Historic Tax Credit

WHY ARE TAX CREDITS NOT MORE WIDELY USED IN CORPORATE AMERICA

BY ALEJANDRO SANTA CRUZ, CFA, VICE PRESIDENT OF INVESTMENTS Federal investment tax credits (ITCs) are government-endorsed, social-engineering tools designed to create a “partnership” between the government and the private sector, providing financial incentives to encourage corporations to deploy capital investments in areas that are considered important or strategic for the country. These areas include affordable housing, new market development, historic rehabilitation and renewable energy among many others. The government is simply not in the business of, or does not have the capacity to, properly assess the risk and evaluate these types of projects, so it turns to the private sector to lead the charge and recognize the opportunity presented the financial, social and environmental benefits of investment tax credits. All companies that are U.S. federal taxpayers should consider tax credit investing. Banks and insurance companies are the most common players to-date, and while corporations have become more active in recent years, tax investing overall remains underutilized. It is estimated that only a short list (less than 10%) of the qualified tax paying companies actively participate in the ~$20 billion annual tax credit market. This low participation rate has resulted in billions of “less than efficient” income tax payments to the U.S. government that could have otherwise generated value for companies, shareholders, and communities. Given the large number of mature, cash-flowing companies in the US seeking earnings enhancements, cash or tax management improvements and lower expense ratios, these are eye-opening statistics. So why are tax credits not more widely used by corporate America? While there may not be a clear-cut answer to this inquiry (or perhaps it is a combination of factors), here are some possible, common explanations: Too Good to be True – When companies first learn about tax credits, they think they are “too good to be true,” and…

Read More
2021 novogradac historic tax credit conference

THOUGHTS FROM THE 2021 NOVOGRADAC HISTORIC TAX CREDIT CONFERENCE

BY JOHN SOREL, AQUISITIONS   Last week I was pleased to attend the 2021 Novogradac Historic Tax Credit Conference in Chicago.  While I attended live and in person, the event was a hybrid show with virtual attendance which was due to the fact that neither business travel policies or pre-pandemic comfort levels have returned to “normal.”  While the live audience was perhaps a little smaller and the cocktail reception less well attended than in other years, the conference was a success in my view. This is particularly true given that it was one of the first in-person events to take place as we all begin to emerge from the COVID-19 required distancing protocols. I had the pleasure of participating on the “Building the Capital Stack” panel discussion which focused on the challenges of combining federal and state historic tax credits with other funding sources, particularly with the use of Opportunity Zone investment. We discussed that while it can be challenging layering multiple funding sources, the benefits generally outweigh the difficulties and much of the challenge is simply understanding the various programs and anticipating everyone’s pain points. Our panel was moderated by Novogradac’s George Barlow and I was joined on the stage by fellow panelists Irvin Henderson of Henderson Company, Shawn Whitney of law firm of Spencer Fane LLP and Melissa McCormack of Bank of America. As for the show at-large, there was Lots of discussion about the possibility of an increase in the federal credit amount from 20% to 30%. Unfortunately, we still have more questions than answers there. Although this conference was smaller than those in the past, Novogradac were terrific hosts, the Swiss Hotel did a wonderful job and I welcomed the opportunity to meet face to face with a number of important clients and counter-parties. It’s just…

Read More
Tax Credits Historic Rehabilitation

City Foundry STL Named as Winner of 2021 Novogradac Journal of Tax Credits Historic Rehabilitation Award

The former foundry has earned an award as a HTC Non-Residential Development that Best Exemplifies Major Community Impact This July, City Foundry STL was named the Historic Tax Credit (HTC) Non-Residential Development that Best Exemplifies Major Community Impact for the 2021 Novogradac Journal of Tax Credits Historic Rehabilitation Awards. City Foundry STL is one of the largest historic redevelopments in St. Louis, Missouri, history. The 300,000-square-foot office, retail and entertainment complex is anchored by a grocery store, a movie theater and a food hall featuring local chef-driven concepts. The development, designed by Lawrence Group and developed by New + Found, is on the site of the former Century Electric Foundry complex which was built in 1929 and operated as a working foundry until 2007. Prior to redevelopment, the nine-acre site was one of the largest brownfield sites in the St. Louis region.   Foss & Company is proud to have served as both federal and state HTC investor on this project. City Foundry is providing much needed reinvigoration into the Midtown area and will serve as a place in the heart of the city to gather, eat, work and play – a new place to build a community in St. Louis. We would like to thank Novogradac for recognizing this project as an example of excellence in historic preservation that will benefit those on St. Louis and beyond. City Foundry STL and other winners of the Historic Rehabilitation Awards will be honored at the Novogradac 2021 Historic Tax Credit Conference, October 7-8 in Chicago. For more information on City Foundry STL and the merchants moving to the complex, visit www.cityfoundrystl.com.

Read More
Novogradac’s Annual Historic Tax Credit Conference

Foss & Company Was A Proud Sponsor Of Novogradac’s Annual Historic Tax Credit Conference

  Foss & Company was a proud sponsor of Novogradac’s annual historic tax credit conference, which was held in Nashville, TN on September 26-28. During the conference, Foss & Company hosted an event for its partners and clients at the Listening Room Café, George Barry and Eric Brubaker attended a breakfast honoring Senator Cassidy’s support of the federal historic tax credit program, Foss team members participated on two panels………and managed to have some fun out and about on Broadway.  

Read More