June 7, 2013 Supreme Court denies Boardwalk appeal. With the Kittredge groundbreaking later this month, HBI eagerly awaits the IRS?s next move.
In the wake of the Third Circuit Court of Appeals? Boardwalk decision, which denied the allocation of federal historic tax credits to the project?s corporate investor, a chilling effect descended over the historic tax credit market. The deal structure utilized in Boardwalk, which was consistent with industry practice, focused almost exclusively on the transfer of tax credits while shielding the investor from any meaningful risk associated with the outcome of the Atlantic City Boardwalk Hall rehab project. Boardwalk, then, sent a strong signal that this type of deal would face heavy IRS scrutiny, as opposed to a transaction that created a more substantial and legitimate project partnership between the developer and investor. Unfortunately, while Boardwalk gave an indication of what type of transaction structure would not pass muster, it provided little in the way of a clear set of rules for the industry to follow in structuring project partnerships moving forward. As a result, investors, including the large corporations that have regularly invested in historic tax credits, are wary and have been reluctant to reenter the historic tax credit market as they wait for the questions raised by Boardwalkto be answered.