the National Register are eligible for federal preservation tax credits.
A 20 percent income tax credit is available for the rehabilitation of historic, income-producing
buildings that are determined by the Secretary of the Interior, through the National Park Service,
to be certified historic structures.
4
The National Parks Service reports that each year,
“approximately 1,200 projects are approved, leveraging nearly $6 billion annually in private
investment in the rehabilitation of historic buildings across the country.”
5
In Florida, there are more than 1,700 properties and districts listed on the National Register.
Nominations for those properties must be submitted to the National Park Service through the
Florida Department of State’s Division of Resources, following a review and recommendation
by the Florida National Register Review Board.
6
The cumulative total of “Qualified
Rehabilitation Expenses” (the value of items that can be written off by developers on their
federal tax bill) for Florida projects over the most recent five-year period (FY 2017-2021) is
$161 million, resulting in $32.2 million in federal tax credits.
7
1
54 U.S.C. § 3021.
2
U.S. Department of the Interior, National Park Service, National Register of Historic Places, What is the National Register
of Historic Places?, available at https://www.nps.gov/subjects/nationalregister/what-is-the-national-register.htm (last visited
Mar. 9, 2023).
3
Id.
4
U.S. Department of the Interior, National Park Service, Technical Preservation Services, available at
https://www.nps.gov/tps/tax-incentives.htm (last visited Mar. 9, 2023).
5
U.S. Department of the Interior, National Park Service, Historic Preservation Tax Incentives, About the Incentives,
available at https://www.nps.gov/subjects/taxincentives/about.htm (last visited Mar. 9, 2023).
6
Florida Department of State, Division of Historical Resources, National Register of Historic Places, available at
https://dos.myflorida.com/historical/preservation/national-register/ (last visited Mar. 9, 2023).
7
U.S. Department of the Interior, National Park Service, Historic Preservation Tax Incentives, 2021 Annual Report, available
at https://www.nps.gov/subjects/taxincentives/upload/report-2021-annual.pdf. (last visited Mar. 9, 2023). BILL: CS/SB 288 Page 3
Main Street America
Main Street America, a program under the National Main Street Center,
8
is a network of
grassroots organizations that “revitalizes older and historic commercial districts to build vibrant
neighborhoods and thriving economies.”
9
The program offers community-based revitalization
initiatives to transform downtowns. In order to be designated as either an affiliate or accredited
member of Main Street America, a community must first become a member of the National Main
Street Center and meet certain requirements.
10
Main Street America has coordinating programs
that are organized at the state, county, and city level which partner with the National Main Street
Center to provide support and training to Main Street America communities.
Florida has two coordinating programs: Florida Main Street America located in Tallahassee and
Orlando Main Street located in Orlando.
11
Florida Main Street is administered by the Division of
Historical Resources (division) under the Florida Department of State.
12
Forty-five Florida Main
Streets and 10 Orlando Main Streets have received technical assistance toward the goal of
revitalizing historic downtowns and encouraging economic development.
13
Florida Initiatives
Currently, Florida does not offer a similar program that provides corporate income tax credits to
offset the costs of rehabilitating historic properties. The Historic Preservation Grant Program,
administered by the division, provides grants for the preservation and protection of the state’s
historic and archaeological sites and properties. However, any property owned by private
individuals or for-profit corporations are ineligible for such grants.
14
Florida’s constitution grants any county or municipality the authority to offer ad valorem tax
exemptions to owners of historic properties making preservation improvements.
15
Codified in the
Florida Statutes under three sections, residential and commercial properties improved in a
manner consistent with historic preservation standards are eligible for an exemption of up to
100 percent of the value of the improvement made to the property.
16
Generally, the property
must be either individually listed in the National Register of Historic Places; be a contributing
property to a national-register-listed district; or be designated as a historic property, or as a
contributing property to a historic district. If the property is used for a governmental,
8
The National Main Street Center was established in 1980 as a program of the National Trust for Historic Preservation as a
way to address issues facing aging and historic downtowns. The Center launched the Main Street America program in 2015.
