Last week, a team of MHA partners and staff joined with Preservation Action, the National Trust for Historic Preservation, the Historic Tax Credit Coalition, and many other historic preservation advocacy groups from across the nation to extoll the merits of the federal historic tax credit. We met with members of Congress from across the country to encourage support of historic preservation legislation like the reauthorization and increase of the Historic Preservation Fund (H.R. 2817) and the Historic Tax Credit Improvement Act (H.R. 3846), as well as encourage members to join the Historic Preservation Caucus.
Here is what you need to know about why these bills are important:
Historic Preservation Fund (HPF)
Since 1976, the HPF has been the main federal funding source of historic preservation. HPF funds State Historic Preservation Offices, Tribal Historic Preservation Offices, and preservation grants for National Register and National Historic Landmarks listing and the saving of historic Civil Rights sites.
The HPF does not use taxpayer dollars. It is supported by a small percentage of federal offshore drilling revenue. An annual deposit of $150 million was set in 1976 and has not changed over the last 40 years. However, congressional support is needed to approve the appropriations required to fully fund the program. This year the President has requested increased funding for TPHOs, and Civil Right Grants. In addition, the President has requested $3 million be appropriated for Historically Black Colleges and Universities as part of the HPF and a significant increase in funding for the Civil Rights Initiative Competitive Grants. The terms of the bill extend the HPF through FY2025.
Historic Tax Credit Improvement Act (HTCIA)
A federal historic tax credit program has been in place since 1981 and has been the incentive for the rehabilitation of more than 40,000 buildings, the creation of almost 2.5 million jobs, and the private investment of $117 billion nationwide. With an impressive $5 of private investment for every $1 in federal funding, the program has remained largely unchanged for three decades.
The HTCIA aims to modernize the federal HTC and encourage Main Street and rural preservation efforts across the country. The proposed legislation allows projects with less than $2.5 million in QREs to take up to 30% (up to $750,000) in order to offset the structuring costs associated with historic tax credit deals. This is of great benefit to developers of smaller rehabilitation projects who find these costs to be prohibitive to using the credit. This added credit also helps to make state HTCs more effective.
The bill introduces other improvements that include the “certification” for some smaller projects, lowering the QRE threshold and the depreciable basis adjustment from 100% to 50% of the adjusted basis for both, eliminating federal tax on proceeds from state HTCs, and relaxing rules for functionally-related complexes.
Bi-partisan support for the HTCIA currently includes 29 cosponsors - including 13 Republicans, 16 Democrats, and 12 members of the House Ways & Means Committee. The sponsor of the bill is Rep. Mike Kelley (R-PA).
*In addition to the HTCIA House Bill, last week a similar version of the bill was presented to the Senate. The Senate Bill does not, however, include the provision for functionally-related properties to be treated as separate properties.
Overall, the reception from the Hill regarding historic preservation is warm. Many members’ office walls are full of photos of historic buildings from their districts and there is a general understanding that HTCs are beneficial economic incentives. True to the current budget vernacular, many staffers asked us for the “score” of the HTC. The answer is that we there is not one yet, but what we can tell them is that for a program that has cost $24 billion since the 1980s, $28.6 billion in federal tax receipts have been generated. That’s good ROI for our nation to preserve its history.
Photos below: (LtoR) MHA Southeast Director Richard Sidebottom speaks with Sen. Linsday Graham and Charleston (R-SC) developer William Cogswell about the merits of HTCs. | (LtoR) Jim Igoe and Erin D. A. Miranda of Preservaton Massachusetts, Sen. Elizabeth Warren (D-MA), Greg Galer of the Boston Preservation Alliance, and Partner | MHA Northeast Director Albert Rex catch up during Preservaton Action Advocacy Week.