Historic Leader: John Leith-Tetrault Honored with NH&RA’s Chairman’s Award

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On July 21st, during NH&RA’s Summer Institute on Martha’s Vineyard, John Leith-Tetrault was presented with the Chairman’s Award by NH&RA Chairman and partner at Bryan Cave, Jerry Breed. As founder of both the National Trust Community Investment Corporation and the Historic Tax Credit Coalition, John Leith-Tetrault has created a legacy in the Historic Tax Credit world.

Since founding the organization, Leith-Tetrault led NTCIC to the tremendous milestone of $1 billion in investments earlier this year. Beyond the numbers, he is “a man who’s been dedicated to community revitalization for his whole career” states Stephanie Meeks, President and CEO of the National Trust for Historic Preservation. The comment is especially significant when considering that career spans over 40 years. Aside from the investments generated and communities helped, the industry itself has much to thank Leith-Tetrault for.

Breed notes that while the Low Income Housing Tax Credit and New Markets Tax Credit enjoy advocacy from various groups, the Historic Tax Credit was without a unified voice until Leith-Tetrault founded the Historic Tax Credit Coalition. “That organization proved crucial because it provided a negotiating team after the Historic Boardwalk opinion came down. It was the coalition that went to Treasury and the IRS saying we need guidance.”

Bill MacRostie of MacRostie Historic Advisors added that Leith-Tetrault has also been an integral part of improving and organizing the relationship between the historic industry and the National Park Service. “He is well-respected, organized, and a real leader in the industry.”

The following remarks were given by Leith-Tetrault upon receiving the Chairman’s Award:

Thoughts on my career
It is truly an honor to receive recognition from people and from an organization that I have had so much respect for. And thanks to so many of you in this audience who have helped me and counseled me over the years. I could not have been successful without the help of so many colleagues and friends in the tax credit industry.

I have just passed the 40-year mark in a career that began in 1975 when I became Assistant Director of Anacostia Neighborhood Housing Services, a CDC in one of Washington, DC’s poorest and yet most historic neighborhoods, where I provided housing counseling and financial services to community residents.

This first job after receiving a degree in Urban Planning from GW exposed me to the two passions that would energize my career, community development and historic preservation. And it set me on a course to find the nexus between these two urban revitalization strategies. The challenge for me has always been, how can you use the market advantages and magnetic nature of historic buildings to promote community development without causing gentrification?

Positions with Neighborworks, Enterprise Community Partners and Bank of America deepened my understanding of community development financial strategies. When I learned of the job opening at the National Trust for Historic Preservation in 1994 I hesitated until Dick Moe, then President of the National Trust said he wanted me to aggressively lead the Trust into what we would later call Preservation- Based Community Development. He wanted the preservation movement to make the same transition from advocacy to hands-on real estate development that the community development world had made in the 1970s. In a speech that I admired him for, he said, “Preservation is for everybody. America’s story is the story of all of its people, not just the rich and powerful. If we are going to save any of our history, we have to save all of it.”

To his great credit, Dick supported my proposal in 2000 to create the Trust’s first ever for-profit subsidiary, the National Trust Community Investment Corporation, even though he had only a public policy understanding of how the Historic Tax Credit worked.

To be honest, I borrowed the concept of a for-profit subsidiary organized to do mission and provide its after tax profits to a nonprofit parent from Jim Rouse who in 1986 had organized Enterprise Community Investment. My timing was good. Mark Sissman, founding President of ECI had just left Enterprise to take a position with my previous employer, Bank of America. As fellow Baltimoreans working in Washington, we decided on a MARC commuter train one day to form the $25 million Bank of America Historic Tax Credit Fund, NTCIC’s first financing vehicle for federal Historic Tax Credits. I’ll always be grateful to Bank of America for believing that the National Trust could be more than an educational and advocacy organization.

From those humble beginnings NTCIC has been able to build itself into a leading syndicator of not only historic, but NMTC and Solar Tax Credits, reaching a milestone of $1 billion in investments earlier this year. This past fiscal year NTCIC up-streamed $4.2 million to the National Trust on gross revenue of about $12 million. Over 16 years, NTCIC has paid royalties and dividends to the Trust of $16 million.

Among the achievements I am most proud of was our introduction of a twinned HTC/NMTC equity product in the first round of the NMTC program in 2003 because it addressed the challenge that got me started – how to use historic preservation as a community development tool rather than as an end in itself, in a way that benefits all residents across the income spectrum.

So where does Preservation-Based Community Development go from here?
In my view we are at a critical inflection point in our work. We have been playing defense with the IRS and with Congress for the past five years defending the HTC from the IRS view that our industry has pushed the envelope in terms of the norms of partnership law and the accounting treatment of HTC investments. And from the view of Republican leadership in Congress who seem to believe that even a credit developed by the Reagan Administration as an economic stimulus is no longer conservative enough.

Nevertheless, I am optimistic. We have a robust industry organization, the Historic Tax Credit Coalition. We are three Republican Members away from having a majority of Ways and Means Republicans co-sponsoring our bill, the HTCIA, seven out of nine Republicans on the Tax Policy Subcommittee are bill co-sponsors. We have finally gotten the bank regulators to define when the HTC qualifies for CRA credit in its new CRA Q&A released last Friday. This should drive higher demand for HTC investments by financial institutions who may now look to the HTC as a way to meet CRA requirements while making a relatively high rate of return.

With the imminent issuance of new regulations on the accounting treatment of 50(d) income generated by the industry preferred Master Tenant transaction structure, we will have put to rest the last big issue with the IRS. Without seeing the new regs, we know the IRS will eliminate the 50(d) tax benefit. What we don’t know are the details. The good news is that in a post 50(d) environment, investors who have been sitting on the sidelines because they couldn’t use the capital losses generated by the master tenant structure will now be able to compete with the industry’s traditional investors. Pricing will drop without the special 50(d) tax advantage, but to more sustainable levels. In the long-term, more competition can only by good for the HTC.

I am optimistic also because historic properties are in the best market position in a generation. Between downsizing baby boomers moving to loft apartments and millennials who want to live and work in historic buildings, demand for historic property rehabilitation is stronger now than any time in my 40-year career. 

Dozens of Rust Belt cities and former northeast and southeast mill towns have been transformed by the HTC, including Milwaukee, Cleveland, Knoxville, Dubuque, Richmond, Winston-Salem, Durham, St. Louis and Kansas City. New Orleans’ recovery from Hurricane Katrina has been driven by HTC transactions. This combination of strong market dynamics, demonstrable results, hard work with executive branch agencies, and continued messaging on Capitol Hill should assure that historic rehabilitation will continue to be a force promoting the livability and vitality of American cities. 

Thank you again NH&RA for this great honor.