See Main Street America, About Us, available at https://www.mainstreet.org/aboutus (last visited Mar. 9, 2023).
9
Main Street America, About Us, available at https://www.mainstreet.org/aboutus (last visited Mar. 9, 2023).
10
Main Street America, Designation, available at https://higherlogicdownload.s3.amazonaws.com/NMSC/390e0055-2395-
4d3b-af60-81b53974430d/UploadedImages/Main_Street_America_Tier_System_Overview_-_2021_July_Update.pdf (last
visited Mar. 9, 2023).
11
Main Street America, Coordinating Programs, available at
https://higherlogicdownload.s3.amazonaws.com/NMSC/390e0055-2395-4d3b-af60-
81b53974430d/UploadedImages/The_Programs/2020_Coordinating_Program_List.pdf (last visited Mar. 9, 2023).
12
Section 267.031(5), F.S.
13
Visit Florida, Florida Main Street Programs Have Stories to Tell, available at https://www.visitflorida.com/travel-
ideas/articles/florida-main-street/ (last visited Mar. 9, 2023).
14
Section 267.0617(2), F.S.
15
FLA. CONST. Art. VII, s. 3.
16
See ss. 196.1961, 196.1997, and 196.1998, F.S. BILL: CS/SB 288 Page 4
not-for-profit, or commercial purpose, it must be open to the public on a regular basis.
Additionally, property used for governmental or nonprofit purposes are eligible to have the entire
value of the property exempted.
17
Corporate Income Tax
Florida levies a 5.5 percent tax on certain income of corporations and financial institutions doing
business in Florida.
18
Florida utilizes the taxable income determined for federal income tax
purposes as a starting point to determine the total amount of Florida corporate income tax due.
19
This means that a corporation paying taxes in Florida generally receives the same benefits from
deductions allowed when determining taxable income for federal tax purposes as it does when
determining taxable income for state taxation purposes.
Insurance Premium Tax
Florida imposes a 1.75 percent tax on most Florida insurance premiums, a 1 percent tax on
annuity premiums; and a 1.6 percent tax on self-insurers.
20
Insurance premium taxes are paid by
insurance companies and remitted to the Department of Revenue (DOR). The revenues are
distributed to General Revenue. In addition, some insurers pay a retaliatory tax to the extent the
insurer's state of domicile would impose a greater tax burden than Florida imposes.
III. Effect of Proposed Changes:
The bill creates the Main Street Historic Tourism and Revitalization Act which provides a tax
credit against corporate income tax and insurance premium tax for qualified expenses
21
incurred
in the rehabilitation of a certified historic structure.
Eligibility
An applicant must apply to the DOS to receive a tax credit no later than 6 months after the date
the certified historic structure is placed in service and must document that:
The rehabilitation is a certified rehabilitation;
22
The structure is a certified historic structure,
23
is income-producing, is located within the
state, and was rehabilitated and placed into service on or after January 1, 2024;
17
Section 196.1998, F.S.
18
Section 220.11(2), F.S.
19
Section 220.12, F.S.
20
Section 624.509, F.S., and s. 624.4621, F.S.
21
The bill defines “qualified expenses” as qualified rehabilitation expenditures (defined in 26 U.S.C., §47(c)(2)) and
structural components (defined in 26 C.F.R., § 1.48-1(e)(2)) at the time of project certification by the U.S. Secretary of the
Interior and the U.S. Internal Revenue Service (IRS).
22
The bill defines “certified rehabilitation” as the rehabilitation of a certified historic structure that the U.S. Secretary of the
Interior has certified to the U.S. Secretary of the Treasury as being consistent with the historic character of the certified
historic structure and, if applicable, consistent with the registered historic district in which the structure is located. See 36
C.F.R., § 67.2
23
The bill defines a “certified historic structure” as a building and its structural components which is of a character subject to
the allowance for depreciation provided in s. 167 of the Internal Revenue Code and which is listed on the National Register BILL: CS/SB 288 Page 5
The applicant had an ownership interest or a long-term leasehold interest in the certified
historic structure in the year during which the certified historic structure was placed into
service;
The total amount of qualified expenses incurred in rehabilitating the certified historic
structure exceeded $5,000;
The qualified expenses were incurred in Florida, and
The applicant received a tax credit for the qualified expenses under the federal historic
rehabilitation tax credit provision.
