HB436 Alabama 2018 Session

Summary

Primary Sponsor

Laura HallRepresentative

Democrat

Session

Regular Session 2018

Title

Taxation, income tax credit, against tax liability for the rehabilitation, preservation, or development of structures near certain higher education institutions, Historic University Neighborhood Rehabilitation Act

Summary

HB 436 creates the Historic University Neighborhood Rehabilitation Tax Credit to encourage rehabilitation of structures near Alabama's historic higher education institutions.

What This Bill Does

It creates a 25% income tax credit for qualified rehabilitation expenditures on certified structures within a half-mile of historic higher education institutions. Owners must submit rehabilitation plans and receive a credit reservation from a committee; they must start within 18 months and complete the project within 60 months, hitting milestones (20% initial costs, then 50% more within 36 months). The credit is claimed in the year the rehabilitation is placed in service, can be transferred (to a transferee) at 85% value, and is funded from a dedicated Education Trust Fund account with annual and total reservation caps; new applications are not accepted after 12/31/2023, though existing reservations proceed.

Who It Affects

• Owners of certified structures located within 0.5 miles of historic higher education institutions who undertake qualified rehabilitation projects and may receive a tax credit.
• Tax credit transferees/investors who can acquire and use the credits against Alabama income tax (subject to transfer rules and fees).
• Local ad valorem tax authorities, which must re-assess properties when rehabilitation is placed in service.
• Communities around historic university neighborhoods, which may benefit from rehabilitation and increased economic activity.

Key Provisions

• Defines certified structure (within 0.5 miles of a historic higher education institution) and qualified rehabilitation expenditures, establishing what costs count toward the credit.
• Provides a 25% credit against state income tax for certified rehabilitations, with a per-project cap of $5,000,000 and a dedicated funding account in the Education Trust Fund; sets annual and total reservation caps and oversight requirements.
• Creates a multi-step process: Commission develops standards; owners submit rehabilitation plans and estimates; credits are reserved by a committee in priority order; owners must begin within 18 months and complete within 60 months with specific cost milestones (20% then 50%); noncompliance may rescind the reservation.
• Allows transfer and assignment of credits (not re-transferrable) at 85% of value; transfers require forms, agreements, and a $1,000 transfer fee per transferee; only transferees can use transferred credits.
• Requires post-rehabilitation documentation (cost and expense certification, CPA audit if expenditures exceed $200,000, and an independent appraisal); the Department issues a tax credit certificate within 90 days of approval.
• Credits are claimable in the year the rehabilitation is placed in service; refunds are allowed if the credit exceeds the tax due; credits claimed at the entity level for pass-through entities.
• Imposes recapture rules and requires notification to ad valorem tax authorities for reassessment; authorizes appeals under the Alabama Administrative Procedure Act; restricts new credits after 2023 while preserving existing reservations.
• Administrative framework: rules to implement the act must be promulgated; an evaluating committee ranks projects based on criteria like community value, return on investment, geographic distribution, and local support; annual reporting to the Legislature on economic impact.

AI-generated summary using openai/gpt-5-nano on Feb 24, 2026. May contain errors — refer to the official bill text for accuracy.

Subjects

Taxation