Senate Bill Aims to Expand HTC
In 1976, Congress passed a bill that allowed the Internal Revenue Service to offer tax credits to people who invested in the rehabilitation of structures deemed "historic.
" Since then, the Historic Tax Credit program has been instrumental in the preservation of 37,000 buildings, and private investment has topped $58 billion.
It has prevented historic structures from falling into disrepair and helped rehabilitate some that had been neglected for years.
Because the program has been so successful a new Senate bill seeks its expansion.
The bill, which was introduced by Senator Ben Cardin (D-MD), would insert special provisions for "smaller projects" into the tax code that regulates the HTC program.
If passed, it would allow projects with rehabilitation costs of less than $7.
5 million to offer a 30 percent tax credit to private investors, rather than the current 20 percent.
And it allows for a maximum $1.
5 million tax credit offering per project.
The Historic Tax Credit program, in its current form, works well for large projects.
"Economies of scale" is as applicable to construction costs as anything else; the more material a builder or developer needs, the lower the per-unit-cost.
The higher costs often associated with smaller projects makes them unappealing to potential investors because the risk is greater.
Offering a higher tax credit for small rehabilitation projects could draw investors, compelling them to take a little more risk in exchange for a smaller tax bill at the end of the year.
In addition to the tax credit bump, a second provision would allow for a two percent increase in tax credits for projects deemed "energy efficient," in which the rehabilitation results in at least a 30 percent reduction in energy use.
This provision is especially appealing to affordable housing advocates, who continue seeking ways to make stable housing a reality for the nation's lowest-income citizens.
Often, when a historic structure is rehabilitated and made into affordable housing, the rental or purchase price is affordable but utilities are not.
Historic structures tend to be poorly insulated.
In addition, heating and cooling equipment is old and inefficient, as are electrical and plumbing systems.
By offering energy efficiency incentives, the Senate bill tackles an important, but often overlooked, obstacle to making historic buildings affordable.
Senate bill S.
2074 (titled the "Creating American Prosperity through Preservation Act of 2012) was introduced earlier this year referred to the Senate Finance Committee.
Because HTCs can be used for multi-family residential projects, including affordable housing developments, an expansion of the program could mean additional financing options for low-income housing projects.
" Since then, the Historic Tax Credit program has been instrumental in the preservation of 37,000 buildings, and private investment has topped $58 billion.
It has prevented historic structures from falling into disrepair and helped rehabilitate some that had been neglected for years.
Because the program has been so successful a new Senate bill seeks its expansion.
The bill, which was introduced by Senator Ben Cardin (D-MD), would insert special provisions for "smaller projects" into the tax code that regulates the HTC program.
If passed, it would allow projects with rehabilitation costs of less than $7.
5 million to offer a 30 percent tax credit to private investors, rather than the current 20 percent.
And it allows for a maximum $1.
5 million tax credit offering per project.
The Historic Tax Credit program, in its current form, works well for large projects.
"Economies of scale" is as applicable to construction costs as anything else; the more material a builder or developer needs, the lower the per-unit-cost.
The higher costs often associated with smaller projects makes them unappealing to potential investors because the risk is greater.
Offering a higher tax credit for small rehabilitation projects could draw investors, compelling them to take a little more risk in exchange for a smaller tax bill at the end of the year.
In addition to the tax credit bump, a second provision would allow for a two percent increase in tax credits for projects deemed "energy efficient," in which the rehabilitation results in at least a 30 percent reduction in energy use.
This provision is especially appealing to affordable housing advocates, who continue seeking ways to make stable housing a reality for the nation's lowest-income citizens.
Often, when a historic structure is rehabilitated and made into affordable housing, the rental or purchase price is affordable but utilities are not.
Historic structures tend to be poorly insulated.
In addition, heating and cooling equipment is old and inefficient, as are electrical and plumbing systems.
By offering energy efficiency incentives, the Senate bill tackles an important, but often overlooked, obstacle to making historic buildings affordable.
Senate bill S.
2074 (titled the "Creating American Prosperity through Preservation Act of 2012) was introduced earlier this year referred to the Senate Finance Committee.
Because HTCs can be used for multi-family residential projects, including affordable housing developments, an expansion of the program could mean additional financing options for low-income housing projects.
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