24
In the application, the applicant must also provide the division with the following:
An official certificate of eligibility from the division attesting that the project has been
approved by the National Park Service. The attestation must identify if the project is located
within a Main Street local program area;
National Park Service Form 10-168c, signed by the National Park Service attesting that the
completed rehabilitation meets the U.S. Secretary of the Interior’s Standards for
Rehabilitation and is consistent with the historic character of the property and, if applicable,
the district in which the completed rehabilitation is located;
Identification of the dates during which the structure was rehabilitated, the date the structure
was first placed into service after certified rehabilitation was completed, and evidence that
the structure was placed into service after the certified rehabilitation was completed;
A list of total qualified expenses incurred by the taxpayer in rehabilitation the certified
historic structure. For certified rehabilitations with qualified expenses that exceeded
$750,000, the applicant must submit an audited cost report that itemizes the qualified
expenses incurred in rehabilitating the structure. The applicant may submit an audited cost
report that was created for purposes of applying for the federal historic rehabilitation tax
credit;
An attestation of the total qualified expenses incurred by the applicant in rehabilitating the
certified historic structure; and
The information required to be reported by the DOR to enable the DOR to compile its annual
report based on the tax credit applications submitted and approved.
Applicants may begin the process for a determination of eligibility before the certified historic
structure is placed in service; however, final determination is withheld until the certified historic
structure is placed in service.
Within 90 days after receipt of the information detailed above or the certified historic structure is
placed in service, whichever is later, the division shall approve or deny the application. If
approved, the division must provide a letter to the applicant. If the taxpayer is denied, the
division must inform the applicant of the grounds for denial. The division must submit to the
DOR a copy of the certification and the information provided by the applicant within 10 days
after the division’s approval.
of Historic Places or located within a registered historic district and certified by the U.S. Secretary of the Interior as being of
historic significance to the registered historic district.
24
26 U.S.C. s. 47 BILL: CS/SB 288 Page 6
Certified Rehabilitation Tax Credit
For taxable years beginning on or after January 1, 2024, there is allowed a credit against the
corporate income or insurance premium tax in an amount equal to:
Twenty percent of the total qualified expenses incurred in rehabilitating a certified historic
structure that has been approved by the National Park Service to receive the federal historic
rehabilitation tax credit; or
Thirty percent of the total qualified expenses incurred in rehabilitating a certified historic
structure that has been approved by the National Park Service to receive the federal historic
rehabilitation tax credit and that is located within a local program area of an Accredited Main
Street Program.
If a taxpayer is eligible for a tax credit that exceeds taxes owed, the taxpayer may carry the
unused tax credit forward for a period of up to five taxable years.
Sale or Transfer of Tax Credit
The bill provides that there is no limit on the total number of transactions for the sale or transfer
of all or part of a tax credit. However, qualified expenses may only be counted once in
determining the amount of an available tax credit, and no more than one taxpayer may claim a
tax credit for the same qualified expenses.
A taxpayer that sells or transfers a tax credit and the purchaser or transferee must jointly submit
written notice of the sale or transfer to the DOR no later than the 30
th
day after the date of the
sale or transfer. The notice must include the following information:
The date of the sale or transfer;
The amount of the tax credit sold or transferred;
The name and federal tax identification number of the taxpayer that sold or transferred the
tax credit and the purchaser or transferee; and
The amount of the tax credit owed by the taxpayer before the sale or transfer and the amount
the selling or transferring taxpayer retained, if any, after the sale or transfer.
The sale or transfer of a tax credit does not extend the period for which a tax credit may be
carried forward and does not increase the total amount of the tax credit that may be claimed.
