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Talking Points, Outreach Guides, and Resources for HTC-GO Advocacy

Now more than ever, advocates need your support to urge members of Congress to Cosponsor the Historic Tax Credit Growth & Opportunity Act (HTC-GO). To help, we have put together a collection of resources, outreach guides, and talking points to help you take action for the HTC-GO and help make this bill a reality.

History of the Historic Tax Credit

The federal Historic Tax Credit (HTC) is a critical community development tool used to encourage investment in the rehabilitation of historic buildings nationwide. Since the program’s establishment in 1976, the HTC has leveraged nearly $235 billion in private investment to preserve more than 49,000 historic properties and support more than 3.2 million jobs. 

Unfortunately, the value of the HTC has diminished over the past decade because of IRS rulings, administrative burdens, and other legislative changes. In an effort to expand and enhance this critical community development program, Congress introduced the Historic Tax Credit Growth & Opportunity Act (HTC-GO). It includes provisions that would encourage more building reuse and redevelopment nationwide and would be particularly impactful for small, midsize, and rural communities.

Learn About the Historic Tax Credit, Advocacy Efforts, and the HTC-GO

Take Action for the HTC-GO

  • Search for local and political events or join a local political party’s email list to learn about events your members of Congress might be attending.
  • Connect with NTCIC for assistance in obtaining the contact information of the scheduling office for your members of Congress.
  • Invite your Representative to tour successful Historic Tax Credit-supported projects.
  • Request cosponsorship through the National Trust for Historic Preservation’s E-Advocacy Tool.
  • Utilize the suggested talking points below for your conversations with your members of Congress.

HTC-GO Talking Points & Advocacy Requests

  • The number of historic preservation projects has significantly decreased over the past several years – by as much as 20%.
  • In addition to skyrocketing costs of materials and labor and rising interest rates, the Historic Tax Credit – our country’s most powerful tool for preservation has lost power and value.
  • Historic Tax Credits have lost value over the past ten years due to IRS revenue procedures and other recent federal policies.
  • Pricing of the credits has dropped 20-25% over the last ten years.
  • “Now is the time to strengthen the Historic Tax Credit to address the slowdown and challenges in rehabilitation projects across the country.”
  • The HTC has not been positively modernized since 1986. In light of other federal investment tax credits being significantly enhanced recently, it is important to improve this incentive.
  • “Would you please cosponsor House Bill H.R. 1785/Senate Bill S. 639 – The Historic Tax Credit Growth and Opportunity Act (HTC-GO) and work to include these provisions in year-end legislation?”
  • The Historic Tax Credit Growth and Opportunity Act (HTC-GO H.R. 1785/S. 639) would bring more value to the credit, make more historic buildings eligible to use the HTC, further incentivize smaller projects and nonprofit projects, and make the credit easier to use.

Historic Illinois Building will Become InterContinental Hotel with Historic Tax Credit Investment

WASHINGTON, DC, March 30, 2023 – The National Trust Community Investment Corporation (NTCIC) is excited to announce the successful financial closing of the Illinois Building, an iconic office building located in the heart of the Mile Square business district of Indianapolis, Indiana. The revitalization project, led by Keystone Group, a development, construction, property management, and investments company specializing in transformational mixed-use projects, will transform the building into a 170-key full-service luxury InterContinental hotel and restaurant space. NTCIC provided an equity investment in federal Historic Tax Credits (HTC) generated by the preservation efforts.

Historic image of the Illinois Building, soon to be a new InterContinental Hotel

Historic Origins

Constructed in 1926, the Illinois Building was designed by the renowned architectural firm Rubush & Hunter, who were responsible for several iconic landmarks in Indianapolis, such as the Masonic Temple, City Hall, Circle Theater, Indiana Theater, and the Stutz Motor Company complex. Commissioned by the president of what is now Levi Strauss & Company, the building served as luxurious office space for nearly 70 years before becoming predominantly vacant by the mid-2000s. Indiana Landmarks listed the building on its 10 Most Endangered list in 2006, spurring interest in its revitalization.

