Written by Pat Lally
When Emily Post penned her first etiquette book in 1922, she offered a guide to appropriate anniversary gifts by year. This year we’re celebrating the National Trust Community Investment Corporation’s (NTCIC) decade-long effort to reinvest in America’s historic neighborhoods and my work in Congress has been taken to a whole new level as a result. Since NTCIC was established in 2000 as a for-profit subsidiary of the National Trust, it has brought more than $330 million to the rehabilitation of over 60 commercial buildings nationwide by partnering with developers of historic buildings to invest equity in a rehabilitation project so that it may be receive federal tax credits. Basically, NTCIC’s leg up “makes the numbers work” for many worthy historic rehabilitation projects that otherwise would not go forward.
These historic rehabilitation projects are the keystones to our country’s heritage – once abandoned structures that used to be lively theaters, bustling department stores, and productive mills -- transformed through NTCIC into 21st Century icons of economic development and job creation by saving our past.
Tin, by the way, is Mrs. Post’s suggestion for a 10th anniversary gift. I think it’s appropriate that we should mark NTCIC’s ten years with an historic building material used to roof countless numbers of historic buildings throughout the county. I will send up a tin of cookies this afternoon.
But why is NTCIC’s work so important to the National Trust’s legislative agenda in Congress?
Well, let’s just say that I can go to the Hill and lobby for important historic preservation programs and initiatives all day, but without the practical information, expertise, and industry support that a practitioner such as NTCIC provides, my effectiveness is limited. Congress moves bills where there are two critical ingredients: 1) information that warrants a federal response to a compelling national need; and 2) vocal advocacy from constituents, business leaders, and industry representatives. NTCIC provides so much of our public policy efforts with the user-based on-the-ground knowledge and industry advocacy we need to be successful. Its focus is on projects that have a high economic impact on the surrounding community and its daily collaboration with tax credit financiers, property owners, developers, nonprofit organizations, and local governments bring an enormously important level of influence to the preservation debate at the national level.
Let me put this value into perspective as it related to a top-tier legislative item for the National Trust, federal and state historic tax credits. NTCIC is the historic tax credit INDUSTRY’S leading advocate for improving and expanding the use of federal and state historic tax credits. I highlight “industry” because – while the National Trust has been enormously successful in attracting support from the mainstream preservation community represented by groups like our statewide and local preservation partners – it had been difficult to cultivate the necessary industry group around historic tax credit legislation. That is until NTCIC stepped in with the tax credit contacts, experts, and users to make a difference. In fact, NTCIC took a fledgling group of tax credit developers we put together around our Community Restoration and Revitalization Act and helped establish the Historic Tax Credit Coalition (HTCC), an expanded group of developers, investors, syndicators, tax accountants, preservation consultants, and lawyers dedicated to amending the federal historic tax credit program.
How did this make a difference? Well, in July 2008, as part of our larger legislative work on the CRRA, Congress made the first beneficial changes to the historic tax credit since it was enacted in 1982 and the National Trust could not have accomplished this without NTCIC and the coalition. One of those changes was allowing the use of the historic tax credit to offset the Alternative Minimum Tax (AMT) and providing a way to address the needs of small urban and rural deals more efficiently. Making smaller historic rehabilitation projects feasible is one of the main goals of the Community Restoration and Revitalization Act, but AMT offsets? Is this important?
You bet it is. In 2010 for example, the City of Wyandotte, Michigan was able to renovate the 1911 Masonic Temple building into the Wyandotte Community Arts Center and arts incubator. $180,525 in historic tax credits was key to the project’s success and even though this may seem like a small amount, a few hundred thousand dollars can be crucial for small projects like this. Dudley Ventures had an investor that could utilize the tax credits. Great, but that investor could not do so unless there was an AMT offset. That’s what ultimately made this small yet important transaction feasible and I hope that more small projects like this will come to fruition through the historic tax credit amendments we’re lobbying for.
The benefits of the National Trust’s partnership with NTCIC as I described above are not just limited to legislative advocacy. An invaluable role it plays, along with its leadership of the coalition, is to provide the information we need to make our case on the Hill. As many of you know, Congress has been focused on creating jobs and some of the only bills it has considered since the recession pertain to employment and economic recovery. While we all know that historic preservation translates into revitalization and jobs, the National Trust lacked much of the comprehensive data needed to garner House and Senate support for including our tax credit proposals in any pertinent bills. Once again, we looked to our for-profit subsidiary.
Earlier this year, NTCIC partnered with the coalition and Rutgers University’s Center for Urban Policy to produce an annual report on the national economic impact of the federal rehabilitation tax credit program. The first report and a summary of its findings are available for download. Did you know that the historic tax credit has created approximately 1.8 million new jobs or about 58,000 jobs annually? These jobs are concentrated in the construction, manufacturing, service and retail sectors. Jobs generated by historic rehabilitation require higher skill levels and pay better wages than new construction. About 75 percent of the credit’s economic effects are retained in the localities and states where the projects are located. Historic tax credit have leveraged over $85 billion in private investment since the program began, with over $3.6 billion invested in 2008 alone. This translates into a 5 to 1 return for taxpayers. For every federal dollar spent five-dollars is raised by the private sector.
Now THIS gets lawmakers’ attention when unemployment continues to hover at around ten percent. And these data speak not only for the success of tax credits; they affirm the value of historic preservation as an economic development tool for the nation.
As we move into election season and the “lame duck” session Congress has scheduled for mid-November, I am not sure what will ultimately be the outcome of our legislative efforts on the Hill. What I do know is that the House is poised to act on a jobs and energy bill and if it does our energy efficiency supplement to the historic tax credit is likely to be included. Congress also may extend the deadline for a variety of expiring tax provisions and one of these is an increase in the historic tax credit for the hurricane-damaged areas of the Gulf Region. It may also work on credits such as the New Markets Tax Credit that dovetail with historic credits in making reinvestment in historic communities work. I hope for success in these areas, but even if Congress fails to act, the progress we’ve made in “moving the needle” to this point is responsible in part to NTCIC.
And all I can say to that is “Happy anniversary…we’re glad to have you around!”
Pat Lally is the congressional affairs director for the National Trust for Historic Preservation. Stay tuned for a behind-the-scenes look at how preservation policy is made through his weekly posts from the Hill.