St. Dennis Apartment Building, Washington, DC
Yale & Towne Industrial Complex,
Stamford, Connecticut
Fisher Building, Chicago, Illinois |
Fall 2008 Update: MacRostie Historic Advisors
Historic Tax Credits More Important Than Ever in Project Financing
The opportunity to utilize federal and state historic tax credits as a source of equity has never been more important than under the current economic conditions. With the debt markets in a state of uncertainty, historic tax credits provide a proven source of capital to help move projects forward. Despite some federal historic credit investors leaving the market as a result of the financial crisis, the remaining investors continue to have an appetite more than adequate to absorb the credits on the market.
Recent Improvements to the Historic Rehabilitation Tax Credits. The following positive changes were made recently in the laws underpinning the historic tax credits:
The Housing and Economic Recovery Act of 2008
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Repeals the Alternative Minimum Tax limitations on the federal historic rehabilitation tax credit, which should expand opportunities for developers to utilize credits generated by their own projects and expand the pool of corporate and institutional investors;
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Increases the allowable percentage of tax-exempt use of a property from 35% to 50% before a lease is considered a "disqualified lease"; and
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Requires state housing agencies to consider the "historic nature" of a project when allocating low-income housing credits.
The Emergency Economic Stabilization Act of 2008
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Extends the Gulf Opportunity Zone Act of 2005, which was set to expire in December 2008, to December 31, 2009. The 2005 act expanded the federal historic rehabilitation tax credit in areas affected by Hurricanes Katrina and Rita from 20% to 26% and the "Old Building Tax Credit" from 10% to 13%;
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Extends the 26% and 13% federal historic tax credit boosts to communities in recently named "Midwestern Disaster Areas" in affected areas of Arkansas, Illinois, Indiana, Iowa, Kansas, Michigan, Minnesota, Missouri, Nebraska, and Wisconsin.
What We Are Working On:
From our Washington, DC office, we are servicing:
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Reuse of the 1920s St. Dennis Apartment Building in Washington, DC’s Mount Pleasant neighborhood for 50 units of affordable housing;
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Rehabilitation of a dozen vacant residences in the East End Historic District in Newburgh, New York as scattered site affordable housing.
Our Boston office is providing historic tax credit and National Register consulting services for:
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Conversion of the Yale & Towne Industrial Complex in Stamford, Connecticut, once the world’s largest manufacturer of locks, for housing. The rehabilitated complex will be part of Harbor Point, an 80-acre mixed-use waterfront development being undertaken by Antares Investment Partners;
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Utilizing state and federal historic tax credits for rehabilitation of the White Elephant Hotel Residences in Nantucket, Massachusetts being undertaken by New England Development.
In Chicago, we are consulting on:
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Rehabilitation of the 1912 Eitel Hospital in Minneapolis, Minnesota by Village Green Companies for market-rate apartments, along with new construction employing "Green" materials and processes in design, landscaping, and operations;
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Developing a signage program for Chicago’s landmark Fisher Building, an 1895 office building that was converted to residential use with ground-floor retail.
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