The Revitalization of Downtown Indianapolis

Keystone Group will oversee the transformation of the 10-story, 135,004 square-foot Illinois Building into a 170-key luxury InterContinental hotel managed by IHG. The project will retain the two ground-floor restaurants currently occupying and operating the space, add a 2nd-floor hotel restaurant and bar, and create a rooftop bar and venue.

“The restoration of the Illinois Building is a testament to our commitment to preserving the architectural heritage of downtown Indianapolis,” said Ersal Ozdemir, Keystone Group CEO. “With the transformational development of this long-vacant historic treasure, we are not only reinvigorating the central business district but also attracting more activity and fostering a vibrant, thriving urban core that benefits residents and visitors alike.”

NTCIC’s Historic Support

To facilitate the restoration of the Illinois Building, NTCIC financed federal Historic Tax Credits generated by the project through its Climate Impact and Revitalization Fund. NTCIC provided underwriting and transaction management services and will provide asset management services through the HTC compliance period.

“We are proud to collaborate with Keystone Group for the Illinois Building restoration, who have demonstrated exceptional stewardship, commitment to quality preservation, and dedication to the local community,” said Amanda Bloomberg, NTCIC’s Senior Acquisition Manager. “Their track record of thoughtful development reinforces our confidence in the project’s potential to make a lasting impact on downtown Indianapolis.”

The conversion of the historic downtown Illinois Building into a hotel exemplifies the shift of companies to more remote and flexible work arrangements and a reduction in the demand for traditional office spaces. This trend has led to an increased interest in repurposing these historic spaces into other types of properties, such as hotels, housing, and retail, which can cater to the evolving needs of urban centers.

Urge your Representative and Senators to Cosponsor

March 27, 2023: Late last week, Representatives Darin LaHood (R-IL) and Earl Blumenauer (D-OR), Mike Kelly (R-PA), Terri Sewell (D-AL), Mike Turner (R-OH), and Brian Higgins (D-NY) reintroduced the House version of Historic Tax Credit Growth and Opportunity Act (HTC-GO/H.R. 1785). The bill includes similar permanent provisions as the Senate version and an additional temporary provision to address recent challenges facing historic rehabilitation projects.

In early March, Senators Cardin (D-MD), Cassidy (R-LA), Cantwell (D-WA), and Collins (R-ME) reintroduced HTC-GO (S. 639). Both the House and Senate bills include four permanent provisions that will add value to the Historic Tax Credit (HTC), improve access to the credit, make more projects eligible to use the credit, and increase investment in smaller rehabilitation projects.

How You Can Help Advocate for the HTC-GO
  1. Contact your Representative and Senators:
    • To locate your House Representative, visit: www.house.gov/representatives
    • To locate your Senators, visit: www.senate.gov/senators/senators-contact
    • Send a message through their website and select “tax” or “taxation” as the issue area, OR
    • Call (during office hours) the office, introduce yourself as a constituent, and ask for the email address of tax staff members.
  2. Talking Points to Encourage Your Members of Congress to Cosponsor the HTC-GO:
    • “The Historic Tax Credit Growth and Opportunity Act (HTC-GO), H.R. 1785/ S. 639, is needed now more than ever.”
    • “The Historic Tax Credit is a vital community revitalization tool in both small towns and large urban areas but has lost value due to federal policies over the last ten years.”
    • “The HTC has not been positively modernized since 1986. HTC-GO provisions would bring more value to the credit, make more buildings eligible to use the credit, and make the HTC easier to use.”
    • “Would the Representative/Senator please cosponsor the Historic Tax Credit Growth and Opportunity Act (H.R. 1785/S. 639)?”
    • “Please look for opportunities to include these provisions in future tax legislation.”
    • “Share the National Preservation Organizations HTC-GO Reintroduction Release with offices.”
About the Provisions of the HTC-GO Legislation

The federal HTC is the largest federal investment in historic preservation and a critical economic development tool used to revitalize our communities. Unfortunately, the value of the HTC incentive has diminished over the past decade because of IRS rulings, administrative burdens, changes in the credit structure, as well as spreading the distribution of the credit over five years as modified by the Tax Cuts and Jobs Act of 2017. As a result, the HTC has lost 20 – 25% of its investment value as interest rates continue to climb and materials and labor costs soar.

