State Historic Tax Credit Investment
Federal Historic Tax Credit Program
The Federal Historic Tax Credit (HTC), initially enacted in 1978 and made permanent in the tax code in 1986, encourages private investment in the rehabilitation of historic buildings. A 20% income tax credit is available for the rehabilitation of historic, income-producing buildings that are determined by the Secretary of the Interior, through the National Park Service, to be “certified historic structures.” The amount of credit available under this program equals 20% of the qualifying expenses of the rehabilitation. It is administered jointly by the Department of the Interior and the Department of the Treasury. The credit attracts private capital to revitalize often abandoned and underperforming properties and generates new economic activity in communities nationwide.
State Historic Tax Credit Programs
Most state tax credit programs mirror the national program, but vary in different percentages. A building owner generates credits by completing a certified rehabilitation on a qualified rehabilitation building. Thirty-four states across the country have enacted individual state Historic Tax Credit programs that work in tandem with the federal program.
As a 501c3 non-profit organization, it is within PAM’s mission to serve as a state historic credit (HTC) investor within any state that has income-producing HTC. As a state HTC investor, PAM helps to ensure that character-defining features and spaces of buildings are retained and helps revitalize surrounding neighborhoods. In the past 7 years, PAM has partnered on state HTC projects in Minnesota, Wisconsin, Iowa and Texas.
Economics of State Historic Tax Credits
As an economic activity, historic rehabilitation greatly outperforms new construction in job creation. Rehabilitation project costs are on average 60 percent labor and 40 percent materials compared to new construction, which is about 40 percent labor and 60 percent materials. In addition to hiring local labor, historic rehabilitation materials are more likely to be purchased locally. As a result, approximately 75 percent of the economic benefits of these projects remain in the communities where these buildings are located.
The HTC is market driven. It attracts private capital to projects that have a financing gap between what a bank will lend and the total development cost of the transaction. A combination of state and federal HTC creates a greater financial incentive to rehabilitate historic buildings. The result of using PAM’s State HTC Investment Program is vibrant, modernized buildings that generate income, sales and property tax, and new enthusiasm in their communities by adding community value through public education and placemaking.
PAM’s State HTC Program
For each project, PAM works to ensure the following:
- more funds are spent on the rehabilitation of historic resources through a tax-advantage structure;
- value is added to each project with public education events and services; and
- funds earned through partnership are introduced into PAM’s programming such as Policy & Advocacy, Education and Main Street.
Why work with PAM?
PAM works in partnerships with industry leaders in development, finance, construction and legal fields to provide exceptional service that is cost-effective, fast and reliable. In the past 7 years, PAM has partnered on projects in Iowa, Minnesota, Wisconsin, and Texas. As a non-profit organization, PAM is focused on the belief that heritage, culture and small businesses are the foundation for community pride and prosperity.
For more information contact
Britta Anderson, Real Estate Manager