On April 24th, Preservation Leadership Forum (in partnership with the National Trust Community Investment Corporation and the the Historic Tax Credit Coalition), hosted the webinar “Coronavirus Response: the Historic Tax Credit as An Economic Recovery Tool” for preservation leaders and the rehabilitation industry to hear about efforts to promote the federal Historic Tax Credit (HTC) as a crucial component of the government’s response to the COVID-19 pandemic and our nation’s economic recovery.
The webinar focused on efforts by the National Park Service and State Historic Preservation Offices to remain open and processing HTC applications, how the pandemic is affecting the historic rehabilitation industry, and advocacy in support of changes to the HTC to stimulate economic activity. With over a thousand registrants and dozens of inquiries, it is clear there is significant interest in making the case to Congress that historic preservation and the historic tax credit are critical components of our nation’s economic recovery.
Government Agency Updates
- The National Park Service, Technical Preservation Services (TPS) office updated participants on its operating status. TPS remains open, with TPS staff primarily teleworking from home. The review of tax incentive applications continues (including Part 1 applications and appeals), mail continues to be received and sent out, and staff remains reachable by email and phone.
- The North Carolina State Historic Preservation Office also described efforts to keep its office open and functioning amid stay at home orders, including innovative ways the office is conducting remote site visits. The National Conference of State Historic Preservation Officers (NCSHPO) is tracking the operating status of each State Historic Preservation Office (SHPO) on its website.
- It was also reported that NCSHPO and the National Association of Tribal Historic Preservation Officers are requesting additional federal investment for State Historic Preservation Officers (SHPOs) and Tribal Historic Preservation Offices (THPOs) to help address challenges associated with the coronavirus pandemic. The requests outlines $30 million for SHPOs and $15 million for THPOs to invest in survey, digitization of records, GIS, and electronic project review systems that will greatly benefit the historic tax credit application process and aid efforts to foster economic investment and job creation in communities nationwide. The request also includes $75 million for grants to Certified Local Governments
Historic Rehabilitation Industry Overview
In its wake, the COVID-19 pandemic has shut down or significantly delayed historic rehabilitation projects across the country. According to the Historic Tax Credit Coalition (HTCC), these projects face unprecedented challenges such as “bans on construction, limited work site attendance, a lack of materials, limited access to government and other regulatory partners [which] has resulted in the near shuttering of the domestic economy.” While existing projects face massive challenges, “new and potential historic tax credit projects face profound financial viability concerns and limited access to capital, greater investment risk, and an uncertain tenant market [that] will cause significant harm to the future pipeline of these projects without federal intervention.”
Historic rehabilitation projects also confront a more immediate threat posed by HTC program rules that require substantial project completion within a certain amount of time. Specifically, to qualify for historic tax credits, rehabilitation projects must satisfy the substantial rehabilitation test within a 24-month or 60-month timeline depending on whether a project is phased.
Federal Advocacy Recommendations
As federal, state, and local governments consider how businesses and citizens should safely reemerge from stay at home orders, many advocates and legislators view the Historic Tax Credit (HTC) as a critical economic recovery tool that should be strengthened and incorporated into legislation designed to revitalize our nation’s struggling communities.
The historic preservation and rehabilitation communities recommend strengthening the HTC in several ways:
- Support Additional Investment for SHPOs, THPOs, and Certified Local Governments. As noted above, the proposal recommends increased funding for State Historic Preservation Officers, Tribal Historic Preservation Officers, and Certified Local Governments, that play an essential role in processing and advancing historic tax credit applications.
- Enact the Historic Tax Credit Growth and Opportunity Act (HTC-GO), H.R. 2825/S. 2615 HTC-GO provisions would make the credit easier to use for small projects and non-profits, allow more historic properties to utilize the incentive, and would enhance the overall value of the HTC, bringing more investment capital into projects that will use it directly for job creation and sustained economic activity.
- Boost Economic Activity by Temporarily Increasing the HTC Percentage (through 2024) for all Rehabilitation Projects from 20 to 30 percent of Qualified Rehabilitation Expenses (QREs)The proposal also requests a temporary boost in the amount of the HTC as was done twice previously; first, in 2005 in response to Hurricane Katrina, and again, in 2008 to ameliorate the impact of the great Midwestern floods. Specifically, the proposal would increase the amount of the HTC from 20 to 30 percent of qualified historic rehabilitation expenses for four years (FY2020 through FY2024) and include a graduated step down in the amount of the credit, returning to 20 percent by FY2027.
- Allow Tax Credit Utilization for Previous Tax Years and Allow More Utilization Per Year
- Modify HTC Regulatory Requirements - Extend the substantial rehabilitation test period for one year to enable credit delivery despite construction delays
Question and Answer
During the question and answer portion of the webinar, participants posed a number of questions for the panelists. Below are several responses to questions raised during the webinar.
