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Tax Teams Series: House Ways and Means Committee Tax Teams Provide an Opportunity to Gain Support for the Historic Tax Credit

Published by Peter Lawrence on Wednesday, June 12, 2024 - 2:06PM

The House Ways and Means Committee tax teams, announced April 24,  could present an important opportunity for community development stakeholders in the coming months. The teams, comprised of Republican members of the Ways and Means Committee, will study key tax provisions from the Tax Cuts and Jobs Act (TCJA), which are set to expire in 2025. The Community Development Tax Team held briefings on May 29 and June 5, during which housing and community development experts spoke on the importance of various housing and community development tax incentives, including the HTC.   

This post is the first in a series examining the importance of the various housing and community development tax incentives, highlights the federal historic tax credit (HTC) and how advocates can use the creation of the tax teams to draw attention to the need to strengthen and enhance the HTC.

Additional posts will follow looking at the low-income housing tax credit (LIHTC), the new markets tax credit (NMTC), the opportunity zone incentive, the neighborhood homes tax credit, the workforce housing tax credit, as well as one examining how all the above-mentioned incentives have been or could be used to benefit rural areas.  

What are the Goals of the Ways and Means Committee Tax Teams?

Each team is assigned a specific area of tax policy to review. The Community Development and Rural Tax teams will be of particular interest to housing and community development stakeholders. The teams will cover the following tax policy areas (* denotes vice chair):

Blog Graphic: Ways and Means Committee Tax Teams

How did the TCJA Change the HTC? 

The HTC is a tax incentive that helps finance the rehabilitation of historic buildings. This tax credit provides a 20% federal tax credit to historic property owners with qualified rehabilitation expenditures (QREs). Under the TCJA, Congress changed the credit claiming period to require the HTC to be claimed “ratably” over the five-year period beginning the taxable year the building is placed in service instead of being able to claim the HTC the year the property was placed in service as was the case prior to the TCJA. The TCJA also repealed the 10% tax credit to non-historic property QREs paid or incurred after Dec. 31, 2017. To qualify for the 20% credit, a building must be a certified historic structure. These buildings are individually listed on the National Register of Historic Places or listed by the Secretary of Interior as a contributing building in a National Register or state or local historic district.

What Kind of Impact Do HTCs Have on Communities Across the Country? 

Spending on HTC-financed properties set a record in fiscal year (FY) 2023, besting the previous record set in FY 2022. The National Park Service (NPS), the federal agency that oversees the HTC, reported that $8.81 billion of rehabilitation costs for historic preservation and community revitalization were financed by the HTC in FY 2023, which surpassed the record of $7.16 billion in FY 2021. NPS also reported that the median qualified rehabilitation expenditures (QRE) for Part 3-approved properties were $1.2 million. 

How Can Novogradac’s Recently Updated HTC Mapping Tool Help Community Development Stakeholders Advocate for the HTC? 

Novogradac’s Historic Tax Credits Mapping Tool, which was recently updated with 2023 Part 3 data provided by the NPS, shows the HTC investments made from 2001 to December 2023 across all 50 states. The searchable map displays the congressional district boundaries for the 118th Congress and its members as of March 2024. Tracking the HTC projects located in each district helps highlight which districts are not using the HTC incentives and could help encourage preservation and revitalization in these communities. 

Novogradac’s HTC mapping tool allows users to enter an address in the search field to locate a specific location or zoom in and click to select by state or congressional district. By clicking ‘Historic Tax Credit Projects,’ points will appear where an HTC project exists. Clicking on the project will show the total project cost, Washington Area Service Office (WASO) number, date of Part 3 approval, address and property description when clicked. Map images and an Excel file of all projects in a specific area can be downloaded. The tool also allows users to add layers such as 2024 LIHTC difficult development areas, 2024 qualified census tracts and NMTC eligible Census tracts.

How does the Formation of the Tax Teams Provide an Opportunity to Highlight HTCs?

Since 1977, the HTC has been responsible for billions in rehabilitation investment, hundreds of thousands of new and rehabilitated homes and the direct and indirect creation of millions of jobs. 

Blog Graphic: Historic Tax Credits 1977-2023

One of the intended uses of the mapping tool is supporting advocacy efforts. HTC stakeholders can show how HTCs are being used across the county when trying to garner support for the incentive. Seeing how HTCs have aided in the preservation of properties in their communities might entice congressional members to co-sponsor legislation to enhance and strengthen the HTC, like the Historic Tax Credit Growth and Opportunity Act (HTC-GO) of 2023 (H.R.1785). This bill, introduced March 24, 2023, by Rep. Darin LaHood, R-Illinois-16th  , would increase the rehabilitation tax credit and provide the first modernization changes to the credit since 1986 if enacted. 

Blog Graphic: Historic Tax Credit Growth and Opportunity Act (HTC-GO)

As of June 7, there are 64 cosponsors to H.R. 1785 and 14 cosponsors of the companion bill in the Senate, S. 639.  

Blog Graphic: HTC-Go Sponsorship as of June 11, 2024

LaHood was named to the Community Development Tax Team, which will be chaired by Rep. Mike Kelly, R-Pennsylvania-16th, and comprised of Vice Chair Rep. Claudia Tenney, R- New York-24th, Rep. Blake Moore, R-Utah-1st, and Rep. Mike Carey, R-Ohio-15th. Kelly, Carey and Tenney, all members of the Community Development Tax Team, are cosponsors of HTC-GO, H.R. 1785. Looking at the Community Development Tax Team members, the mapping tool shows the projects located in each of their districts. A sample project is presented below in each members’ district. Additionally, maps and tables of the HTC properties in each members’ district are available. 

Blog Graphic: Rep. Mike Kelly (PA-16): 29 Properties

HTC properties in Pennsylvania’s 16th congressional district

Blog Graphic: Rep. Claudia Tenney (NY-24): 58 Properties

HTC properties in New York’s 24th congressional district

Blog Graphic: Rep. Darin LaHood (IL-16): 7 Properties

HTC properties in Illinois’ 16th congressional district

Blog Graphic: Rep. Blake Moore (UT-1): 73 Properties

HTC properties in Utah’s 1st congressional district

Blog Graphic: Rep. Mike Carey (OH-15): 41 Properties

HTC properties in Ohio’s 15th congressional district

What’s Next for HTCs?

During the second half of 2024, tax professionals and community development stakeholders will be paying special attention to congressional action around tax legislation. As noted above, HTC-GO is the marquee HTC legislation. It should be noted, Rep. Earl Blumenauer, D-Oregon-3rd, and Sen. Ben Cardin, D-Maryland, both key sponsors of HTC-GO, plan to retire in January 2025. The loss of these congressional members means new sponsors will have to take their place when the legislation is reintroduced during the next legislative session. 

The public has been invited to submit comments to the 10 tax teams; comments will be accepted through Oct. 15. Senate Finance Committee Republicans have also launched working groups as part of their preparation for the “2025 tax cliff.” The working groups are expected to include one on community development and economic opportunity that will focus on similar issues as the Ways and Means Community Development Tax Team. Novogradac professionals will continue to monitor congressional efforts to prepare for next year’s tax discussions. 

More data on HTCs are expected to be released this fall, when NPS traditionally releases its annual HTC reports. Those wanting to take a deeper look at HTCs should save the date for the Novogradac 2024 Historic Tax Credit Conference, taking place Oct. 10-11 in Kansas City. 

This is the first installment in a blog series focused on identifying how the Committee Tax Teams might affect community development. Stay tuned for the next installment, which will focus on the NMTC. 

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