National Park Service statistics indicate that HTC applications are down 20% compared to pre-pandemic levels (2019), and the number of projects continues to decline even as the economy is rebounding.

Historic buildings have simply become more difficult to rehabilitate.

HTC-GO Temporary Provisions (House Bill Only)

The HTC-GO legislation temporarily increases the rehabilitation credit (IRC § 47) to address profound challenges facing the historic rehabilitation sector.

  • This provision increases the HTC percentage from 20% to 30% for 2023 through 2026.
  • The credit percentage is phased down to 26% in 2027, 23% in 2028, and returns to 20% in 2029 and thereafter.
HTC-GO Permanent Provisions (House and Senate Bills)

The permanent provisions will make important changes to the HTC to encourage more building reuse and redevelopment nationwide and would be particularly impactful for small, midsize, and rural communities. These provisions would:

  • Make the credit easier to use by increasing the credit from 20% to 30% for projects with less than $2.5 million in qualified rehabilitation expenses.
  • Make more projects eligible to use the HTC by lowering the substantial rehabilitation threshold.
  • Increase the value of HTCs and promote affordable housing development by eliminating the requirement that the value of the HTC must be deducted from a building’s basis (property’s value for tax purposes), making it easier to pair with the federal Low-Income Housing Tax Credit.
  • Enable further nonprofit use of the HTC by eliminating IRS restrictions that make it challenging for nonprofits to partner with developers. This change will create more opportunities for workforce development facilities, job/small business incubators, community health centers, local arts centers, affordable housing, and homeless services to be supported by the HTC.
Resources

For further assistance with your advocacy, please contact Mike Phillips, Shaw Sprague, and Patrick Robertson

March 2, 2023: Today, Senators Cardin (D-MD), Cassidy (R-LA), Cantwell (D-WA), and Collins (R-ME) reintroduced the Historic Tax Credit Growth and Opportunity Act (HTC-GO/ S. 639), in the Senate. The bill includes four permanent provisions that will add value to the Historic Tax Credit (HTC), improve access to the credit, make more projects eligible to use the credit, and increase investment in smaller rehabilitation projects.

Representatives Darin LaHood (R-IL) and Earl Blumenauer (D-OR) are expected to reintroduce a House companion HTC-GO bill next week. The bill will include similar permanent provisions and an additional temporary provision to address recent challenges facing historic rehabilitation projects.

How You Can Help Advocate for the HTC-GO
  1. Contact your Senators:
    • Visit the senate.gov contact list to locate your Senators
    • Send a message through their website and select “tax” or “taxation” as the issue area, OR
    • Call (during office hours) the office, introduce yourself as a constituent, and ask for the email address of tax staff members.
  2. Talking Points to Encourage Your Senators to Cosponsor the HTC-GO:
    • The Historic Tax Credit Growth and Opportunity Act (HTC-GO/ S. 639) is needed now more than ever.
    • The Historic Tax Credit is a vital community revitalization tool in small towns and large urban areas but has lost value due to federal policies over the last ten years.
    • The HTC has not been positively modernized since 1986. HTC-GO provisions would bring more value to the credit, make more buildings eligible to use the credit, and make the HTC easier to use.
    • Would the Senator please cosponsor the Historic Tax Credit Growth and Opportunity Act (S. 639)?
    • Please look for opportunities to include these provisions in future tax legislation.
About the Provisions of the HTC-GO Legislation

The federal HTC is the largest federal investment in historic preservation and a critical economic development tool used to revitalize our communities. Unfortunately, the value of the HTC incentive has diminished over the past decade because of IRS rulings, administrative burdens, changes in the credit structure, as well as spreading the distribution of the credit over five years as modified by the Tax Cuts and Jobs Act of 2017. As a result, the HTC has lost 20 – 25% of its investment value as interest rates continue to climb and materials and labor costs soar.

National Park Service statistics indicate that HTC applications are down 20% compared to pre-pandemic levels (2019), and the number of projects continues to decline even as the economy is rebounding.

Historic buildings have simply become more difficult to rehabilitate.

