Commercial Real Estate
5 tips for using the Historic Tax Credit program for public housing
Rehabbing older public housing structures can be expensive—but they may be eligible for HTC financing. These five tips can help developers and housing authorities move these projects forward.
Public housing may not be the first place that comes to mind when you think of a historic building. But if a public housing structure is at least 50 years old, you may be eligible to use Historic Tax Credit (HTC) equity to update it.
The HTC program is an option for financing Rental Assistance Demonstration (RAD) conversion projects. These projects can involve complex financing structures, multiple approvals and lots of time, so it’s important for developers and housing authorities alike to keep these five tips in mind.
1. Start now.
In many cities, public housing is decades old and needs updating. Given the complexity of these projects, time is of the essence. Begin talking to historic preservation consultants and housing authorities about your rehabilitation plans as soon as possible.
2. Build for the future.
Public housing should be built to last, regardless of ongoing funding. So you want to do more than update amenities. Consider future advancements, such as:
- Larger mail rooms for e-commerce deliveries
- Laundry machines that accept credit cards and mobile payments
- Wi-Fi access
3. Work with a bank that thinks outside the box.
Your banking team can do more than outline HTC certification for you; it can also help you determine the best financing options for your project. For example, if your project includes a daycare center, clinic or other community facility, it may qualify for New Markets Tax Credit equity. Likewise, you may be able to finance your project through Low Income Housing Tax Credit, agency lending, and bridge and permanent lending. Your banking team can also connect you with tax advisors, consultants and other experts.
4. Balance HTC requirements with energy efficiency.
It’s possible to improve your energy efficiency and preserve historic elements. HTC financing frequently requires that you preserve buildings’ facades, windows and interior entryways and lobbies. As a result, you can’t add updates such as energy-efficient windows or exterior cladding, which change a building’s exterior. You can, however, make updates that don’t affect historic elements, such as upgrading interior building systems and installing LED light bulbs and energy-efficient appliances.
5. Allow time to make accessibility updates.
A lot of public housing was built before the Americans with Disabilities Act (ADA) passed in 1990, and properties may need renovations to be ADA compliant. These renovations take precedence over HTC requirements. For example, if your project requires that you build accessibility ramps or add signs in Braille, you’ll need to make those updates, even though they alter the building’s historic character. Be sure to factor in time and money to make necessary changes.