Could you confirm the procedures for submitting SHPO and Part II approvals?
NPS has up-to-date information on the TPS website regarding tax incentive program operations in response to the Covid-19 public health emergency. For the (currently 11) SHPO offices that are operating remotely with no access to their offices and mail, tax incentive applications are being submitted by the applicant to the SHPO electronically.
Once the SHPO has completed its review of the application, the applicant will be notified by the SHPO with instructions for the applicant to send a hard-copy of the application to the NPS directly for NPS review. For all other SHPO offices, the application process remains as normal. Please contact the SHPO office should you have questions concerning their specific operations before submitting any tax incentive applications.
NPS responses could impact deadlines required at the state level. Will the 30-day review hold true, assuming the applicant is not causing any delay?
The tax incentives program continues to operate as close to normal as possible during this period. The TPS office remains open, with TPS staff primarily teleworking from home at this time. The review of tax incentive applications continues (including Part 1 applications and appeals), under normal review times; mail continues to be received and sent out; and staff remains reachable by email and phone.
Who supports or opposes the Historic Tax Credit Growth and Opportunity Act (H.R.2825 / S. 2615)?
HTC-GO enjoys broad bipartisan support on Capitol Hill. There are currently 64 cosponsors of the legislation in the House, 31 Republicans and 33 Democrats. In the Senate, there are 12 cosponsors, 7 Democrats and 5 Republicans. We are unaware of specific legislative opposition to HTC-GO, but there are members of Congress who generally do not support the use of tax incentives.
What information can be shared with legislators?
There are several resources available on the National Trust’s website for advocates to send Congressional representatives. Visit our Historic Tax Credit page for statewide HTC maps and an HTC one-pager that describes how investing in historic rehabilitation is an investment in our economic recovery.
Is the HTC for big projects only?
The HTC is available for all income-producing properties listed on the National Register or contributing properties in a National Register historic district that meet the substantial rehabilitation threshold. Projects must spend the greater of $5,000 or the adjusted basis of a building whichever is greater. According to the National Park Service’s Annual Report on the Economic Impact of the Federal Historic Tax Credit for FY 2018, almost half (46%) of all projects in FY18 were under $1 million, and 18 percent were under $250,000.
Is there economic data we can point to that demonstrates how historic tax credits stimulate economic activity?
Historic tax credits consistently demonstrate their catalytic effect on economic activity. As referenced above, the National Park Service produces a report each year in collaboration with Rutgers University’s Edward J. Bloustein School of Planning and Public Policy that includes helpful statistics about how HTC-related activity compares across various economic sectors. The most recent report, the Annual Report on the Economic Impact of the Federal Historic Tax Credit notes, for example, that HTCs helped spur $7.7 billion in total rehabilitation investment and created 129,000 new jobs in fiscal year 2018.
Another important resource is a report by the team at PlaceEconomics, entitled, Catalyst for Change: The Federal Historic Tax Credit: Transforming Communities, that notes, “the impacts and the nature of the measurements vary from project to project, but the results are consistent: the tax credit works, the benefits accrue far beyond the property owner, and historic buildings not only play a central role in reflecting America’s past but also in enriching America’s future.”
In the ensuing weeks, Congress is poised to negotiate a fourth Coronavirus relief package that could include all or part of the proposed HTC provisions described above as well as important funding for preservation.
In addition to the critical funding outlined above for SHPOs and THPOs, the National Trust sent a letter supported by 379 preservation non-profits and businesses letter to Congressional leaders requesting significant investment to help catalyze the economic recovery of nonprofit organizations, small businesses, and the arts and culture sector, while also protecting historic and cultural resources. The letter supports the HPF funding requested by NCSHPO and NATHPO and also an additional $300 million in HPF funding for several competitive grant programs. Most of those grants support brick and mortar rehabilitation grants.
Please ask your members of Congress to support funding for preservation and to strengthen the federal historic tax credit in order to spur economic activity and promote community revitalization efforts.
Stay informed of legislative developments and federal agency actions in response to the pandemic by subscribing to the National Trust’s advocacy newsletter for updates, calls-to-action and upcoming webinars.
To contact your Members of Congress, connect with the HTC advocacy coordinators below who can help you contact the appropriate tax staffer:
Shaw Sprague (email@example.com)
Michael Phillips (firstname.lastname@example.org)
Patrick Robertson (email@example.com)
Or visit the main pages for the House Representatives and the Senate.
Click the contact section or “contact me” link. Go to the message portal and if possible, select “Tax or Taxation” as the issue area category.
Additionally, you may also contact the Capitol Switchboard at 202-225-3121. Please keep in mind that most congressional staff are working remotely at this time.
HTC Advocacy Resources