HTC-GO Permanent Provisions

The permanent provisions will make important changes to the HTC to encourage more building reuse and redevelopment nationwide and would be particularly impactful for small, midsize, and rural communities.

These provisions would:

  • Make the credit easier to use by increasing the credit from 20% to 30% for projects with less than $2.5 million in qualified rehabilitation expenses.
  • Make more projects eligible to use the HTC by lowering the substantial rehabilitation threshold.
  • Increase the HTC’s value and promote affordable housing development by eliminating the requirement that the value of the HTC must be deducted from a building’s basis (property’s value for tax purposes), making it easier to pair with the federal Low-Income Housing Tax Credit.
  • Enable further nonprofit use of the HTC by eliminating IRS restrictions that make it challenging for nonprofits to partner with developers. This change will create more opportunities for workforce development facilities, job/small business incubators, community health centers, local arts centers, affordable housing, and homeless services to be supported by the HTC.
Resources

For further assistance with your advocacy, please contact Mike Phillips, Shaw Sprague, and Patrick Robertson

The federal Historic Tax Credit (HTC) is a critical community development tool used to encourage investment in the rehabilitation of historic buildings nationwide. Since the program’s establishment in 1976, the HTC has leveraged nearly $120 billion in private investment to preserve more than 48,000 historic properties and support more than 3 million jobs. The credit is also often paired, or “twinned,” with other programs such as the Low-Income Housing Tax Credit and the New Markets Tax Credit, which has helped to create nearly 200,000 units of low- and moderate-income housing units and increase access to vital community goods and services.

Unfortunately, the value of the HTC has diminished over the past decade because of IRS rulings, administrative burdens, changes in the credit structure, and spreading the distribution of the credit over five years as modified by the Tax Cuts and Jobs Act of 2017. As a result, the HTC has lost 20 – 25% of its investment value as interest rates continue to climb and materials and labor costs soar. National Park Service statistics indicate that HTC applications over the last two fiscal years are down 20 percent when compared to 2019 and prior years. Historic buildings have simply become more difficult to rehabilitate.

So, What is the Historic Tax Credit Growth & Opportunity Act?

In an effort to expand and enhance this critical community development program, Congress introduced the Historic Tax Credit Growth & Opportunity Act (HTC-GO). It includes provisions that would bring five more tools to the HTC: More Credits, More Value, More Buildings, More Nonprofit Use, and More Simplicity.

Let’s take a look at what the Historic Tax Credit Growth & Opportunity Act will do to enhance and expand the power of the Historic Tax Credit.

HTC Percentage Increase

Currently, the HTC provides a 20% credit to project costs directly associated with the repair or improvement of historic structural and architectural features of a building, also known as qualified rehabilitation expenditures (QREs). This percentage is the foundation for all equations for determining the value of the HTC through the rehabilitation process.

For example, under the current law, a project with $200,000 in historic rehabilitation costs could receive up to $40,000 in HTCs ($200,000 x 20% = $40,000).

If passed, this bill will increase the HTC percentage from 20% to 30% through 2025. This is a 50% increase in value and benefit to historic preservation projects, so that same project with $200,000 in rehab costs would generate $60,000 in credits ($200,000 x 30% = $60,000). For projects generating more than $2.5 million in QREs, the increase would be in effect from 2020 through 2025 before gradually returning to 20% in 2028. Properties must complete the rehabilitation efforts after March 31, 2021, to be eligible for this provision.

What is the Historic Tax Credit Growth & Opportunity Act?

The Historic Tax Credit enhancements will better support community development projects like the Academy Lofts building in Atlanta, GA, the new home to The Creatives Project, a nonprofit organization providing quality arts-based education & outreach through artist-in-residency programs.

 

Permanent Increase in the Rehabilitation Credit for Small Projects

The HTC is not just for large-scale projects and developers. In fact, over half of all completed historic projects that utilized the HTC were under $2.5 million in qualified costs.

For these smaller projects, after December 31, 2023, a taxpayer would be able to elect a “small project credit” and receive the 30% tax credit for projects with qualified costs up to $2.5 million or less. This increase for small projects would be permanent. This change would ensure rural and non-urban areas are better positioned to benefit from utilizing HTCs even after the temporary 30% credit for larger projects expires in 2025.

