Last week the US House of Representatives passed the H.R. 4173, Wall Street Reform and Consumer Protection Act of 2009. Historic Tax Credit advocates achieved a major victory in last minute amendment that removed provision that would have seriously compromised a bank’s ability to invest in historic tax credits. A blog post featured on the National Trust for Historic Preservation summarizes the provision excellently and is excerpted below:
“Under the original Senate legislation, there was an exception for an investment “otherwise authorized under Federal law that is — designed to primarily promote the public welfare.” What does that mean? The language — if enacted — would have changed the current tax credit landscape by curtailing a bank’s ability, through its holding companies, from investing in certain private equity funds (like historic tax credits and historic building rehabilitation) that do not “promote the public welfare” as narrowly defined in the statute. The use of historic tax credits in historic preservation depends heavily upon investors such as the national banks.
Under current law, such an institution can invest as much as they wish in historic tax credits in two ways. The first is if the building has a direct low-to-moderate income benefit, such as affordable housing, or if it is located in a low-to-moderate income area or a targeted, government redevelopment area. The second (and here’s the key provision affecting us), national banks can invest in historic tax credits through their holding companies if the historic property does not have direct low-to-moderate income benefit, is located outside an economic development district or low-to-moderate income area, or is part of a master plan development. This represents a big chunk of the potential tax credit inventory. The Senate, by restricting banks from investing in historic tax credits under the second option, would have measurably curtailed the wider use of historic tax credits, and that’s certainly not what we want.”