The National Trust for Historic Preservation’s for-profit subsidiary, the National Trust Community Investment Corporation (NTCIC), on August 18 announced its partnership with Tax Credit Capital LLC of New Orleans to expand the former Small Deal Fund (founded in 2002) into the National Trust Small Deal Fund (SDF). SDF invests in very small historic tax credit projects—approximating $1.2 million–$3.5 million in total development costs—that normally generate $200,000–$650,000 in tax-credit equity.

Owners of small historic tax-credit projects typically can’t take advantage of the 20 percent federal rehabilitation tax credit, which equals 20 percent of the amount spent on a National Park Service-certified rehabilitation of a certified historic project for commercial, industrial, agricultural, or rental residential use. The tax credit is a dollar-for-dollar reduction in the amount of taxes owed, and many small property owners do not have enough tax liability to redeem the credit. (And those who do may be unable to claim the value of the credit because of IRS rules.)

The role of syndicators
Owners of larger historic tax-credit projects can turn to so-called “syndicators,” who essentially purchase the credits (typically at 80 percent of their face value) and funnel them to corporations that can use the tax benefit. For small-project owners, the syndication transaction costs generally are too high to make the investment cost effective for owner or investor.

The National Trust Small Deal Fund overcomes this financial barrier for smaller projects by acting as a syndicator. SDF has standardized its investment terms and documents, thereby minimizing investor risks, reducing due diligence requirements, and keeping closing costs very low. SDF makes an initial good-faith $100 contribution to the project, and 80 percent of the tax-credit equity investment is paid upon receipt of final NPS project approval. SDF pays the remainder paid at negotiated performance benchmarks.

Chevron Texaco is the investor
Chevron Texaco is the investor behind the National Trust Small Deal Fund. NTCIC’s role is to locate and refer deals through its national network of historic preservation partners, including its Main Street and Community Partners Networks, Historic Hotels of America, National Trust Regional Offices, and State and Local Partners Program.

National Trust for Historic Preservation President Richard Moe, Hon. AIA, says, “The National Trust is very excited about this partnership. The Small Deal Fund represents a previously unavailable source of capital for the rehabilitation of smaller historic properties such as those found along Main Streets that are so important to our communities’ vitality.”

In 2003, the Small Deal Fund facilitated 11 projects that generated $5,411,379 in federal historic tax credits. Through June 30, 2004, the fund closed on 30 properties, totaling approximately $11 million in tax credit equity, and is expected to expand further with the new Trust partnership.

SDF can purchase federal credits in all 50 states and is able to purchase state historic credits in Louisiana, Maryland, Michigan, Rhode Island, and Virginia. Various properties—including hotels, offices, restaurants, entertainment, cultural and nonprofit facilities, retail, and mixed-use projects—are eligible. For more information or to submit a deal for consideration, visit NTCIC online.

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