Commercial Investment Real Estate July/August 2018 | Page 16

FINANCING
FOCUS
Preserving History
The HTC remains a valuable tool in making historic preservation profitable.
by Jonathan Shaver, CCIM
P
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July | August 2018
taken by stakeholders in the HTC industry, the worst potential
outcome — elimination of the HTC — was avoided.
HTC’s Reach
The Federal Historic Tax Credit is an incentive created to help
offset the cost of rehabilitating historic buildings, a process that
frequently is more expensive than ground-up construction. The
HTC originally was created as part of the Tax Reform Act of
1976, signed into law by President Jimmy Carter. It subsequently
was expanded by the Economic Recovery Tax Act of 1981, also
known as the Kemp-Roth tax cut, and was made a permanent
part of our tax code as part of the Tax Reform Act of 1986, signed
into law by President Ronald Reagan.
Since the HTC’s inception, more than 43,000 projects leverag-
ing nearly $90 billion in private investment have been completed
in all 50 states, the District of Columbia, Puerto Rico, and the
U.S. Virgin Islands, according to the National Park Service,
which administers the program. Perennial top users of the credit
include Louisiana, Missouri, New York, Ohio, and Virginia. In
2017, use of the HTC resulted in $5.8 billion in private invest-
ment and more than 100,000 jobs being created, according to the
NPS Annual Report for Fiscal Year 2017. The use of the HTC
COMMERCIAL INVESTMENT REAL ESTATE
resident Donald Trump’s election in November 2016
foreshadowed major changes to our nation’s tax code
— initially threatening preservation of the Historic Tax
Credit Program.
Early tax reform conversations among the Big Six — Senate
Finance Committee Chairman Orrin Hatch; Senate Majority
Leader Mitch McConnell; House Speaker Paul Ryan; House
Ways and Means Committee Chairman Kevin Brady; Treasury
Secretary Steven Mnuchin; and former Trump economic adviser
Gary Cohn — included elimination of the HTC altogether.
This prospect sent shockwaves through the HTC community,
which rallied fast and furiously to lobby to save the HTC from
elimination or other negative modification.
Through these efforts, the HTC’s prospects went from quite
bleak (complete elimination), to a cut in half from 20 percent to
10 percent, to remaining at 20 percent but being allocated over
five years instead of all at once at project completion. This final
treatment of the HTC is what ultimately was signed into law by
President Trump in the Tax Cuts and Jobs Act of 2017.
Comprehensive tax reform was conceived of, pushed through,
and put into law breathtakingly quickly — less than three months
from start to finish. But as a result of a robust campaign under-