Restoring History

A Closer Look at Restoration Tax Credits and Commercial Real Estate

Undertaking a development project in commercial real estate begins with a tightrope act hinging on balance and style. When preparing the numbers, costs must not only add up, but also make the project look attractive enough to capture the imagination and favor of investors, property owners, and communities. It is for these reasons that historic properties often make excellent redevelopment targets. Compared to new construction costs, the savings that rehabilitating historic property might offer can do wonders for balance sheet math, while the emotional resonance attached to locally familiar and preservation-worthy properties can capture critical early enthusiasm by project financers. The right historical rehab project achieves economic development and cultural preservation all in one profitable fell swoop.

Since at least the early 1960s, federal development subsidy in the form of rehabilitation tax credit for historic properties has been in the tax code. It’s a policy that lends a simultaneous hand both to developers and to communities concerned with protecting their architectural links to the past.

For developers, a 20% federal and/or state tax credit towards the rehabilitation of a historic commercial property has the bottom-line potential to turn a "maybe" property into a "definitely" project. Allaying rehabilitation costs using tax credits can significantly free up a project's capital, allowing developers the latitude and flexibility to put dollars anywhere they may be needed, all the way from sweetening a pro forma to helping to meet construction code – sometimes with the helping hand of the government that puts these codes in place.

However, obtaining federal or state tax credits is a project in itself. The applications process presents a veritable circus of hoops to jump through, each program with its own idiosyncrasies, categorizations of costs, and demands on applicants. What’s more, the legislatures that enact tax credit programs are actively amending the body of law, altering thresholds and features. Expect a lot of I-dotting and T-crossing with federal and state historic preservation tax credit applications. And as always, retain qualified legal counsel for applications review.

The Changing Picture of Federal Help

The federal level of these tax credits is best exemplified by the Federal Historic Preservation Tax Incentives Program. This program is administered by the Technical Preservation Services division of the National Park Service under the US Interior Department. Even here, the ground is shifting in surprising ways. Recent changes to the IRS Tax Code, signed into law in December 2017, have significantly altered the provisions of the program’s credits, including the outright elimination of a 10% credit for development of non-historic buildings – an unexpected legislative priority coming from a GOP-majority Congress led by a Republican commercial real estate developer as POTUS.

To learn the latest on eligibility requirements for the federal historic preservation tax credit, consult the National Park Service.

State Programs

The federal level is only the beginning when it comes to rehabilitation tax credits and their changing ground rules. Somewhere around ⅔ of U.S. states offer some form of financial assistance for redevelopers of historic properties. But it’s also true that state legislatures are constantly re-legislating their tax credit laws. Up-to-date information about state historic preservation tax credits is best obtained from local historical commissions or administrative offices identified below. 

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The National Trust for Historic Preservation has identified 33 states that have passed historic preservation tax credits.

Use this table as a starting point and make sure that programs in your state have not lapsed or passed sunset dates.  

State Program Legislation Contact

Alabama

H.B. 345

Alabama Historical Commission

334-230-2643

taylor.stewart@ahc.alabama.gov

Arkansas H.B. 1953

Arkansas Historic Preservation Program

info@arkansaspreservation.org

(501) 324-9880

Colorado H.B. 14-1311

Office of Archaeology and Historic Preservation

(303) 866-3392

oahp@state.co.us

Connecticut Public Act No. 07-250

Julie Carmelich

(860)-256-2762

julie.carmelich@ct.gov

Delaware H.B. 1

Joan Larrivee

Historic Tax Credit Program Coordinator

Division of Historical and Cultural Affairs

Phone: (302)736-7406

Georgia H.B. 1441

Carole Moore

Grant & Tax Incentives Coordinator

(770) 389-7848
Illinois Public Act 097-0203

Department of Commerce and Economic Opportunity

(217) 557-0513

CEO.HistoricCredit@illinois.gov

Iowa H.F. 2650

State Historic Preservation Office of Iowa (SHPO)

Daniel Hansen

(515) 725-3128

Kansas H.B. 2560

Kansas State Historic Preservation Office

(785) 272-8681, ext. 240

Kentucky H.B. 272

Mike Radeke

Restoration Project Manager

(502) 564-7005, Ext. 141

Louisiana H.B. 359

Nicole Hobson-Morris

(225) 342-8172

Maryland H.B. 1196

Collin Ingraham

Administrator of the Tax Credit Program

(410) 514-7671

Massachusetts H.B. 2987

Massachusetts Historical Commission

(617) 727-8470
Minnesota

H.F. 2695

Natascha Wiener

Senior Design Reviewer

mn.gov/admin/shpo/
Missouri S.B. 1

State Historic Preservation Office

(800) 361-4827

(573) 751-7858

Montana H.B. 619

Montana State Historic Preservation Office

(406) 444-7715
Nebraska L.B. 191

Nebraska State Historic Preservation Office

teresa.fatemi@nebraska.gov

(402) 471-4787

New Mexico H.B. 606

Harvey Kaplan

Tax Credits & Architectural Review

(505) 827-3971

New York S.B. 8392

New York State Division for Historic Preservation

(518) 237-8643

North Carolina H.B. 97

Tim Simmons

(919) 807-6585

Mandy Bullman

(919) 807-6590

North Dakota S.B. 2033

State Historical Society of North Dakota

(701) 328-2666

Ohio H.B. 149

Carrie Manno

(614) 446-6667
Oklahoma H.B. 3024

Oklahoma Historic Society

Jennifer Bailey

(405) 522-4479

Pennsylvania H.B. 761

tinyurl.com/y9e4lwbw

866-466-3972

Rhode Island H. 6060

tinyurl.com/ybu9j8ht

(401) 222-2678

hphc.info@preservation.ri.gov

South Carolina Act No. 229

Dan Elswick

(803) 896-6174

Texas H.B. 500  

Texas Historical Commission

(512) 463-6100

Utah S.B. 37

Nelson Knight

(801) 245-7244
Vermont Act No.183

Caitlin Corkins

Tax Credits & Grants Coordinator

(802) 828-3047

Virginia H.B. 1453

Elizabeth Tune

(804) 482-6093

West Virginia H.B. 2882

Tax Credit Coordinator

(304) 558-0240

Wisconsin S.B. 259; SB 668

Jen Davel

(608) 264-6490

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