A BILL TO BE ENTITLED
AN ACT to incentivize the rehabilitation of historic educational buildings to allow those buildings to continue to serve educational purposes.
The General Assembly of North Carolina enacts:
SECTION 1.  G.S. 105‑129.105 reads as rewritten:
"Article 3L.
"Historic Rehabilitation Tax Credits Investment Program.
"§ 105‑129.105.  Credit for rehabilitating income‑producing historic structure.
(a)	Credit. – A taxpayer who is allowed a federal income tax credit under section 47 of the Code for making qualified rehabilitation expenditures for a certified historic structure located in this State is allowed a credit equal to the sum of the following:
(1)	Base amount. – The percentage of qualified rehabilitation expenditures at the levels provided in the table below:
Expenses
Over	Up To	Rate
0	$10 million	15.00%
$10 million	$20 million	10.00%
(2)	Development tier bonus. – An amount equal to five percent (5%) of qualified rehabilitation expenditures not exceeding twenty million dollars ($20,000,000) if the certified historic structure is located in a development tier one or two area.
(3)	Targeted investment bonus. – An amount equal to five percent (5%) of qualified rehabilitation expenditures not exceeding twenty million dollars ($20,000,000) if the certified historic structure is located on an eligible targeted investment site.
(4)	Education bonus. – An amount equal to five percent (5%) of expenses not exceeding twenty million dollars ($20,000,000) if all of the following requirements are met:
a.	It is a building that is at least 40 years old and not currently in active use.
b.	The initial use of the building was for an educational purpose.
c.	Following the rehabilitation, the building is placed into service for an educational purpose and remains used for that purpose or another educational purpose for each year in which the credit, or a carryforward of the credit, is claimed. For a building used for multiple purposes, the bonus provided in this subdivision shall be proportionate to the amount of the building used for educational purposes.
d.	The exterior facade and aesthetics of the building are not substantially changed as a result of the rehabilitation, other than for repairs and renovations appropriate to restore the building to active use.
e.	The expenses used for calculation of the bonus under this section are qualified rehabilitation expenditures and the building is a certified historic structure.
(a1)	Alternative credit. – A taxpayer who rehabilitates a building in this State that meets the requirements set forth in sub‑subdivisions a. through d. of subdivision (4) of subsection (a) of this section is allowed a credit equal to the credit that would be allowed under subsection (a) of this section for rehabilitation expenses that would have been qualified rehabilitation expenditures if the building was a certified historic structure.
(b)	Pass‑Through Entity. – Notwithstanding the provisions of G.S. 105‑131.8 and G.S. 105‑269.15, a pass‑through entity that qualifies for the credit provided in this section may allocate the credit among any of its owners in its discretion as long as an owner's adjusted basis in the pass‑through entity, as determined under the Code, at the end of the taxable year in which the certified historic structure is placed in service, is at least forty percent (40%) of the amount of credit allocated to that owner. Owners to whom a credit is allocated are allowed the credit as if they had qualified for the credit directly. A pass‑through entity and its owners must include with their tax returns for every taxable year in which an allocated credit is claimed a statement of the allocation made by the pass‑through entity and the allocation that would have been required under G.S. 105‑131.8 or G.S. 105‑269.15.
(c)	Definitions. – The following definitions apply in this section:
…
(2a)	Educational purpose. – Defined in G.S. 105‑278.4.
…."
SECTION 2.  This act is effective for taxable years beginning on or after January 1, 2019.