News Historic Tax Credit

The Historic Tax Credit Coalition: The Industry’s Voice for Historic Tax Credits

Written By: NTCIC

With this issue of the Novogradac Journal of Tax Credits focusing on legislative initiatives and issues, it seemed appropriate to reach out to the chairwoman of the Historic Tax Credit Coalition (HTCC), Merrill Hoopengardner, to discuss the work of that organization.

Written by John M. Tess, President, Heritage Consulting Group and originally featured in the Novogradac Journal of Tax Credits

Merrill is the president of the National Trust Community Investment Corporation, where she has been since 2016. Before that, she was a principal at Advantage Capital Partners, a finance company that specializes in using public-private partnerships to raise venture capital and small business capital for investments and loans in underserved areas. She also previously worked as an attorney at Nixon Peabody LLP, where she specialized in tax credit finance. In full disclosure, I serve on the board of the HTCC and fully endorse its activities.

Q: What exactly is the Historic Tax Credit Coalition (HTCC)?

A: The HTCC is a nonprofit stakeholder organization focused on the future of the federal Historic Tax Credit (HTC) program, both in legislative and regulatory matters. Through the HTCC, coalition members advocate for improvements that would make the HTC a more successful program. To date, the HTC program has been incredibly successful. The last NPS HTC report (through Fiscal Year 2018) cited 1,013 projects representing $6.9 billion in estimated qualifying rehabilitation costs. As importantly, the HTC represents one of only a handful of effective incentives to preserve and rehabilitate older and historic buildings and it is the federal government’s most significant investment in preservation.

Q: Who is involved in the HTCC?

A: Since forming in 2009, the HTCC has established itself as a critical voice before Congress as well as key agencies in protecting and expanding the HTC. Our success is largely determined by our growing membership, by the advocacy of our members and by their ongoing involvement in the organization.

The HTCC is an open membership nonprofit and I would be remiss if I did not encourage anyone interested in joining the HTCC to contact me. Our members include businesses representing developers, syndicators, preservation consultants, investors, lawyers, accountants and architects among others. In total, we count more than 75 organizations/companies as members. Our board numbers 13, representing the spectrum of industry. Much of our work is through our committees. Two key committees are the Internal Revenue Service and the National Park Service committees, which work to improve policies, regulations, and administration by working directly with agency partners. We have committees targeting state credits, issues important to investors, as well as national legislative initiatives.

Q: What are some of the successes of the HTCC?

A: On the grand level, HTCC’s success is reflected in the continued success and growth of the program. That said, the HTCC has had a number of significant accomplishments both on the legislative and regulatory side.

On the legislative side, our most important accomplishment was the retention of the HTC in the Tax Cuts and Jobs Act that went into effect in January 2018. Considered the most sweeping tax reform in three decades, Congressional debates were broad-ranging, with leadership challenging the justification of nearly every major incentive. The HTCC, working with the bipartisan Congressional Historic Preservation Caucus and supported by preservationists across the country, effectively demonstrated the importance of the HTC as fundamental preservation and economic tool, one that ultimately returns more money to the federal tax coffers than the incentive took while preserving our nation’s heritage.

Similarly, the industry has had a number of legislative successes on the state level, led by some of the Coalition’s members and some other national preservation nonprofits. Particularly the recent experience of the Texas state tax credit demonstrates that the added benefit of a state credit can serve as an enormous stimulant where projects combine not only the federal and state HTC but also may link to other incentives such as new markets tax credits and the low-income housing tax credits. Just recently, the governor of California signed into a law a 20 percent state HTC (25 percent for affordable housing projects) that begins Jan. 1, 2021, and will continue at least through 2025. Like many state credits, this incentive can be combined with the federal program as well as other incentives. This state credit is in addition to the current Mills Act property tax incentive. The California success follows similar success in Illinois, which now has a 25 percent HTC through at least 2023 and a 30 percent state HTC it in Hawaii that will not sunset for five years. Currently, there are 36 states with a statewide credit. In these instances, the leadership initiative for these state credits emanated from within through the work of state and local advocates. HTCC played an important role in connecting the larger tax credit industry with statewide efforts.

While the legislative work is notable, as important is the fundamental behind-the-scenes work the HTCC does with the regulatory agencies. Oftentimes, policy and rule interpretation–or even implementing processes–can be a significant barrier to success. The HTCC has been effective in establishing a working relationship with both the National Park Service (NPS) and Internal Revenue Service (IRS), who administer the programmatic and tax regulatory provisions, respectively. We are able to meet directly with program administrators to resolve problem areas.

A: The HTCC has been working in concert with the NPS to address understaffing at the reviewer level over the past few years. If you have been to industry conferences or spoken with the NPS recently, you will know the agency is well on its way to being fully staffed. Leadership at the agency has filled many open positions, with a few hires still to come. This boost in staffing, funded by the user fees paid by applicants for the HTC, combined with application levels normalizing after a rush during tax reform, should bring the review process into more of a steady-state.

At the same time, the HTCC has been in conversations with the NPS and the National Conference of State Historic Preservation Officers (NCSHPO) about ways to ensure review timelines for Part 2 submissions that better align with program guidelines. The industry has seen a sharp uptick in the amount of time it takes to review developments, especially big projects, over the past decade, and the HTCC is working to help identify some of the causes of that delay and collaborate with our agency partners on potential solutions.