Layers of finance: Historic tax credits and the fiscal geographies of urban redevelopment

From the State to the Shareholder: Rent and the Production of Shareholder Value in Real Estate

“…First, in common law countries like the United States, many different investors can possess ownership rights in a single building. Similar to processes of rural land development (Kay ), urban developers and investors increasingly view buildings as “bundled financial assets” which unravel into discrete interests (Tapp :14), such as air rights (Chen ) and subterranean ground rights (McNeill ). While the selling and stacking of these rights make particular real estate developments financially possible, the purchasing and trading of detachable property rights increases the profitability of a building as multiple rent streams are pulled from a single project and circulated on capital markets.…”

“…Historic tax credits are a characteristic neoliberal policy whereby the state mobilises capital markets to achieve some social welfare objective, in this case, historic preservation. Enacted by law in 1978 as an incentive and amended to its current form as a credit in 1986, historic tax credits stimulate private investment in historic preservation by providing property owners with an income tax credit that covers 20% of the qualified rehabilitation expenses accrued in the redevelopment of a historically designated income‐generating property (see, for more details, Tapp ). From the state’s perspective, tax credits foster social goods as “they promote the rehabilitation of historic structures of every period, size, style, and type … [and are] instrumental in preserving the historic places that give cities, towns and rural areas their special character” (TPS :2).…”

“…For example, industry reports and scholarly research shows that nearly all federal historic tax credits projects also use equity from federal low‐income housing or new markets tax credits. And in the last two decades, an estimated 80% of all federal historic tax credit projects also sourced equity from state historic tax credits (Tapp ). Projects that are too big and that bring together too many different investors are perceived as risky for banks and financial institutions.…”

“…A short decade after real estate markets’ near fatal collapse, property is once again a booming site for investor profits (Evans ). Real estate tax credits are among the most significant investment strategies that have emerged in the United States: investment in the federal historic tax credit, one of three federal credits used in real estate deals, has doubled in volume after the crisis, growing to a $70 billion market in the last 10 years (Tapp ). Banks and financial institutions, who are behind the surge of investment, actively began to “pad their profits” (Peters ) under “the most comprehensive financial reform legislation since the 1930s” (Webel :ii).…”

Green Infrastructure and Private Property: The Crucial Relationship for the Sustainable Future of Cities

“…In this case the most effective economic incentives could be to assign development rights to strips of private land parcels for increasing the square footage or height of existing buildings within the same parcel. Single private landowners could be also restored through tailored Tax Credits for collecting the earned revenues from the development rights and channeling it into a tax credit fund for local tax bills and other fiscal duties (Tapp 2019 ). In urban districts characterised by detached/semi-detached and terraced houses, the demand for green spaces from residents could be lower than the one of more compact district, where residents do not have private yards or garden.…”