1. Historic Preservation Tax Credits
Under the provisions of the Tax Reform Act of 1986, a 20% tax credit is available for the substantial rehabilitation of commercial, agricultural, industrial, or rental residential buildings that are certified as historic. The credit may be subtracted directly from federal income taxes owed by the owner.
Federal tax incentives are available to stimulate private investment in the rehabilitation of historic structures. The Tax Reform Act of 1986 establishes:
- a 20% tax credit for the substantial, certified rehabilitation of certified historic structures for commercial, industrial and rental residential purposes, and a 10% tax credit for the substantial rehabilitation for nonresidential purposes of buildings built before 1936; and
a straight-line depreciation period of 27.5 years for residential property and 39 years for nonresidential property for the depreciable basis of the rehabilitated building reduced by the amount of the tax credit. - A certified historic structure is any building that is listed individually in the National Register of Historic Places, or located in a registered historic distinct and certified as being of historic significance to the district.
- A registered historic district is any district that is listed in the National Register of Historic Places, or designated under a local ordinance under Michigan Public Act 169 of 1970, as amended, which has been certified by the National Park Service as substantially meeting all the requirements for listing of districts in the National Register. Simply being listed in a locally designated historic district is not sufficient to gain access to the Federal tax credits.
- A certified rehabilitation is any rehabilitation of a certified historic structure that is certified as being consistent with the historic character of the property and, where applicable, the district in which it is located. The Secretary of the Interior’s Standards for Rehabilitation are used to determine whether the historical character of the building is preserved through the process of rehabilitation.
http://ohp.parks.ca.gov/?page_id=25007
http://www.michigan.gov/mshda/0,4641,7-141-54317_19320_62001-54165–,00.html
2. New Market Tax Credits
Established by Congress in 2000 this program is meant to help new or increase investments into operating businesses and real estate projects located in low-income communities. Investment in low income areas allows investors to receive a tax credit against their Federal income tax return in exchange for making equity investments in specialized financial institutions called Community Development Entities.
http://www.cdfifund.gov/what_we_do/programs_id.asp?programID=5 http://en.wikipedia.org/wiki/New_Markets_Tax_Credit_Program http://www.irs.gov/pub/irs-utl/atgnmtc.pdf http://nmtccoalition.org/3. Community Development Entities
The investment vehicle for the NMTC is a Community Development Entity (CDE). CDE may apply for credits through an annual competition conducted by the CDFI Fund1. CDEs successful in receiving an allocation must have a strong business plan, good management, proven track record of working with investors and proposed projects that will have a substantial impact in low-income communities.
Once an allocation has been awarded, a CDE must then seek private investment in exchange for the credit. The CDE has five years to place the credits, after which time the credits can be recaptured and transferred to another CDE. Corporate and individual taxpayers may receive a federal tax credit of 39 percent over seven years in return for their equity investment in a CDE. With the proceeds from these equity investments, CDEs must provide investments of equity, loans, lines of credit and technical assistance to qualified businesses. CDEs have one year to place the funds in qualified investments. In general, if substantially all of the proceeds from the credit are not placed in qualified investments, the CDE would be out of compliance. At that point, recapture penalties would be applied to the investor.
http://www.frbsf.org/publications/community/investments/0308/article1a.html http://www.novoco.com/new_markets/resource_files/forms/Comm_Dev_Entity_Certif_App.pdf http://www.21stcgfund.com/ http://www.chicagodevelopmentfund.org/success-stories.html4. Rehabilitation Tax Credits
Most local and state authorities have an entity that administers the federal Rehabilitation Investment Tax Credit (RITC) program in partnership with the National Park Service (NPS) and the Internal Revenue Service (IRS). The tax credit program is one of the most successful and cost-effective programs that encourage private investment in rehabilitating income producing, historic properties such as office buildings, rental housing, hotels, bed and breakfasts, and retail stores.
http://www.crt.state.la.us/hp/tax_incentives_program.aspx http://www.ginsbergjacobs.com/assets/08-12-new_historic_rehab_tax_credits.pdf http://www.irs.gov/pub/irs-mssp/rehab.pdf http://www.portal.state.pa.us/portal/server.pt/community/rehabilitation_investment_tax_credit_program/26465. Low Income Housing Tax Credits
Low Income Housing Tax Credit is a dollar-for-dollar tax credit in the United States for affordable housing investments. It was created under the Tax Reform Act of 1986 (TRA86) that gives incentives for the utilization of private equity in the development of affordable housing aimed at low-income Americans. LIHTC accounts for the majority – approximately 90 percent – of all affordable rental housing created in the United States today. The tax credits are more attractive than tax deductions as they provide a dollar-for-dollar reduction in a taxpayer’s federal income tax, whereas a tax deduction only provides a reduction in taxable income. The “passive loss rules” and similar tax changes made by TRA86 greatly reduced the value of tax credits and deductions to individual taxpayers. As a result, almost all investors in LIHTC projects are corporations.
http://en.wikipedia.org/wiki/Low-Income_Housing_Tax_Credit http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/affordablehousing/training/web/lihtc/basics/work http://www.youtube.com/watch?v=XxwpoLztx70 http://portal.hud.gov/hudportal/HUD?src=/program_offices/fair_housing_equal_opp/lihtcmou6. Community Development Block Grants
Community Development Block Grants are to be used for a wide range of housing and community development activities directed toward neighborhood revitalization, economic development and improved community facilities and services, and must give “maximum feasible priority” to activities that will benefit low-and moderate-income persons or aid in the prevention or elimination of slums or blight. Funds may also be used to meet other community development needs that present a serious and immediate threat to the health or welfare of the community.
