TD Bank Makes History Come Alive

By Laine Crosby

As historic events unfold all around us, it’s a good time to look at the role banks can play in preserving the historic character of their communities and how the federal Historic Tax Credit (HTC) has made that possible. Last year, TD Bank got our attention by using the HTC to preserve an at-risk neighborhood of one of America’s oldest cities.

The HTC is a tax incentive for preservation. It encourages private sector investments in historic properties by providing a credit worth 20% the cost of rehabilitation for income-producing buildings that have been certified as historic structures. The National Park Service and the Internal Revenue Service jointly administer the program, in partnership with state historic preservation offices as part of the Federal Historic Preservation Tax Incentives Program. It is one of the nation’s most successful and cost-effective community revitalization programs. In the past 40 years, it has created nearly 2.3 million jobs in local communities, while leveraging over $78 billion in private investment to preserve 41,250 historic properties.

With Donald Trump about to be inaugurated as the 45th president of the United States, experts continue to speculate about what his administration will mean to sanctions, banking regulations, and housing finance. However, based on his latest real estate venture as a private citizen––the renovation of the Old Post Office Pavilion in Washington, D.C.—we might conjecture that he supports the HTC, which he used to renovate the historic property for a luxury hotel. That said, the permanence of this credit is not necessarily safe. Under the new tax reform legislation proposed last year by Paul Ryan, the HTC has been on the cutting block.

Turning a community around.

A prime example of the economic and community development activities made possible by the HTC is the revitalization of the Oliver neighborhood in historic East Baltimore, an area made famous by HBO’s show, The Wire, for its crime, poverty, and illegal drug trade in Baltimore’s seaport area. Many Americans saw the area up close during the April 2015 riots after the death of Freddie Gray. Historic structures once essential to community life in East Baltimore were abandoned, and neighborhoods had been vacated, making room for crime and further negligence.

TD Bank in Baltimore, Maryland used the HTC for its East Baltimore Historic Program (EBH), which has helped to improve market and neighborhood conditions in East Baltimore. Since 2012, TD Bank has been the lead investor and lender with TRF Development Partners (TRF DP), a non-profit housing and development firm, to rehabilitate houses in this historic area. Together with Baltimoreans United in Leadership Development (BUILD), they provide affordable housing and are rebuilding an area encompassing over 600 properties near the Johns Hopkins Medical Center.

Using an innovative program structure.

TD Bank has customized a financial structure that provides construction financing, project equity, and an innovative permanent financing approach for homeowners. Their alternative housing finance concept utilizes the HTC to offset construction costs. As a result, they are able to offer rent-to-own options for some properties, after five years of residence. The goal of EBH is to positively change the market conditions by using its housing investments to drive neighborhood improvement. The program reuses existing infrastructure, remediates hazardous conditions such as lead-based paint and asbestos, and renews the existing environment, making it significantly more sustainable environmentally than new construction.

In addition, the rehabilitation of individual units allows for construction contracts to be awarded to small neighborhood-based contractors, creating jobs in a community that had been struggling with unemployment.

TD Bank is also helping minorities in the community make home ownership more affordable by offering credit and mortgage counseling, homeownership education, savings plans, and post-purchase counseling.

Rewarding best practices.

The redevelopment work has already created over 175 new and/or rehabilitated homes on formerly abandoned properties, and consolidated over 100 vacant lots while reducing abandoned property by 65%. And the best part is that the program is sustainable in the long-term and holds great promise for banks in other areas suffering from concentrated vacant and abandoned homes, depressed real estate values, and possible future abandonment.

Each year the American Bankers Association recognizes banks that have made a difference in their communities. This past year, the American Bankers Association has awarded TD Bank, Baltimore, Maryland with its 2016 ABA Foundation Community Commitment Award for Community and Economic Development for its work in East Baltimore.

The rehabilitation of historic buildings is essential to maintaining the fabric of communities. Each building tells a story, and when these structures can be revitalized and used by the next generation, it is a cultural and economic win. Renovations are more expensive than new construction, and without the Historic Tax Credit, many of America’s historic neighborhoods could be lost to history.

Laine Crosby is a marketing and financial services writer, a New York Times bestselling author, and editor of ABA Bank Compliance magazine. Email: lainecrosby@icloud.com.

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