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` (, HISTORIC REHABILITATION TAX CREDITS continued from page 2 Additionally, a Difficult -to- Develop Area (DDA) designa - tion—a concept borrowed from the low - income housing credit program —is being requested to assist projects in urban neigh- borhoods facing higher than usual development costs. This change would provide a "basis boost" for DDA projects by providing tax credits on 130 percent of eligible basis, making the credit on such expenditures worth $0.26 per $1. Amend the tax- exempt occupancy restriction. Currently there are circum- stances when the availability of the tax credit can be severely diminished when more than 35 percent of the rehabilitated building is occupied by tax - exempt organizations. This requirement can eliminate a valuable set of tenants for his- toric rehabilitation projects, thereby hindering the economic feasibility of projects. It also gives rise to an especially acute missed opportunity in the reha- bilitation of historic structures on both closed and active mili- tary bases. The military is often interested in retaining occupancy in historic buildings; its leasing of space in buildings whose rehabilitation is supported by the tax credit could significantly increase the market feasibility of saving these buildings. Reduce the lease term holding for concessionaires in nationalparks who rehabilitate histmzc buildings so that they may qualijy for tax credits. More than 8,000 historic build- ings are located in national parks. The exact total cost of deferred maintenance on these historic buildings is not known, but it is projected to be several hundred million dollars. With the Bush administration direct- ing funds to infrastructure improvements and mainte- nance backlogs in the national parks, the use of private invest- ment funds— through judicious use of the historic rehabilitation tax credit —can go a long way to restoring and preserving these structures in both urban and rural areas. Concessionaires, including those who operate in historic buildings in the parks, are currently limited to 20 -year Key Legislation leases that effectively prevent them from meeting the 27.5 - year residential and 39 -year commercial lease requirements of the historic rehabilitation tax credit program. The law should be amended to permit conces- sionaires and lessees of these structures to use the rehabilita- tion tax credit provided their contract or lease has at least five years remaining. The Historic Preservation Development Council plans to approach potential champions Tax Reform Act of 1976. In 1976 Congress took the first step to redress the bias of the federal tax system against the preservation and reuse of our nation's historic buildings by providing incen- tives for rehabilitating income - producing his- toric structures and providing disincentives for their demolition. To qualify for the incentives, projects needed to be certified by the Depart- ment of the Interior. Provisions of the legislation included five -year amortization of qualified expenditures incurred in the rehabilitation of certified historic structures or, alternatively, accelerated depreciation of substantially reha- bilitated historic structures; denial of deduction of costs of demolishing a certified historic struc- ture; and restriction of straight -line depreciation of buildings constructed on the site of a demol- ished or substantially altered certified historic structure. Revenue Act of 1978. For the first time Congress provided for a tax credit in the amount of 10 percent of qualified expenditures incurred with certified rehabilitation of certified historic build- ings. The tax credit could be combined with accelerated depreciation provision of the 1976 law but not with the five -year amortization. Economic RecoveryTaxActof1981. This legislation acknowledged the dramatic impact of federal assistance through the tax laws on historic properties and marked the most significant effort to foster historic preservation through on Capitol Hill this year to begin the process of getting these changes enacted. For updates on the council's progress, and to find out what you can do =to help, contact the Public Policy office at (202) 588.6255, policy ®nthp.org. By National Trust staff. Gordon Kerr, director of congressional affairs, Office of Public Policy; Keni Rubman, Forum News editor; Byrd Wood program man- ager, National Trust Forum; with special thanks to Gary&enson, presiclentofMetro- Plains Development, LLC national tax policies. Congress authorized a 25 percent tax credit for certified rehabilitations of certified historic structures, a 20 percent credit for rehabilitations of structures over 40 years old, and a 15 percent tax credit for rehabilita- tion of structures 30 -39 years old combined with 15 -year straight -line depreciation. Tax Reform Act of 1986. The passage of this act marked a maturity of the relationship between national tax and preservation policy. While it resulted in a modest reduction in the historic preservation credit from 25 percent to 20 per- cent, it imposed several significant restrictions on all forms of real estate investment. [Source: Twenty-flfth Anniversary Report: Fed- eral Tax Incentives for Rehabilitating Historic Buildings. Report is available on the National Park Service website: www2.cr.nps.gov.] To learn more, contact: Federal Historic Preservation Tax Incentives Heritage Preservation Services (2255) National Park Service 1849 C Street, N.W. Washington, D.C. 20240 Michael Auer at (202) 343 -9594 hps- info @nps.gov www2.cr.nps.gov /tps /tax . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . .F. O. R. U. M. . . N. E. W. S.