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Katherine Ferguson

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Connecticut Needs A Higher Historic Tax Credit Cap

Posted by Katherine Ferguson on Wednesday, April 26, 2017

The Carroll Building | Waterbury, CT

Just as the case in Kentucky, Connecticut has an aggregate cap on their state historic tax credit. And the demand for these tax credit dollars far outweighs the supply. The last three years has seen funds fully reserved quickly with the last year being fulfilled in the first four months of the fiscal year. 

In the April 2017 issue of the Novogradac Journal of Tax Credits, MHA Northeast director Albert Rex takes a look at the history of the Connecticut Historic Rehabilitaiton Tax Credit program and gets insight from some of the key players in the state. 

Read the full story here | 
Connecticut Looks at Boost to Annual Cap


Topics: State HTC, Novogradac Journal of Tax Credits, Connecticut, Aggregate Cap

'The Greenest Building': Sustainability and Economics in Building Reuse

Posted by Katherine Ferguson on Wednesday, March 15, 2017

This St. Paddy’s week, America’s urban areas are crawling with green-clad revelers drinking green-colored beverages. No doubt that many of these merry-makers will be patronizing pubs in historic buildings and main streets that have benefited from historic preservation efforts. They may not be painted green for the occasion (although there may be a few), but these buildings are often considered ‘the greenest buildings,’ a term coined by American architect and sustainability expert Carl Elefante (FAIA, LEED AP) when he declared, “The greenest building is the one that is already built.”


Preservationists are quite familiar with ‘the greenest building’ argument for adaptive use of historic buildings. This concept was originally perpetuated during the energy crisis of the 1970s and phrases like “embodied energy” and “carbon footprint” became part of the preservation lexicon. In the 1980s, the National Trust for Historic Preservation created the famous poster of an old building in the shape of a gas can to convey the idea that building reuse was a good way to conserve energy. It was effective and iconic.

Today, our better understanding of climate change and how our actions contribute to environmental shifts has deepened the issue, linking sustainability with responsibility. The popularity of LEED ratings and energy-efficient materials in building development are the realization of what is marketable, what is socially responsible, and what is financially beneficial over time for developers and end users alike.

Historic preservation and adaptive use are inherently sustainable practices, not only because of the aforementioned embodied energy of the structure but also because of building characteristics that encourage innovative sustainability strategies. “Because many historic buildings were built before climate control was widespread, they showcase great regional climatic adaptation and strategies for passive thermal comfort regulation. Many lessons on how to reduce energy consumption are archived in the historic buildings around us,” says Amalia Leifeste, AIA, assistant professor at the Clemson University/College of Charleston Graduate Program in Historic Preservation. “Sustainable strategies can be gleaned from an understanding of past practices and introduced to new construction or, better yet, capitalized on or re-introduced to existing buildings.”

In addition to being ‘green’ by sustainability standards, there are myriad tools that incentivize reuse and help developers achieve valuable equity for these projects. The federal historic tax credit awards up to 20 percent of qualified rehabilitation expenses for eligible income-producing buildings and at the moment 33 states have historic tax credit programs that mirror or resemble the federal program. Some states and local municipalities utilize tax abatement programs. Cities like Los Angeles, Phoenix, and St. Petersburg, Florida are using local ordinances to reward developers reusing buildings with shorter and streamlined permitting approvals and relaxing zoning and code requirements that apply to new construction. This is a forward-thinking approach to encouraging the sustainable practice of reuse.

The economic benefits of historic building reuse not only benefit developers but also extend to local business owners, residents, and municipalities themselves. Time and time again, the rehabilitation of a single building – be it a landmark mill or a main street storefront – can be the spark for greater economic development in a community, bringing with it more jobs and tax dollars. The creation of housing, affordable or otherwise, is another common use of historic buildings that can stimulate the economy of a locale.

As American cities turn green this week, look around at the historic buildings and the inherent green they represent for energy, for equity, and for economic development. If you are holding a green beer while you ponder this, all the better.

Topics: adaptive use, Sustainability

Presidential Policy & the Federal Historic Tax Credit

Posted by Katherine Ferguson on Thursday, February 23, 2017

Congress believes that the rehabilitation and preservation of historic structures and neighborhoods is an important national goal. Congress believes that the achievement of this goal is largely dependent upon whether private funds can be enlisted in the preservation movement.
- Tax Reform Act of 1976

A new president. An energized Congress. An aggressive approach to legislative reform. We have seen these themes dominate newspapers for the past month. In addition to the new administration, much has been made about legacies – that of the outgoing president and those of presidents past that are invoked for comparison’s sake.

