PURPOSE: This gives a brief overview of the program and defines terms used in this chapter.

1. (1) The Missouri Historic Preservation Tax Credit (HTC) Program was enacted in 1997 and took effect on January 1, 1998. The law may be found in sections 253.545 to 253.561, RSMo. The law is intended to aid in the rehabilitation of historic structures in the state of Missouri by providing an incentive in the form of state tax credits equal to twenty-five percent (25%) of the total costs and expenses of rehabilitation, provided that such costs and expenses exceed fifty percent (50%) of the total basis in the property. The Department of Economic Development (DED) is responsible for the issuance of the credits based upon certification of the rehabilitation by the Department of Natural Resources, State Historic Preservation Office.

2. (2) As used in this chapter, the following terms mean:

   1. (A) Final Completion. For the purposes of issuing state historic preservation tax credits, the project is considered complete when all work has been done on the project. The final year construction costs are incurred is the year credits will be issued. (i.e., if costs are still being incurred in 2007 then regardless of “placed in service” date or date of “substantial completion,” the credits will be issued as 2007 credits if those expenses are being claimed for tax credits.) Please note: completion dates have been established for the state historic program only. Federal guidelines vary. Final completion is separately determined for each “construction period” of a “multiple project.” Costs associated with one construction period may not be carried to another construction period of a project. Each construction period is considered a separate project for audit purposes and must stand alone to meet all requirements of the HTC Program. Any exceptions must be submitted to DED before the final cost certification is submitted and must be approved in writing by DED.
   2. (B) Identity of Interest. An identity of interest may exist: 1) when the project owner has any financial interest in the other party (i.e., general contractor, subcontractor, vendor); 2) when one (1) or more of the officers, directors, stockholders, or partners of the project owner is also an officer, director, stockholder, or partner of the other party; 3) when any officer, director, stockholder, or partner of the project owner has any financial interest whatsoever in the other party or has controlling interest in the management or operation of the other party; 4) when the other party advances any funds to the project owner; 5) when the other party provides and pays on behalf of the project owner the cost of any legal services, architectural services, or engineering services other than those of a surveyor, general superintendent, or engineer employed by a general contractor in connection with obligations under the construction contract; 6) when the other party takes stock or any interest in the project owner as part of consideration to be paid; and 7) when there exists or comes into being any side deals, agreements, contract, or undertakings entered into thereby altering, amending, or canceling any of the original documents submitted to DED at initial application, except as approved by DED. In the event an identity of interest exists between the project owner, developer, and/or contractor, care should be taken that no duplication of work exists.
   3. (C) Non-Qualified Expenditures. All costs included in Total Project Costs which are not Qualified Rehabilitation Expenditures are considered Non-Qualified Expenditures.
   4. (D) Project Owner. The entity or individual(s) owning the structure or property on which rehabilitation or new construction costs have been incurred which are expected to generate HTC and/or Neighborhood Presentation Act (NPA) tax credits.
   5. (E) Qualified Rehabilitation Expenditures (QRE)—HTC. Qualified Rehabilitation Expenditures are those expenditures that are used as eligible basis on which to calculate the Missouri Historic Preservation Tax Credit. Such costs include, but shall not be limited to, qualified rehabilitation expenditures as defined under section 47(c)(2)(A) of the Internal Revenue Code of 1986, as amended.
   6. (F) Qualified Rehabilitation Expenditures (QRE)—NPA. Qualified Rehabilitation Expenditures are those expenditures that are used as eligible basis on which to calculate the Missouri Neighborhood Preservation Tax Credit.
   7. (G) Total Project Costs. Total Project Costs include all costs, whether accrued or paid, pertaining to the redevelopment of the property for which an application for tax credits has been submitted. Total Project Costs include all Qualified Rehabilitation Expenditures and all Non-Qualified Expenditures, 4 CSR 85-5

including the shell acquisition cost. It does not include any cash reserves established or to be established for the project, such as replacement reserves, lease-up reserves, lease commission reserves, or other cash held by, or for, the project owner.

AUTHORITY: section 135.487, RSMo 2000 and section 620.010, HB 788, Second Regular Session, Ninety-fourth General Assembly, 2008.* Original rule filed July 8, 2008, effective Feb. 28, 2009.

*Original authority: 135.487, RSMo 1999 and 620.010, RSMo 1971, amended 1981, 1983, 1986, 1989, 1990, 1993, 1994, 1995, 1999, 2001, 2007, 2008.