Relating to certain expenditures by public institutions of higher education and university systems that are eligible for certain tax credits.

Contracts

• Tax Credit Purchase Agreements: Corporate buyers must draft Master Purchase Agreements specific to state entities. These must include "True-Up" provisions to adjust payments if the final certified credit amount differs from estimates.
• Construction Agreements: Developers and contractors working for universities must accept "Liquidated Damages" clauses tied to credit recapture. If construction errors cause a loss of historic certification, the contractor will be liable for the financial loss of the credit.
• Indemnification: Purchase agreements must indemnify the buyer against "recapture" events where the state disallows the credit post-transfer.

Hiring/Training

• Accounting/Tax Teams: Staff must be trained on Form 05-901 (Franchise Tax Credit Transfer Affidavit) and the specific due diligence required to verify "Qualified Rehabilitation Expenditures" (QREs) generated by a non-taxable entity.
• Project Managers (Construction): Must be trained to segregate QREs from non-qualified costs (e.g., landscaping, additions) in all payment applications to university clients, as this data is required for the Certificate of Eligibility.

Reporting & Record-Keeping

• Audit Defense: Buyers must obtain and retain the Certificate of Eligibility issued by the THC and the Cost Segregation Report from the university.
• Transfer Filing: The transfer is not valid until the Comptroller receives and processes the transfer affidavit. This must be filed immediately upon purchase to apply against current year estimated tax payments.

Fees & Costs

• Capital Outlay: Buyers should budget for the purchase of credits. While no government fee is added, market rates for these credits typically float between $0.85 and $0.92 on the dollar.
• Insurance: Buyers should evaluate "Tax Credit Recapture Insurance" premiums if the university refuses full indemnification.