Are you hearing these common historic tax credit myths?
- “Small projects don’t generate enough HTC equity to make the effort worthwhile.”
- “Nonprofit-owned properties, like community and religious facilities, can’t use HTCs.”
- “HTCs severely limit how property owners can modify their buildings.”
- “The HTC application process is complicated and takes too long.”
Let’s debunk a few of these. For more than 40 years, Heritage Consulting Group has worked on historic tax credit projects of all sizes and types across the country. We understand the complexities and regulations of state and federal HTC programs and how to efficiently manage them within the constraints of small-scale development.
Myth #1
With escalating construction costs and higher interest rates, maximizing access to financial incentives is critical for most real estate development, including historic rehabilitation projects. Combined, federal and state historic tax credits can offset roughly 40% to 60% of qualified project costs.
An estimated 20,000 small-scale projects with total project costs of less than $1 million have been completed using federal historic tax credits since 1976, according to the National Park Service.
One outstanding smaller scale project involves Piggush Engineering’s rehabilitation in Kankakee, Illinois, of the 1907 Kankakee Title Building, a contributing property within the Kankakee Downtown Historic District. This historic rehabilitation had a total project cost of $2.4 million, with $2.2 million in Qualified Rehabilitation Expenditures including updates to building systems. Heritage Consulting Group helped the developer secure $440,000 in federal historic tax credits to offset the cost of this rehabilitation.
Myth #2
While HTCs are a natural fit for income-producing buildings in downtown districts and commercial corridors, many state historic tax credit programs also offer a clear path to HTC utilization for nonprofit-owned buildings. Heritage has supported the HTC rehabilitation of religious buildings and other nonprofit facilities in multiple states.
Myth #3
This can be true. The property owners best positioned to access federal and state HTC equity are those who appreciate the cultural, social and environmental value of historic preservation. However, at the heart of the HTC program are reasonable rehabilitation standards that support both practical adaptive reuse as well as the retention of defining historic features. Historic rehabilitation is not the same as historic restoration. Heritage is skilled at navigating the line between an owner’s vision and HTC requirements.
Myth #4
While nuanced, the HTC process is generally straightforward. Heritage Consulting Group has developed streamlined HTC services tailored for small projects that make HTCs accessible. We can quickly assess if a project would benefit from HTCs and navigate the application process on the owner’s behalf. We can also connect our clients with other professionals to support their rehabilitation projects.
Considering Historic Tax Credits for your Main Street property? Contact Heritage Consulting Group to discuss your project: 215-248-1260 or info@heritage-consulting.com.
