By Josh Bergeron

The Selma Times-Journal

Selma residents looking to take advantage of a historical preservation tax credit may want to begin the application process before it officially takes effect.

Alabama House Bill 140, passed during the 2013 legislative session, provides income tax credit for rehabilitation, preservation and development of historic structures.

“I think this is a really great thing for Selma,” Selma-Dallas County Historical Society Member Sylvia Smith said during a Monday informational meeting. “Hopefully, it gets people to start their project.”

Smith said applicants should begin drawing up plans and review the application as soon as possible to reserve a spot.

The bill counts expenses incurred by the owner for improvement of the buildings, such as repair of exterior materials, repair of interior finishes — wood floors, plaster walls and ceilings — and upgrades to heating, ventilation and air conditioning systems.

Small jobs like painting or adding a room do not qualify for the credit. Renovation expenditures must exceed 50 percent of the original price of the building or $25,000, whichever is greater, according to the bill.

“If someone gave you a building or you got it for really cheap, then you have to spend at least $25,000,” Smith said.

Labor costs are not covered by the tax credit.

Buildings must be individually listed in the National Register of Historic Places and listed as a contributing resource in the historic district. But Selma residents shouldn’t get started on projects just yet.

Smith said plans have to be approved by the Alabama Historical Commission before a tax credit is guaranteed.

“You can’t go back and say I did all that stuff, I want my credit,” she said.

If the commission deems a project eligible, applicants will be charged a $200 fee, according to the bill.

Smith said applicants have 30 days to pay the fee. If the fee isn’t paid in a timely manner, projects will be removed from the program and applicants will be forced to restart the process, she said.

Residential projects are limited to $50,000 in tax credits or $200,000 in total expenditures each.

Commercial projects are capped at $5 million in tax credits or $20 million in total expenditures. The commercial tax credit cap is identical to the total cap for all projects, which could create a problem, Smith said.

“One $20 million project in a big city would use up all of the money,” Smith said. “So, it’s important to start looking at the bill and the application if you are planning to do a project. If everybody everywhere all decides to send their application in at the same time, then they will do a lottery to decide who receives a tax credit.”

The credit can be applied every year, for ten years, to income taxes and financial institution tax until the tax credit amount is reached. The tax credit may do more for the Queen City than spruce up its image, Smith said. “This credit will create jobs because 60 to 70 percent of renovation is labor,” She said. “A rehabbed historic building has a 100 year life span, but new construction might only have a 30 to 40 year span.”