P
artner Insights spoke with Melissa McCormack, executive director of Historic Tax Credit at JPMorganChase, about how the firm helps developers tap federal Historic Tax Credit (HTC) equity to restore and repurpose historic buildings. McCormack brings a legacy of banking and preservation skills to every transaction.

    The HTC program allows for tax credits on income-producing properties that are at least 50 years old or deemed historically significant. Buildings can qualify based on architectural significance, association with historical events, or connection to notable individuals. The federal HTC is not a limited resource; it's available if a building qualifies as historic and the rehabilitation plan is approved by the National Park Service.

    The credit allocation is calculated based on qualified rehabilitation expenditures (QREs), which are typically 80% of hard and soft costs excluding acquisition costs. The amount of HTC available equals 20% of QREs, which can be allocated among partners or passed through to tenants.

    McCormack notes that the federal HTC program often complements state programs like New York's, which offers a $5 million credit per building. This combination can make a significant impact on affordable housing projects and strengthen operating budgets for smaller developments.

    In the current market, HTC typically accounts for 15% of the overall capital stack, excluding acquisition costs. The equity is paid over time through installments from investors upon project completion, approvals, and stabilized operations.

    Historic Tax Credit can be used in conjunction with other credits like New Markets Tax Credit (NMTC), Solar Investment Tax Credit, and Low-Income Housing Tax Credit (LIHTC). McCormack highlights the benefits of adaptive reuse, including reduced environmental impact, conservation of materials, and cultural preservation.

    The supply of historic buildings in New York that might qualify for HTC is diverse, with asset classes including multifamily residential, mixed-use retail, hotels, and light manufacturing. Successful projects include the Brooklyn Navy Yard's Building 127 conversion and the EJ Victory building redevelopment in Johnson City.

    Developers, building owners, and government officials interested in exploring HTC can contact McCormack at [email protected] for more information on how JPMorganChase can assist.