Bill Would Increase Number of Restoration Projects and Reward Energy-Efficient Improvements

Published by Michael Novogradac on Thursday, February 9, 2012 - 12:00am

On Monday, February 6, Sen. Ben Cardin introduced bipartisan legislation that would create jobs through the restoration of historic buildings. S. 2074, the Creating Prosperity through Preservation (CAPP) Act of 2012, is cosponsored by Sen. Olympia Snowe. The bill has been referred to the Senate Finance Committee, of which Cardin is a member.

S. 2074 is the companion legislation to the bipartisan H.R. 2479, the Creating American Prosperity through Preservation Act of 2011. H.R. 2479 was introduced in the House of Representatives in July by Reps. Aaron Schock and Earl Blumenauer.

Key Provisions

The CAPP Act would make five meaningful changes to the federal HTC. (Some of these changes have been proposed in earlier bills that were sometimes referred to as modernization legislation.)

First, the bill would help smaller projects by boosting the 20 percent credit to 30 percent for deals of less than $5 million in qualified rehabilitation expenditures. The increase in the credit amount will  make the rehabilitation of many small buildings and buildings in rural areas financially feasible.

Second, the bill would provide a 2 percent credit boost for achieving energy use savings at least 30 percent greater than established industry standards for similar buildings. This change would promote energy-efficiency and operating cost-savings by encouraging developers to use energy-efficient technology.

Third, the bill would eliminate the federal taxation of the proceeds of a state HTC transaction for both state credit certificate sales and credits allocated through partnerships. This provision addresses concerns raised by the 4th Circuit decision in the case Virginia Historic Tax Credit Fund v. Commissioner of Internal Revenue. This provision would support the 30 states that have state historic tax credits.

Fourth, the CAPP Act would also expand the number of properties that qualify for the credit by indexing the eligibility date from pre-1936 to 50 years and older. This change would expand the number of buildings that are eligible for rehabilitation.

And fifth, the bill would help target the historic credit’s impact to low-income communities by opening the door to not-for-profit project sponsors and building tenants. This change would create projects with high community benefit, while also stimulating on-going job and economic growth in low-income, underserved areas. This change would also lower transaction structuring costs, making the credit more efficient.

Support for the CAPP Act

The bipartisan introduction of the CAPP Act is an encouraging start for the bill, as is the understanding on behalf of its sponsors that the legislation, if enacted, would contribute to the economy’s recovery.

“I am extremely proud of this bill because it will help ensure that historic properties are restored and made useful once again, while creating jobs that will stimulate greater economic activity,” Cardin said. “The Historic Tax Credit has created some 2 million jobs nationwide since 1978 and by expanding the program to include energy-efficient improvements and additional restoration projects, we can create thousands of new jobs in renovating historic properties.”

Since its creation, the HTC has leveraged more than $90 billion of private-sector investment ($5 of private investment for every $1 of HTC) to preserve and rehabilitate more than 37,000 historic properties, including the creation of over 185,000 housing units, of which more than 75,000 are low and moderate-income units.

“The federal historic tax credit has proven to be a cost-effective creator of jobs and economic activity for more than thirty years,” said Tom Cassidy, vice president of government relations and policy at the National Trust for Historic Preservation. “The CAPP Act will ensure that, in the future, more “Main Street” communities can benefit from its revitalization effects, and nonprofit organizations can more easily access the credit to bring jobs and services to disinvested areas.”

What You Can Do

The initial efforts of the Historic Tax Credit Coalition to support this bill were enhanced with the announcement last year that the National Trust for Historic Preservation would mount a major public education campaign to save the historic tax credit. The Trust is working to create a broad based coalition to build awareness of the value of the federal HTC in both Congress and the executive branch.

In December the Trust launched a web page where it has posted informational resources for supporters of the historic tax credit. Those resources include research and talking points to help the preservation community advocate for the historic tax credit and the CAPP Act. And just last week, the Trust posted a pledge for the preservation community to sign on in support of the historic tax credit.