New Research Shows Federal Historic Tax Credit Achieved a Record Increase in Use and Economic Impacts in 2016
Coalition of historic preservation advocates and industry leaders unite to urge Congress to protect federal tax incentive during tax reform initiatives
Recently released research shows that a federal tax incentive that is in danger of elimination as part of the Congressional tax reform process has a profound and positive impact on our nation’s economy and quality of life while more than paying for itself. Produced by the National Park Service and Rutgers University, the Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2016 revealed that use of the federal historic tax credit (HTC) reached an all-time high in fiscal year 2016 (FY 16). Rehabilitation of 1,039 historic buildings was made possible by $1.2 billion in tax credits, generating 109,000 jobs and $1.7 billion in federal state and local taxes—which more than cover the cost of the program. FY 16’s annual activity level is an increase of nearly one third (32 percent) over last fiscal year, representing the largest year-over-year increase since 1986.
“The federal HTC program has preserved and rehabilitated thousands of historic buildings while promoting economic revitalization in cities and towns across the country,” said Merrill Hoopengardner, president of NTCIC, a subsidiary of the National Trust for Historic Preservation. “As this research shows, more than 40 percent of HTC projects over the last 15 years were located in communities with populations of less than 25,000, proving that this tool is vital to our Main Streets and rural areas too. At the end of the day, we are focused on creating positive, transformational, and lasting change in disinvested communities nationwide. The HTC is a unique and creative way to obtain those results.”
The recent uptick in development can be attributed in large part to the real estate market shift that has occurred over the last 10 years, wherein many in the millennial and baby boomer generations want to live, work, and play in authentic downtown historic residential and commercial spaces. These market trends can be seen in nearly every major American city from New Orleans, Memphis and Mobile in the South, to Cleveland, Toledo and Detroit in the Midwest, and Dallas, Tulsa and Los Angeles in the West. Without the HTC, developers say they would not have the financing tools to meet this demand.
The report also found that, since its inception in 1978, the federal HTC has attracted $131 billion in private investment to the rehabilitation of 42,293 historic buildings, creating over 2.4 million jobs and serving as a net-revenue generator for the U.S. Treasury: the $29.8 billion in federal taxes generated by HTC projects exceeds the $25.2 billion in credits allocated.
This research demonstrates the significant and cost-effective economic benefit of reusing vacant hotels, schools, factories and other forgotten historic resources and affirms the need for the HTC. Developers repeatedly state that these rehabilitation projects simply would not be financially feasible without the incentive provided by the HTC. Lenders and investors typically favor new construction over riskier rehabilitation projects; historic rehabilitation projects frequently have higher costs, greater design challenges, and weaker market locations.
Despite the HTC’s winning combination of results and cost-effectiveness, House Republican leaders have vowed sweeping reform of the tax code, and that no tax incentive is safe. The National Trust for Historic Preservation and NTCIC have joined with their industry partner, the Historic Tax Credit Coalition, and other national, state, and local preservation groups to help raise awareness of the importance of the HTC to America’s economy and quality of life.
The full report text and more information about efforts to protect and enhance the HTC may be found at www.savehistoriccredit.org.
National Trust Community Investment Corporation (NTCIC) enables tax credit equity investments that support sustainable communities nationwide. NTCIC is a wholly owned for-profit subsidiary of the National Trust for Historic Preservation. ntcic.com | @ntcic
About the Historic Tax Credit Coalition
The Historic Tax Credit Coalition (HTCC) is a national nonprofit organization comprised of a variety of stakeholders that recognize the importance of the federal Historic Tax Credit, including architects, developers, preservation consultants, syndicators, investors, lawyers and accountants. In addition to ensuring the future of the federal Historic Tax Credit, coalition members advocate for important improvements that would make the credit a more efficient and effective means of financing the rehabilitation of historic and older buildings. Historiccredit.com | @historiccredit