Advocacy Alert: Urge Your Members of Congress to Cosponsor the Historic Tax Credit Growth and Opportunity Act
Senate and House champions have reintroduced the Historic Tax Credit Growth and Opportunity Act (H.R. 1785, S.639). Led by Sen. Ben Cardin (D-MD) and Sen. Bill Cassidy (R-LA) in the Senate and Rep. Darin LaHood (R-IL) and Rep. Earl Blumenauer (D-OR) in the House, these bills include four permanent provisions that will add value to the Historic Tax Credit (HTC), improve access to the credit, make more projects eligible to use the credit, and increase investment in smaller rehabilitation projects. The House version of the bill also includes a temporary provision to address recent challenges facing historic rehabilitation projects. The bill including the following changes:
- Establishes a permanent 30% Historic Tax Credit for projects $2.5 million and less, making it easier to complete small projects
- Eliminates the HTC Basis Adjustment, bringing more value to HTCs and making it easier to pair with the Low-Income Housing Tax Credit
- Reduces the substantial rehabilitation threshold, making more buildings eligible to use the HTC
- Makes the credit easier to use by non-profits
- This provision increases the HTC percentage from 20% to 30% for 2023 through 2026.
- The credit percentage is phased down to 26% in 2027, 23% in 2028, and returns to 20% in 2029 and thereafter.
The federal HTC is the largest federal investment in historic preservation and a critical economic development tool used to revitalize our communities. Unfortunately, the value of the HTC incentive has diminished over the past decade because of IRS rulings, administrative burdens, changes in the credit structure, as well as spreading the distribution of the credit over five years as modified by the Tax Cuts and Jobs Act of 2017. As a result, the HTC has lost 20 – 25% of its investment value as interest rates continue to climb and materials and labor costs soar. National Park Service statistics indicate that HTC applications are down 20% compared to pre-pandemic levels (2019), and the number of projects continues to decline even as the economy is rebounding. Historic buildings have simply become more difficult to rehabilitate.