Historic Tax Credit Activity Rebounds: FY 2013 Results Reflect Improving Economy

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Aided by the strengthening economy, federal historic rehabilitation tax credit project activity picked up sharply in the latest full federal fiscal year, suggest new reports from the National Park Service.

The annual report and accompanying statistical analysis provide data on federal historic tax credit program activity during FY 2013, which ended September 30, 2013.

Under the program, a federal tax credit can be claimed for 20% of the costs to rehabilitate buildings certified as historic by the National Park Service, provided the renovation work satisfies federal rehabilitation standards. The steps required to receive the tax credit include National Park Service approvals of a Part 1 application (certification of historic significance); Park 2 application (proposed rehab work); and Part 3 application (certification of the completed work).

Highlights of FY 2013 program activity:

  • Aggregate estimated investment (i.e. rehab expenditures) of $6.73 billion for proposed projects receiving Part 2 approval, the highest level in the program’s 36-year history;
  • A record number of housing units in approved proposed projects, of 25,121;
  • Continued strong job creation, with an average 78 new jobs created by certified projects (Part 3). These projects created an estimated 62,923 new jobs, nearly 9% more than the prior year; and,
  • Nearly 41% of certified projects also utilized state historic tax incentives.

Recovery from Recession

The aggregate estimated investment for approved proposed projects rose for the third straight year as historic tax credit project activity continued to recover in FY 2013 from the recent recession. At the bottom in FY 2010, aggregate estimated investment in approved projects plunged to $4 billion, capping a two-year decline of 65%.

The number of approved projects fell to 937 in FY 2011 but has increased since.

“Project activity has rebounded in the past two years,” says the statistical analysis, “with an encouraging 23% increase in the number of approved projects in FY 2012-2013 and an increase of 67% in investment dollars.”

In FY 2013, the National Park Service approved 1,155 proposed projects, a 13% increase from FY 2012. Part 2 approvals were received for projects in 48 states and the District of Columbia; North Dakota and Wyoming had none.

The average tax credit amount for approved projects rose for the third straight year. In FY 2013, approved projects expected to claim an average $1.16 million in tax credits.

In FY 2013, 803 completed projects were certified (Part 3 approvals), up 8% from FY 2012. These accounted for $3.39 billion in aggregate certified rehab expenses, 7% above the prior year.

 

Shift by Project Size

Compared to FY 2012, there was a bit of a shift in the breakdown of certified projects by size. While the category of the very largest projects ($1 million or more in rehab investment) accounted for 41% of all completed projects, this was down from 48.5% in FY 2012.

Meanwhile in the same period, projects with $100,000-$249,999 in rehab investment jumped from 16% to 23% of all projects. Among approved proposed projects, the largest projects declined to 44.5%, while those in the $100,000-$249,999 bracket rose to 16%.

The breakdown in the primary use of certified projects was almost the same in FY 2013 as in FY 2012, led by housing (46% of all projects) followed by office (21%), commercial (19.5%), and other (13.5%).

States with the great number of Part 2 approvals in FY 2013 were Virginia (128), Louisiana (119), Missouri (94), Ohio (78), and Massachusetts (72). The most Part 3 approvals were in Ohio (80), Virginia (74), Louisiana (73), Missouri (72), and New York (65).

(Report, analysis: http://www.nps.gov/history/tps)