Tax Credits
Strategic use of tax credit programs plays a vital role in revitalizing communities, preserving cultural heritage, and supporting economic growth. By aligning private capital with public priorities, these incentives help transform underutilized properties and underserved neighborhoods into vibrant, productive assets — bridging funding gaps, enhancing feasibility, and delivering value for both communities and investors.
At Palmer Westport, we bring together deep expertise in navigating tax credit programs and a practical understanding of how they can support meaningful development. By helping clients access, structure, and integrate tools such as Historic and New Markets Tax Credits, we ensure these resources are aligned with broader goals and implemented efficiently — serving as a powerful catalyst for transformation and helping create a long-lasting positive impact.
Historic Tax Credit (HTC)
Historic Tax Credits (HTCs) are one of the most effective and widely used financial tools for revitalizing America’s architectural heritage. Designed to encourage private investment in the rehabilitation of historic buildings, HTCs reduce the financial burden of restoration by offering significant tax incentives to property owners and developers.
What is an HTC?
- A federal income tax credit (20% of qualified rehabilitation costs) for the rehabilitation of certified historic buildings, typically listed on the National Register of Historic Places or contributing to a registered historic district.
- Many states also have their own historic tax credit programs (often adding 10-25%), which can be combined with the federal credit.
How does it help restore historic theaters?
- It directly reduces the amount of federal income tax owed by investors or developers, making rehabilitation financially attractive.
- Eligible expenses include restoring the historic facade, stage, auditorium, and other significant features. It does not include costs like new additions or landscaping.
- Investors often buy into these projects by purchasing the tax credits, providing upfront equity for the project.
Example for a theatre: If it costs $10 million to restore a historic theater, and $8 million of that qualifies, the 20% federal HTC could yield $1.6 million in tax credits, which can be sold to investors or used to offset tax liability.
Community Benefits of HTCs include:
Revitalizing Communities Through Adaptive Reuse
Local Economic Benefits
Skilled Labor and Lasting Job Creation
Catalyzing Future Investments
New Markets Tax Credits (NMTCs)
New Markets Tax Credits offer a powerful tool for encouraging private investment in underserved communities, helping bridge financing gaps for transformative projects. These credits can play a key role in supporting development that aligns with broader revitalization strategies — from community facilities to commercial and mixed-use spaces. By channeling capital where it is most needed, NMTCs contribute to sustainable growth and meaningful economic opportunity without prescribing any single development path.
- NMTCs provide a 39% tax credit over seven years for investments made in qualified low-income communities
- Qualified low-income communities are defined as census tracts where the poverty rate is at least 20% or where median family income is less than 80% of the area median
- NMTCs can be used for a variety of purposes, including real estate development, small business lending, and community facilities
- The demand for NMTCs often exceeds the supply, which is allocated by the Community Development Financial Institutions Fund through a competitive application process
- NMTCs have been used to finance a wide range of projects, from a grocery store in a food desert to a hotel in an underserved area
- NMTCs have been successful in attracting private capital to low-income communities and have been credited with creating jobs, increasing access to services, and revitalizing neighborhoods
