Historic Tax Credits News Briefs - March 2011

Tuesday, March 1, 2011

The National Development Council's Corporate Equity Fund (CEF) provided low-income housing and historic tax credit (HTC) equity to the Franklin Building in downtown Watertown, N.Y. Constructed as an early 20th century arcade, the building later housed a millinery shop and a YWCA before deteriorating in the 1990s. The once-condemned structure now includes 13,000 square feet of commercial space and 16 affordable studio, one- and two-bedroom apartments. Developer partners Watertown Local Development Corporation and Neighbors of Watertown left the original woodwork, detailing, and interior promenade's tin ceiling intact to bring character to the residential units.

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President Barack Obama appointed three new members to the Advisory Council on Historic Preservation (ACHP), an independent federal agency that promotes the preservation and use of historic resources and advises the president and Congress on historic preservation policy. The new appointees are Michael B. Coleman, mayor of Columbus, Ohio; Horace Henry Foxall Jr., retired manager of the Army Corps of Engineers Center of Expertise for Preservation of Historic Structures and Buildings; and Bradford J. White, development consultant at Brad White & Associates. As mayor, Coleman led the restoration of downtown Columbus' historic Lincoln Theatre and the Lazarus department store building. For 30 years, Foxall assisted the Army Corps of Engineers and other federal agencies with developing historic preservation projects and programs. He also advised staff in the execution of historic building preservation. White provides development consulting on affordable housing and historic resources, serves on the Illinois Housing Council board and is the former chairman of the Landmarks Preservation Council of Illinois and Preservation Action.

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Law firm Manatt Phelps & Phillips reported that the Health Resources and Services Administration (HRSA) issued guidance for health centers that are interested in designing capital financing transactions that involve federal incentive programs, such as historic and new markets tax credits. The guidance clarifies how much HTC or new markets tax credit project financing community health centers may use to supplement their HRSA capital grant awards, and clarifies that HRSA grants can be used to repay bridge financing obtained in conjunction with an HTC or NMTC structure. Community health centers have received nearly $1.4 billion in grants under the facility investment capital improvement programs, but to extent to which the funds could be used in combination with the federal tax credit programs was unclear until HRSA, a division of the U.S. Department of Health and Human Service, issued the recent guidance. Grantees will still need written approval from HRSA prior to using grant proceeds with HTC or NMTC financing. More discussion on the guidance is available at www.manatt.com.

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The Honolulu City Council introduced a bill to repeal the state's property tax exemption for historic residences and replace it with an historic preservation income tax credit. If enacted, S.B. 1100 would create a credit against state income tax worth 25 percent of a project's rehabilitation expenditures. Projects that include affordable rental or homeownership units would receive a 30 percent tax credit. A program cap has not yet been proposed.

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Supporters of Missouri's HTC program have begun to consolidate in response to discussions to eliminate or cut the program's funding. The Alliance for Investment, Jobs & Preservation held its inaugural meeting to organize efforts to speak on the program's behalf, The Kansas City Star reported. The group's members include architects, preservation advocates, historians and developers who will attempt to show how the credit has created jobs and spurred community investment across the state. Missouri's HTC, responsible for much of the recent development in downtown Kansas City, was established in 1998 and is worth 25 percent of eligible rehabilitation costs. In November, the Tax Credit Review Commission recommended a $75 million annual cap on the program.

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