Sign Up For Novogradac Industry Alert Emails

Spending on HTC-Financed Properties Sets Record in FY 2023; New York Remains Leading State for Activity

Published by Michael Kressig on Thursday, March 7, 2024 - 7:40AM

Historic preservation rehabilitation costs for properties funded, in part, by federal historic tax credit (HTC) equity set a record in fiscal year (FY) 2023, fueled by the most new-construction housing financed by the incentive since 2016.

That data comes from the annual Federal Incentives for Rehabilitating Historic Buildings report issued by the National Park Service (NPS) last week.

The NPS reported $8.81 billion in rehabilitation costs for historic preservation and community revitalization financed by the federal HTC in FY 2023, which ended Sept. 30, 2023. That surpassed the record $7.16 billion reported for FY 2021 and was only the second time rehabilitation costs surpassed $7 billion. 

Blog Graphic: HTC Spending Set Record in FY 2023

The NPS report emphasizes the HTC’s success in leveraging private investment, pointing out that the incentive has leveraged more than $131 billion in private investment since 1976. The HTC will likely have its 50,000th certified project this year, as the total was 49,263 through the end of FY 2023, including 970 properties that received NPS Part 3 certifications of completed work in that year.

Blog Graphic: More than 12,000 New Housing Units Financed in 2023

FY 2023 was a significant year for new housing units funded by HTC equity, as 12,684 new units were financed by the incentive. That was the highest number of HTC-financed, new housing units since 2016, when more than 14,000 were built. The NPS also tracks rehabilitated housing units: An additional 6,162 existing housing units were rehabilitated with HTC equity in FY 2023, the highest figure since 2019.

The NPS reported the median qualified rehabilitation expenditures (QRE) amount for Part 3-approved properties in FY 2023 was $1.2 million, a figure that has been steady over the past decade, varying from $950,000 in 2015 to $1.4 million in 2018. There were a substantial number of smaller projects in 2023: Of the 970 Part 3-certified developments, 46% were for less than $1 million and 14% were for less than $250,000.

A provision in the Historic Tax Credit Growth and Opportunity Act of 2023 would provide a boost in the HTC percentage from 20% to 30% for small projects, which is defined as those with QREs of $3.75 million or less.

Blog Graphic: $1 Billion Club

The NPS report included state-by-state data for applications received, approved and estimated QREs. It also provided FY 2019-2023 totals for each state, revealing that 11 states surpassed $1 billion in combined QREs for Part 3 approvals granted in the last five years. New York led all states in both Part 3 approvals and QREs over the five-year period.
In FY 2023, Louisiana led all states with 101 Part 3 approvals, followed by Missouri, Virginia and New York. Also in FY 2023, New York led all states in estimated QREs, followed by Illinois, Massachusetts and Pennsylvania.

Learn more about Novogradac's expertise and many services