New York’s Historic Tax Credit Dominance Reveals Hidden Challenges for Developers

Written by:

Rudi Davis

Date:

08 Dec 2025

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New York State has led the nation in historic tax credit projects over the past decade, completing more projects than the next three states combined. Yet, behind these numbers, developers face significant hurdles related to timing and project preparation that often go unrecognized.

Michael Puma, Principal and Project Manager at Preservation Studios, says that while the state’s historic tax credit program appears robust, the real challenge for developers is not regulatory approval but when and how they engage with the process. Preservation Studios has managed about 60% of New York’s historic tax credit projects over the last ten years, representing $1.3 billion in reinvestment.

Market Dynamics and Success Rates

Puma reports steady demand for historic tax credit consulting. “We have inquiries on a weekly, if not every other day basis,” he says. For projects that engage his firm from the start and follow the recommended process, the success rate is high.

However, these strong outcomes are largely limited to developers who involve preservation consultants early. Many others, Puma notes, miss out by waiting too long to consider tax credits.

The Timing Trap

A common pitfall is seeking historic tax credits late in the development process. Puma’s firm frequently encounters projects already 25% to 50% complete, or even weeks from receiving a certificate of occupancy, where owners only then inquire about credits. “I’ve had a few that have been weeks away from getting their certificate of occupancy. We’re talking like 95% done,” Puma says.

While it is sometimes possible to secure credits at this stage, doing so often requires costly and risky adjustments. Late engagement increases the likelihood of compliance problems and unexpected expenses.

Strategic Approach

Preservation Studios recommends a proactive, two-step strategy. First, they assess a building’s eligibility for historic designation before purchase. Second, they guide ownership teams to ensure renovation plans comply with preservation standards from the outset.

“We like to take that two-prong approach early on in that due diligence period, often before people have even purchased the building, so that by the time they close, they have a fair level of confidence that they’re going to be successful going through the entire process,” Puma explains.

This approach means developers must extend due diligence periods and invest in preservation consulting before closing. While this adds upfront cost, it significantly lowers the risk of project failure or costly redesigns later.

Implementation Challenges

Even with careful planning, projects can run into trouble during demolition. Puma notes that original features intended for preservation are often removed by demolition crews due to miscommunication, requiring expensive replication later. “The best laid plans…mostly go awry during the demolition phase,” he says. Effective coordination between development and demolition teams is essential to avoid these setbacks.

Looking Forward

As New York’s most straightforward historic tax credit projects have already been completed or are underway, developers now face more complex properties that require creative solutions. “The obvious ones have been done or are underway, and we’ve kind of moved on to the second tier,” Puma says.

For developers, this means adapting to a more challenging landscape, prioritizing early engagement with preservation experts, and recognizing that success now depends on careful planning and timing, not just finding the right property. The era of easy historic tax credit deals in New York is over, replaced by a market where preparation and expertise are more important than ever.