Redefinition of “Substantial Rehabilitation”

To be eligible for HTCs, a project must pass the “Substantial Rehabilitation” test. Generally, this means that a project must spend the greater of either $5,000 or the pre-rehabbed worth of the building itself, also known as the “adjusted basis.” Currently, a project can determine its adjusted basis by completing the equation A-B-C+D = Adjusted Basis, where:

A.     Purchase price of the property, both building and land

B.     The cost of the land at the time of purchase

C.     Depreciation taken for an income-producing property

D.     Costs of improvements made to the property since its purchase

The new provision cuts the substantial rehabilitation requirement in half so that qualified rehabilitation expenditures must exceed the greater of 50% of the adjusted basis of the building rather than 100%. This reduction effectively updates the adjusted basis equation to (A-B-C+D)/2 = Adjusted Basis.

Lowering the rehabilitation cost requirements will greatly increase the HTC eligibility for countless projects and make the cost of entry much more approachable.

For example, an individual purchased a historic building for $200,000 ($150,000 for the building and $50,000 for the land). Under current law, the building’s new owners would need to incur at least $150,000 in rehabilitation costs to qualify for the credit. The new bill provision would reduce this threshold to $75,000 in rehabilitation costs.

Elimination of Rehabilitation Credit Basis Adjustment

For a larger-scale project to generate project funding at the onset of development using the HTC, rather than claiming the credits come tax season, a building owner needs to partner with an investor that has both the ability to use the credits themselves and available funding. The investor can then provide financing to the project, typically a percentage of a dollar per credit, in exchange for the ability to claim the credits themselves – lowering the amount of taxes the investor owes at the end of the year.

Currently, the financial and legal process of a building owner and investor partnering in this way requires an investor to recognize income in the amount of credits they can claim, which often results in a lower price per credit the investor can offer to a project. Essentially, the current law lowers the dollar value of the HTC, and the amount of funding a project can receive from an investor.

With the new provision, an investor no longer needs to recognize income in the amount of the HTC to claim the credit. By eliminating this adjustment, an investor can provide more funding per credit to a project. Though complex, this change would place the HTC in line with other development credits like the Low Income Housing Tax Credit (LIHTC) and make it easier to use with such programs.

Modifications Regarding Certain Tax-Exempt Use Property

Currently, to generate HTCs, a building owner and its tenants must be taxable entities. This requirement prevents many nonprofit healthcare centers, daycare organizations, arts organizations, and community service providers from engaging in historic preservation activities, especially if they already own and use their historic property.

This provision would amend and remove certain leasing and tax-exempt use restrictions, making the HTC easier to access by nonprofits that provide critical community services and other tax-exempt entities.

Click Here to Contact Your Representative

Written by Tim O’Donnell of the National Trust for Historic Preservation

In its heyday, the Crescent Corset Company employed more than 700 women, many of them Italian immigrants, at a factory on South Main Street in Cortland, New York. The large industrial brick building, built in multiple stages starting in 1923, quickly became an anchor for the small city, which sits between Ithaca and Syracuse.

They came up with a plan to convert the factory into a mixed-used complex, believing there was demand for both residential and commercial units. The National Trust Community Investment Corporation (NTCIC) supported the companies with state and federal historic tax credit equity, which Lockwood says was necessary for getting the adaptive reuse project off the ground.

“In Cortland, which is 15,000 to 20,000 people, you can’t talk to too many people [whose] grandmother didn’t work there, or their sister, or their aunt,” said Ben Lockwood, president and CEO of Housing Visions, the nonprofit developer that has helped transform the rundown building into a vibrant commercial and residential space over the past several years.

 

The saga of the Crescent Corset Company factory, as it was formerly known, is similar to that of many other manufacturing sites in American cities during the second half of the 20th century. Over the years, activity within the building slowly declined until it became vacant, and a once proud structure had become an eyesore.

But the factory’s fate changed when Housing Visions partnered with David Yaman Realty Services, a local firm. Together, they produced an adaptive reuse plan that brought the former factory back to life, once again making it a keystone in Cortland.

Click Below to Read the Full Story

Crescent Commons Story