http://www.us-government-grants.net/block-grants http://portal.hud.gov/hudportal/HUD?src=/program_offices/comm_planning/communitydevelopment/programs http://www.governing.com/gov-data/other/2012-HUD-Community-Development-Block-Grants-list-map.html http://www.loansafe.org/louisiana-studies-post-katrina-housing-in-pass-christian7. Mortgage Guarantee Programs (through HUD)
In 1934 the U.S. Federal Housing Administration (FHA) was created to provide mortgage insurance on loans made by FHA-approved lenders throughout the United States and its territories. It insures mortgages on single family and multifamily homes including manufactured homes and hospitals. It is the largest insurer of mortgages in the world. The nation’s trend toward housing assistance continued with the creation of the Veterans Administration (VA) home loan program in 1944 and Rural Housing Service (RHS) loans in 1994. The FHA was created for the purpose of providing a national insurance program against home default. The insurance was funded from the proceeds of a fixed premium charged on unpaid loan balances, and those revenues were used to buy Treasury securities as a way to cover future mortgage defaults. This insurance cuts the default risk lenders face when the only down payment buyers can afford to make is well under 20 percent. The programs are referred to by their names of Fannie Mae, Freddie Mac, Ginnie Mae as well as the VA guaranteed loans.
http://www.netplaces.com/mortgages/the-mortgage-business-mortgages-101/federal-loan-programs-and-how-they-work.htm http://hud.gov/offices/cfo/reports/2011/cjs/fha_fund_2011.pdf http://www.freddiemac.com/sell/expmkts/hudind.html http://www.businessweek.com/news/2012-03-27/fha-bailout-risk-looming-larger-after-guarantee-binge-mortgages8. Tax Increment Financing
Tax increment financing (TIF) is based upon the pledge of future real property (not personal) taxes generated by new development within that defined geographic area. The public improvements make development of the area possible, which in turn enhances the value of the property. The taxes generated as a result of the enhanced property values are used to fund the public improvements within the area and other incidental costs. Once the period of the TIF has completed the TIF funds go back into the general fund as taxes.
http://www.tedc.org/inc_taxincrement.php http://en.wikipedia.org/wiki/Tax_increment_financing http://dfw.cbslocal.com/2012/04/30/dallas-boosting-development-with-tax-increment-financing/ http://www.icsc.org/government/CDFA.pdf9. Building Code in relationship to Adaptive Reuse
Some municipalities have modified their codes and zoning regulations to encourage adaptive reuse projects.
“Adaptive reuse is becoming more and more popular, and it has a lot to do with re-energizing historic downtowns from coast to coast,” says Claire DeBriere, executive vice president and COO of the Ratkovich Co., a Los Angeles-based company that has worked on adaptive reuse projects. “A lot of cities are pursuing preservation and adaptive reuse projects aggressively. And they’ve been very thoughtful in how they can encourage development and rehabilitation of their cores into something that is new, different and engaging.”
http://nreionline.com/property/mixed_use/adaptive_reuse_022012/ http://historicbellingham.org/documents_reports_maps/adaptive_reuse.pdf http://www.structuremag.org/article.aspx?articleID=461 http://adaptivereusernoel.blogspot.com/2012/04/adaptive-reuseredevelopment-and.html10. Superfund and Brownfield Grants (EPA)
Superfund and Brownfield Grants are for properties that have been designated as either uncontrolled hazardous waste lands (Superfund) or are blighted and undesirable areas (Brownfields).
https://en.wikipedia.org/wiki/Superfund https://en.wikipedia.org/wiki/Brownfield_Regulation_and_Development http://www.epa.gov/earth1r6/6sf/brownfields/index.html http://www.epa.gov/region6/6sf/6sf.htm http://www.epa.gov/brownfields/ http://www.epa.gov/superfund/11. Pedestrian Oriented Development
Development designed with an emphasis primarily on the street sidewalk and on pedestrian access to the site and building, rather than on auto access and parking areas. The building is generally placed close to the street and the main entrance is oriented to the street sidewalk. There are generally windows or display cases along building facades which face the street. Typically, buildings cover a large portion of the site. Although parking areas may be provided, they are generally limited in size and they are not emphasized by the design of the site.
http://des.nh.gov/organization/divisions/water/wmb/repp/documents/ilupt_chpt_3.2.pdf http://bishopartsdistrict.weebly.com/index.html http://uc-ciee.org/downloads/CRECPODevaluation.pdf http://des.nh.gov/organization/divisions/water/wmb/repp/documents/ilupt_chpt_3.2.pdf http://www.cooltownstudios.com/2005/05/03/the-13-points-of-pedestrian-oriented-development/12. Transit Oriented Development
Transit-oriented development consists of transit neighborhoods that contain a mix of affordable and market rate housing. MITOD’s provide many benefits, such as reduced income segregation, stabilization of transit system ridership, workforce stabilization, and strengthens the socioeconomic makeup of the neighborhood. For these reasons, many jurisdictions are keenly interested in MITOD’s to achieve their goals of maximizing mass transit ridership, reducing traffic congestion, promoting economic development, growing their local tax bases, providing more housing options and lowering pollution and greenhouse gas emissions.
http://www.transit-oriented.com/ http://www.vtpi.org/tdm/tdm45.htm http://www.transitorienteddevelopment.org/ http://www.dallas-ecodev.org/redevelopment/tod/
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