Tax Reform Could Mean Trouble for Local Historic Renovation Projects
Although it is hard to predict what exactly will come out of the current push by House and Senate Republicans to overhaul the federal tax code, local developers and historic preservationists are raising the alarm about one proposed change that could have a big impact on future redevelopment projects.
The first draft of the legislation calls for the repeal of the Federal Historic Preservation Tax Credit (FHTC), a tool used, since it was first written into the tax code in 1978, to facilitate the renovation of historic buildings. In Ohio, additional state tax credits are often used in tandem with the federal credits.
“It would really change the math, and put a significant freeze on new historic preservation projects,” said Michael Tomko, a developer who has applied for state and federal credits to renovate a pair of historic buildings on East Broad Street Downtown. “It’s a program that tends to have a good return on investment and is a real catalyst to push older buildings from vacancy to redevelopment.”
He added that the uncertainty around the federal credits could result in more projects moving forward in the short-term, with developers hoping to get buildings covered by the program before it goes away.
Columbus Landmarks Foundation has been sending out advocacy alerts to members, urging them to contact Senator Rob Portman and express support for the tax credits.
“More than 500 historic buildings in Central Ohio have been rehabilitated utilizing the FHTC, including the recent LeVeque Tower renovation,” said Becky West, Executive Director of Columbus Landmarks. “Without the Federal Historic Tax Credit, preservation of historic buildings will stall, curtailing revitalization and economic vitality in our community.”
Nationwide, preservationists estimate a return of $1.20 to the economy for every dollar in tax credits awarded. Columbus Landmarks puts the impact of the state credits even higher, with a return of $6.20 for every dollar.
West is concerned that the state credits could be cut if the federal credits go away, especially given the fact that the Ohio Senate proposed suspending the program in 2015.
“At a minimum, the state program will be severely weakened if the federal HTC is eliminated because the two are frequently utilized together to accomplish these projects,” she added.
The current tax proposal does retain the Lower Income Housing Tax Credit program, which is meant to encourage the building of affordable housing, although the possibility of a reduction in the corporate tax rate has already weakened the market for those credits.
For more information, see www.columbuslandmarks.org.