States often use tax credits as one of their tools to promote economic development. We see many state governments use their tax system to partner with the private sector on certain tax credit programs to promote areas that need the help of both. These incentives target areas that the legislature would like to enhance to diversify their economies, and without the private sector to buy or invest in the credits, many of these programs would languish. The most common tax credit programs target job creation as part of the program being offered, however, others simply offer the tax credit program to build on a specific area needing help within the state. Here at Clocktower Tax Credits, we see all types of economic development programs geared to agriculture, affordable housing, historic redevelopment, renewable energy, and even film and media production.
The most common tax credit programs in which we participate are in the Real Estate sector, with a focus on historic rehabilitation and affordable housing. Clocktower covers all 50 states, however not all states have both of these programs. In fact, in 2021, there are at least six new state tax credit programs (Michigan, New Jersey, Mississippi, Ohio, Pennsylvania, and Virginia) that have been announced to support the states’ mission to provide more affordable housing or save historic housing stock. Here are links to three of the new programs: (Pennsylvania), https://www.housingfinance.com/finance/pennsylvania-awards-41-6-million-in-housing-tax-credits_o , (Virginia) https://www.jdsupra.com/legalnews/new-virginia-opportunity-tax-credit-9623372/, (and Michigan), https://www.miplace.org/historic-preservation/programs-and-services/historic-preservation-tax-credits/. And this year, many of the established programs have increased their annual dollar caps or extended their sunset dates; for example, Nevada has extended its program to provide the ability to transfer their state LIHTC after 2030.
Not every state has every tax credit program, and even if a state seems to have a program comparable to another state’s, each program will have varying eligibility requirements and restrictions. For a complete overview of state historic tax credit programs, see the National Trust’s website for Historic Preservation: https://forum.savingplaces.org/learn/fundamentals/economics/tax-credits/state-htc.
And for an overview of state credits for affordable housing; https://www.localhousingsolutions.org/act/housing-policy-library/state-tax-credits-for-affordable-housing-overview/state-tax-credits-for-affordable-housing/.
At Clocktower Tax Credits, LLC, we work with every transferable state tax credit program and have the expertise to understand the nuances within each program and to facilitate transfers to institutional buyers. We work with developers with prospective Historic Rehabilitation or Low-Income Housing tax credit projects seeking Federal and/or State tax credit equity, and other unique state incentives such as the Pennsylvania Resource Enhancement and Protection (REAP) credits and Florida Voluntary Cleanup Tax Credits (VCTCs). Let our expertise help you with your next tax credit project.
For inquiries, please contact Sue Ellyn Idelson at (978) 793-9574 or SIdelson@ClocktowerTC.com.