Bill
HB 506
HB 506 creates a capped state tax credit program (up to $60 million/year) to incentivize hotel renovations, with higher credits for LEED-certified projects.
Status (as provided)
- Introduced: November 12, 2024
- Current status in your materials: action postponed indefinitely
Purpose / Intent
- To create state income tax credits (both personal and corporate) to incentivize renovation of existing hotels, encourage sustainable construction (through LEED certification), and stimulate investment in the hospitality sector and downtown/regional revitalization.
Key provisions
- Two tax credits for qualifying hotel renovation costs:
- 30% of qualifying renovation costs for projects that achieve LEED-NC Silver certification.
- 20% of qualifying renovation costs for other qualifying hotel renovations (no LEED).
- Eligible taxpayers/process:
- Credits available to taxpayers who make qualifying hotel renovation expenditures (individuals or corporations).
- Taxpayers must apply for precertification and certification of eligibility through the Tourism Department (TD).
- Annual caps and limits:
- Total statewide cap: $60 million per year, split as $30 million maximum against the personal income tax (PIT) and $30 million maximum against the corporate income tax (CIT).
- Credits are nonrefundable but may be carried forward for up to five years.
- Timeframe:
- The credit would apply to taxable years 2025 through 2034.
- If no explicit effective date is in the statute, it would take effect 90 days after adjournment (example date in analysis: June 20, 2025).
- Definitions / exclusions:
- Qualifying costs are renovation-related only (explicitly exclude new construction).
- Costs that have already been used to claim certain federal incentives (e.g., federal New Markets Tax Credit) are excluded.
- Administration and oversight:
- The Tourism Department is responsible for precertification and certification.
- The Taxation and Revenue Department (TRD) would process credits on taxpayer returns and must update forms/systems.
- State agencies (e.g., Economic Development Department) provided input in fiscal analyses.
Fiscal impact and administrative costs (estimates from fiscal analyses)
- Maximum potential General Fund revenue loss: up to $60 million per year (the statutory annual cap).
- TRD implementation costs: estimated one-time IT and workload costs of about $45,000 (information systems development) plus testing costs (estimated additional staff hours).
- Actual fiscal impact is uncertain/indeterminate below the cap because utilization depends on how many projects proceed and the scale of eligible renovations.
Who would be affected
- Primary: hotel owners and operators undertaking qualifying renovation projects (both small and large).
- Taxpayers who invest in hotel renovations and have sufficient PIT or CIT liability to use the credit.
- State agencies: Tourism Department (eligibility administration), Taxation and Revenue Department (processing and IT changes), Economic Development Department (policy/impact).
- Local economies / communities: potential job creation in construction and hospitality and downtown revitalization benefits where projects occur.
Potential benefits and risks
- Benefits:
- May spur renovation of outdated, shuttered, or dilapidated hotels — increasing lodging capacity, supporting tourism, and generating local economic activity.
- LEED incentive promotes energy-efficiency/green building practices.
- Risks/uncertainties:
- Could disproportionately benefit larger hotel operators with greater capital/tax appetite because the credit is nonrefundable.
- Possibility of subsidizing projects that would have occurred without the credit (windfall), producing revenue loss without additional investment.
- Uptake and overall effectiveness are hard to predict due to limited data on renovation demand and project scale.
Procedural / timeline notes
- Introduced Nov. 12, 2024; in the provided record the bill’s status is “action postponed indefinitely.” If revived and enacted with no explicit effective date, it would go into effect 90 days after adjournment and apply to tax years 2025–2034.
- Implementation would require Tourism Department rules/processes for certification and TRD system updates before credits can be claimed.
Bottom line
HB 506 would create a capped, time-limited tax credit (up to $60M/year statewide) to encourage hotel renovations — with higher credit rates for LEED-certified projects — administered via the Tourism Department and claimed on state income tax returns. The program’s fiscal cost could reach the statutory cap, but actual cost and economic outcomes depend on project uptake and program design/administration.
Compiled from official sources — confirm details with the bill’s official record.
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