Committee hears technical fix to Kansas housing investor tax credit to preserve carryforward value for buyers

House Bill 2096 would change when a Kansas housing investor tax credit becomes transferable, allowing the transfer to be recognized in the year the cash investment was originally made rather than the year the credit is actually transferred, and would apply the change retroactively to credits issued for tax year 2022 and later.

Proponents told the committee the amendment is a narrow technical fix that preserves the full value of the credit for purchasers and increases available cash for developers who use the program to redevelop housing in rural communities.

Amelia (committee staff) summarized the bill for the committee and said the measure would amend the transferability provision currently codified in K.S.A. 79-32-313 to provide that Kansas housing investor tax credits are transferable from the year the credit was originally issued and that the change would apply retroactively to tax year 2022 and years thereafter. She also noted the bill had passed the House on Feb. 26, 2025, by a recorded vote of 111 to 6.

Riley Goen, testifying for Friends of Historic Preservation, said the program is used for housing development in rural counties with populations under 75,000 and that the transferability issue causes purchasers to lose a year of carryforward when transfers are delayed. "This is a very specific and technical fix," Goen said, and added that allowing transfers to be effective in the year of the cash investment would let buyers receive the full five years of carryforward.

Alex Orel, Senior Vice President for Government Relations at the Kansas Bankers Association, also described the bill as a technical correction to align the housing investor tax credit with the legislative intent behind similar historic tax credit programs. Orel said the change would preserve the full economic value of credits when sold and increase cash available to developers for rural housing projects, and noted the program includes caps and guardrails intended to target rural communities.

Developer Justin Perjant, who works on adaptive reuse and historic-preservation housing projects in rural downtowns, said the program is important to bridging a financing gap in small markets where rents do not cover construction costs. He told the committee that the loss of a major purchaser in the credit market had reduced pricing for credits and made projects harder to finance. "None of the projects that I've built would be possible," Perjant said when asked whether the transferability change affects whether projects are built.

No opponents or neutral witnesses offered testimony during the hearing. The bill record shown in committee indicates the measure already passed the House (111-6) and was being heard by the Tax Committee for further consideration.

The committee did not take a committee vote on the bill during the hearing; proponents asked the committee to treat the change as a technical fix and not part of a broader policy debate over tax credits.

Votes and status: House passage Feb. 26, 2025 (111-6). No committee action recorded in the hearing transcript.

Ending: The hearing record closes with proponents standing for questions; the committee moved on to subsequent bills on its agenda.