Historic tax credits preserve history while fueling community growth.

Across the country, developers are breathing new life into historic buildings — and historic tax credit (HTC) programs are helping make those projects possible. These programs provide a powerful financial incentive for renovation, making it easier to transform older structures into vibrant spaces. However, these kinds of projects don’t just restore buildings — they re-energize neighborhoods, attract investment and give communities a stronger sense of identity. By making preservation more financially feasible, they open the door for developers to take on projects that might otherwise remain stuck on the drawing board.

How historic tax credits work.

In many states, developers can receive tax credits of up to 25% of their Qualified Rehabilitation Expenses (QREs). For example, if a renovation project involves $1 million in eligible costs, the developer may earn $250,000 in credits. Because most developers don’t carry tax liabilities large enough to use the full amount, they can sell their remaining credits to a financial institution or bank at a discounted rate. In turn, that financial institution can apply those credits against its own tax liability or resell them. The process not only helps developers fund large-scale projects but also creates opportunities for financial partners to support revitalization efforts.

The impact of HTCs reaches far beyond the balance sheet:

• For communities, they preserve iconic architecture, increase tax revenues from new businesses and instill pride by giving historic buildings new purpose.
• For local economies, they help attract residents, businesses and visitors back into revitalized areas.
• For developers, they provide a crucial piece of financing that makes major renovations more cost-effective.

“The historic tax credit program has increased in popularity over the last ten years as more developers have learned how to leverage it,” said Nadia McMichael, Manager of Tax Credit Services at Commerce Bank. “Major midwestern cities with strong urban cores — like St. Louis, Kansas City and Indianapolis — have been tapping into tax credits for years. More recently, we’ve seen pioneering efforts in places like Oklahoma, and there’s growing momentum as more developers across the region learn how to effectively put these tools to work in revitalizing their downtowns.”

A track record of success.

The Commerce Bank Tax Credit Services department was established nearly 25 years ago and works with programs across Missouri, Kansas, Oklahoma, Arkansas, Texas, Minnesota, Wisconsin, Colorado, Iowa and Massachusetts. Recent efforts include four historic renovation projects in Oklahoma this year alone. These projects not only preserved significant buildings in Tulsa and Oklahoma City but also helped catalyze economic development in their surrounding neighborhoods.

“These high-profile projects get a lot of attention and exposure in the community. Developers recognize Commerce Bank as a strong regional bank with significant resources,” said Shannon O’Doherty, CEO of Commerce Bank’s Oklahoma market.

Preserving the past and building the future.

Eligibility for HTC programs requires that a property be listed on the National Register of Historic Places link opens in a new window, either individually or as part of a district. Developers can work with preservation consultants to apply to the National Park Service and the State Historic Preservation Office for historic designation. Ultimately, historic tax credits allow the past to inform the future, preserving the character of communities while ensuring historic spaces continue to serve vital roles for decades to come.

As McMichael put it: “The greenest building is one that’s already been built.”