President Trump and the 115th United States Congress have vowed to make tax reform a priority in 2017, and those paying attention will most assuredly draw comparisons between these efforts like the Tax Reform Act of 1986 that were overseen by the Reagan administration, a popular administration by which most Republican bodies benchmark policies and platforms.

For supporters of historic tax credits, these tax reforms were the birthplace of the current federal programs. Having originally been part of the Ford administration’s Tax Reform Act of 1976, early Reagan reform included the Historic Rehabilitation Tax Credit as part of the Economic Recovery Act of 1981.

Our historic tax credits have made the preservation of our older buildings not only a matter of respect for beauty and history, but of course for economic good sense.
- President Ronald Reagan, 1984 

Permanent changes were made to the federal Historic Rehabilitation Tax Credit in the Tax Reform Act of 1986 (the most extensive overhaul of the federal tax system since 1913) that reduced the income-producing credit from 25 percent to 20 percent while other real estate tax benefits were cut – a testament to the program’s value that was apparent to lawmakers. Those changes remain, 31 years later, as the basis for the program in its current form. 

Supporters of the federal historic tax credit are not just preservationists but also developers, investors, architects, local business owners, private citizens, government regulators, and elected officials – both Republican and Democrats. Architecture Magazine has called it a “model of governmental initiative” and the Internal Revenue Service in 2002 stated that the Historic Preservation Tax Incentives program “is the nation’s most effective Federal program to promote urban and rural revitalization and to encourage private investment in rehabilitating historic buildings.”


The Federal Historic Rehabilitation Tax Credit | By the Numbers

  • Over 42,000 historic buildings have been rehabilitated
  • Over 2.3 million jobs have been created
  • Over $117 billion in private investment has stimulated local economies
  • On average, every $1 in federal credit yields $4 of private investment
  • For $23.1 billion in costs, the program has generated $28.1 billion in federal tax receipts.


In short, the legacy and success of the Historic Rehabilitation Tax Credit is one that should be honored in upcoming tax reform. Sweeping change proposed by Speaker of the House Paul Ryan (R-WI) currently appears to eliminate altogether incentive programs like the historic tax credit. In addition, a reduction in the corporate tax rate could de-incentivize the program even if the program remained intact. While the primary goal of historic tax credits is to serve as an economic development tool, it is also as Reagan noted a matter of respect for beauty and history that is protected by an incentive that rewards good preservation.

(An argument can be made that is also a matter of sustainability. But a topic for another day.)

Topics: policy, federal HTC, tax reform

The Historic Advisor | Winter 2017

Posted by Katherine Ferguson on Thursday, February 16, 2017


Inside the issue

Working_2017Q1_banner.jpg  ProjectSuccess_2017Q1_banner.jpg  Awards_2017Q1_banner.jpg


Topics: The Historic Advisor

The Case for Uncapping Historic Tax Credits in Kentucky

Posted by Katherine Ferguson on Wednesday, February 8, 2017

| Louisville, Kentucky

When state legislators consider implementing historic tax credit programs, a conservative approach is often to cap the program in order to control the cost. While this achieves the desired short-term goal, it can limit the potential of such programs to stimulate economic development to its fullest potential by creating competition and limitations that keep developers out of the market. 

The historic tax credit in Kentucky was created as part of the 2005 JOBS for Kentucky Tax Modernazation Plan and has an annual aggregate cap of $5 million with a $400,000 per-project cap. But in 2014, a short-term bill called the Enhanced Historic Tax Credit was passed that was aimed at stimulating development in tax increment finance communities in the state. 

Juxtaposing these two programs and their economic impacts, we can glimpse what effects an uncapped program may have on historic development in Kentucky and support a national call for uncapped state programs. We explore this topic in our Februrary 2017 State of Historic Tax Credits column of the Novogradac Journal of Tax Credits.

Read the full story here | 
Capping Kentucky: The Case against Annual Aggregate Caps for State Historic Tax Credits


Topics: State HTC, Kentucky, Novogradac Journal of Tax Credits