A tax credit earned, purchased, or transferred to a partnership, limited liability company,
S corporation, or other pass-through taxpayer may be allocated to the partners, members, or
shareholders of that taxpayer without regard to the ownership interest of the partners, members,
or shareholders in the rehabilitated certified historic structure.
If the tax credit is reduced due to a determination, examination, or audit by the DOR, the tax
deficiency must be recovered from the taxpayer that sold or transferred the tax credit or the
purchaser or transferee that claimed the tax credit up to the amount of the tax credit taken. Any
subsequent deficiencies must be assessed against the purchaser or transferee that claimed the tax
credit, or in the case of multiple succeeding entities, in the order of tax credit succession.
BILL: CS/SB 288 Page 7
DOR and Division Audit Authority
The DOR, with assistance from the division, is authorized to perform additional financial and
technical audits and examinations, including examining the accounts, books, or records of the tax
credit applicant, to verify the legitimacy of the qualified expenses included in a tax credit return
and to ensure compliance. The division must provide technical assistance for any technical audits
or examinations if requested by the DOR.
It is grounds for forfeiture of previously claimed and received tax credits if the DOR determines
that a taxpayer received a tax credit to which the taxpayer was not entitled. The taxpayer must
return the forfeited tax credits to the DOR, which will then be paid into the General Revenue
Fund.
The taxpayer must file an amended tax return and pay any required tax within 60 days after the
taxpayer receives notification from the IRS that a previously approved tax credit has been
revoked or modified, if uncontested, or within 60 days after a final order is issued following
proceedings involving a contested revocation or modification order.
The DOR may issue a notice of deficiency at any time within five years after the date on which
the taxpayer receives notification from the IRS that a previously approved tax credit has been
revoked or modified.
The DOR may issue a notice of deficiency at any time if the taxpayer fails to notify the DOR of
any change in its tax credit claimed. The amount of any proposed assessment in the notice of
deficiency is limited to the amount of the tax credit claimed Furthermore, a taxpayer is subject to
applicable penalties and interest for failing to report and timely paying any tax due as a result of
the forfeiture of its tax credit.
Other Provisions
The DOR must provide a report annually by December 1 which identifies, in the aggregate, the
number of employees hired during construction phases, the use of each newly rehabilitated
building, the expected number of employees hired, the number of affordable housing units
created or preserved, and the property values before and after the certified rehabilitations.
The DOR must also establish a cooperative agreement with the division; adopt any necessary
forms required to claim a tax credit; provide administrative guidelines and procedures required to
administer the Act, including rules establishing an entitlement to and sale or transfer of a tax
credit; and provide examination and audit procedures required to administer the Act.
The DOR and the division are granted rulemaking authority and the DOR is granted additional
emergency rulemaking authority to administer the Act.
The DOR is authorized to make available to the division and the Secretary of the Department of
the Interior of the United States information relating to the Act.
The bill makes conforming changes. BILL: CS/SB 288 Page 8
The bill applies to taxable years beginning on or after January 1, 2024.
The bill takes effect on January 1, 2024. The emergency rulemaking authority granted to the
DOR takes effect upon the bill becoming a law.
IV. Constitutional Issues:
A. Municipality/County Mandates Restrictions:
Article VII, section 18 of the Florida Constitution requires a two-thirds vote of the
membership of each house of the Legislature to pass legislation requiring counties and
municipalities to spend funds, limiting their ability to raise revenue, or reducing the
percentage of a state tax shared with them. This bill does not require counties or
municipalities to spend funds, limit their authority to raise revenue, or reduce the
percentage of a state tax shared with them as specified in Article VII, section 18 of the
Florida Constitution. Therefore, the provisions of Article VII, section 18 of the Florida
Constitution do not apply.
B. Public Records/Open Meetings Issues:
None.
C. Trust Funds Restrictions:
None.
D. State Tax or Fee Increases:
The bill does not create or raise a state tax or fee. Therefore, the requirements of
Article VII, section 19 of the Florida Constitution do not apply.
E. Other Constitutional Issues:
None identified.
