Revitalizing Downtowns Act This bill expands the investment tax credit to add a qualified office conversion credit. The amount of such credit is 20% of the qualified conversion expenditures with respect to a qualified converted building. The bill defines qualified converted building as any building if (1) prior to conversion, the building was nonresidential real property which was leased, or available for lease, to office tenants; (2) the building has been substantially converted from an office use to a residential, retail, or other commercial use; (3) the building was initially placed in service at least 25 years prior to the beginning of the conversion, and (4) straight line depreciation is allowable with respect to the building.
Impact
If enacted, HB419 is likely to encourage urban renewal and revitalization efforts by providing financial incentives for the conversion of outdated or underutilized office spaces. This could significantly impact commercial real estate markets, particularly in urban areas where there is a surplus of office space due to changing work patterns and the shift towards remote work. It could also promote the creation of more diverse living and retail environments in city downtowns, thus potentially enhancing economic development in these regions.
Summary
House Bill 419, titled the 'Revitalizing Downtowns Act', aims to amend the Internal Revenue Code of 1986 by introducing an investment credit specifically designed for the conversion of office buildings into other uses. This bill proposes a qualified office conversion credit that allows a credit equal to 20% of the qualified conversion expenditures for buildings that have undergone significant changes from their previous office uses to residential, retail, or other commercial purposes. The bill defines a 'qualified converted building' as any structure that was nonresidential real property leased for office use and has been substantially converted following a 25-year service period.
Contention
Notably, the bill includes stringent guidelines regarding qualified conversion expenditures, such as a prohibition on including costs related to the enlargement of the building or those attributable to tax-exempt use properties. Critics might argue that these limitations may restrict the potential benefits of the credit and could lead to challenges in the implementation of the program. Furthermore, there may be discussions regarding whether the 20% credit is sufficient to incentivize conversion projects that require significant financial investment.
Further_notes
The success of HB419 would largely depend on how well it aligns with existing urban planning and housing policies, particularly around affordable housing. The provisions for residential conversions include requirements for a percentage of units to be rent-restricted and occupied by low-income individuals, suggesting an attempt to integrate affordable housing with urban development projects.
Provides tax credits for upstate reinvestment zones, for qualified purchases of buildings and qualified rehabilitation expenditures of buildings in such zones; sets credit at 20%.