This tax credit, approved by the Connecticut General Assembly in 2007, is in almost every aspect consistent with to the 2006 historic tax credit for residential rehabilitation projects in historic commercial/industrial buildings.  Importantly, however, the new credit adds two components that have been proven to be attractive to developers while being catalysts for community revitalization: mixed use development and affordable housing.   

Unlike the 2006 historic tax credit, the new historic tax credit can be applied to projects that combine residential with commercial development.  This is a huge incentive for developers; their return on investment is so much greater when residential units are combined with commercial/retail units, the so called “mixed use” development that is recognized as critical to downtown revitalization.  Added to that 25% credit, an additional 5% credit for residential units can be reserved for creation of affordable housing units. With this added incentive we can see projects that will result in a range of incomes living in rehabbed mills and other industrial and downtown commercial buildings. To be eligible for the extra 5% credit, 20% of the rental units and 10% of owner occupied units must be affordable. This aspect of the new tax credit will stimulate much needed affordable housing while appealing to developers who can rent or sell 80% or 90% at market rate, a very popular option when factoring post project revenue.