V. Fiscal Impact Statement:
A. Tax/Fee Issues:
The Revenue Estimating Conference (REC) has not analyzed the committee substitute.
The REC analysis for the prior version of the bill estimated that the bill would reduce
recurring General Revenue Fund receipts in Fiscal Year 2023-2024 by $39.3 million.
Beginning in Fiscal Year 2024-2025, General Revenue Fund receipts are estimated to
reduce by $39.7 million, cash and recurring. BILL: CS/SB 288 Page 9
B. Private Sector Impact:
Taxpayers who have ownership interest in a certified historic structure in the year during
which the structure was placed into service after the certified rehabilitation was complete
may be eligible to receive a tax credit to offset corporate income taxes and insurance
premium taxes for qualified expenses incurred in the rehabilitation of the certified
historic structure.
C. Government Sector Impact:
The DOR determined that in Fiscal Year 2024-2025, $91,488 in non-recurring funds is
necessary to implement the bill. The funds will be used to update the state’s tax software
system and modify necessary forms.
25
VI. Technical Deficiencies:
None.
VII. Related Issues:
The bill requires the DOR to annually report specific information to the President of the Senate
and the Speaker of the House of Representatives. The report must include the number of
employees hired during construction phases; the use of each newly rehabilitated building and the
expected number of employees hired; the number of affordable housing units created or
preserved; and the property values before and after the certified rehabilitation.
Information provided to the DOR contained in returns, reports, accounts, or declarations received
by the DOR is confidential, except for official purposes.
26
Limited use of the tax credit program
might limit the ability to aggregate information sufficiently to overcome confidentiality
restrictions.
Clearly establishing who is an “employee hired” will provide guidance to the DOR on who to
include in the statistics. For example, employees might include the number of employees hired
by the contractors or subcontractors that perform the construction phases or might include only
employees hired by the applicant during the construction phases.
The information for the report must be collected from the applicant by the division at the time of
application, which is 90 days after the structure is placed in service. Clearly establishing what
documentation is required to substantiate affordable housing units will provide guidance to the
DOR on what units to include in the statistics. Unless the applicant has contractually restricted
units for affordable housing, the DOR may not have the information necessary to confirm if units
are affordable housing units.
25
Florida Dep’t of Revenue, Senate Bill 288 Bill Analysis (Feb. 01, 2023) (on file with the Senate Committee on Finance and
Tax
26
Section 213.053(2)(a), F.S. BILL: CS/SB 288 Page 10
VIII. Statutes Affected:
This bill creates section 220.197 of the Florida Statutes.
The bill amends the following sections of the Florida Statutes: 213.053, 220.02, 220.13, and
624.509.
IX. Additional Information:
A. Committee Substitute – Statement of Substantial Changes:
(Summarizing differences between the Committee Substitute and the prior version of the bill.)
CS by Finance and Tax on March 14, 2023:
The committee substitute:
Replaces the term “taxpayer” with “applicant” to clarify that a person other than a
corporate income tax taxpayer may apply and receive a tax credit.
Creates an application deadline whereby an applicant must apply to the Division of
Historical Resources of the Department of State within 6 months after the structure is
placed in service.
Removes a requirement to confirm the project is within a local program area and
replaces it with an attestation if the project is located in such an area.
Requires a determination of tax credit eligibility to occur only after the structure is
placed in service.
Clarifies that the Division of Historical Resources of the Department of State must
evaluate and approve or deny an application within 90 days after receipt of the
application or after the structure is placed in service, whichever is later.
Clarifies that the tax credit is equal to either 20 percent or 30 percent of total qualified
expenses, rather than such amount annually.
Allows the tax credit to be taken against the corporate income tax and franchise tax
under chapter 220.
Clarifies how a tax credit may be sold or transferred.
Adds a definitions for “placed in service,” “taxpayer,” and “affordable housing.”
Makes other technical changes.
B. Amendments:
None.
This Senate Bill Analysis does not reflect the intent or official position of the bill’s introducer or the Florida Senate.