The Demand for Historic Tax Credits (HTC) and the Intricacies of HTC Projects

November 8, 2023

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Increase Demand for Historic Tax Credits

Since 1977, the HTC Program has provided a sought-after tax incentive for those in the real estate development industry. While demand for historic tax credits (HTC) has fluctuated through the years, preliminary certifications for rehabilitation (Part 2 Approval) have steadily increased in the long term. According to the National Park Service (NPS) report on tax incentives, the number of Part 2 Application Approvals increased by 23%: 1,045 in 2007 to 1,282 in 2020. Contributing to such an increase, unforeseen economic downturns (i.e., COVID-19) encourage Developers, Contractors, and Architects to diversify their project portfolio and/or seek the capital benefit of historic tax credits. Going through the approval process may seem daunting, but, with a construction consulting company such as Moran Consultants on your side, we can help manage specific construction-related requirements of the HTC Program.

Figure 1 Federal Tax Incentive for Rehabilitating Historic Building, retrieved from NPS.

The Potential Risk to Your Project During the HTC Application Process

With the DOI’s (Department of the Interior, NPS) nuanced standards for rehabilitation, and the inherent challenges with any construction project, communication gaps can often arise regarding the specific NPS construction requirements. Moreover, once the Part 2 Application is approved and work begins, the ongoing compliance to these construction standards is not typically reevaluated until the completion of the project and the preparation of Part 3. In the event a scope item is deemed (by the NPS) to “not meet the standard,” the potential cost and time impacts may significantly affect the successful completion of the project and investment risk of involved financial parties.

How Moran Consultants Can Help

Moran Consultants has conducted upfront due diligence reviews and/or construction loan monitoring of 100+ HTC projects across the nation. We review the NPS scope items during pre-construction and throughout construction itself, reporting on adherence of the work to the Department of the Interior’s Standards for Rehabilitation. Additionally, we are actively working alongside many of the nation’s prominent Historic Preservation Consultants, such as Heritage Consulting Group, to ensure timely resolution of any scope-related issues as soon as they arise. If you need help managing risk on your next HTC project, give us a call at 866-545-3350 or contact us online to learn how Moran Consultants can help.

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Headshot of John Moran