A tax reform bill introduced in the House of Representatives on Thursday would eliminate a widely used measure for combatting urban decay, even as developers and preservationists argue that the program more than pays for itself.
The Historic Tax Credit (HTC), introduced in 1981 by the Reagan administration, provides a 20% tax credit over five years for projects that revitalize historical buildings that would have otherwise fallen into disrepair. Paying out only after the project has finished, the program generates $1.20 in tax revenue for every dollar spent, according to the National Trust for Historic Preservation.
Shifting the cost burden entirely to the private sector, the tax credit has made it easier for developers to find funding for rehabilitation projects that lenders are typically wary of. A 2015 report by the National Park Service and Rutgers University has shown how the credit has ultimately generated over $131 billion in private investments and preserved over 42,000 buildings across the country. By offsetting the increased design and construction costs associated with saved these blighted buildings, HTC has also created over 2.4 million construction, administration and local business jobs.
— Saving Places (@SavingPlaces) November 2, 2017
Stephanie Meeks, president of the National Trust for Historic Preservation, put out a statement after the House revealed its latest reform legislation.
“By spurring public-private investment in the reuse of old and historic buildings, the federal Historic Tax Credit fuels the economic engine that is currently revitalizing downtowns, neighborhoods, and Main Streets across America. Getting rid of it now threatens the economic revival that is evident in America’s cities and towns. Any plan to revise the tax code should enhance, not abolish, a pro-growth investment like HTC.”
A rare coalition has formed between developers, preservationists and members of Congress as support for saving the HTC has grown. In a bi-partisan letter to the Chairman and Ranking Member of the House Committee on Ways and Means, Congressman David B. McKinley, (R-WV), rallied for the credit even while acknowledging that he was expected to vote for the proposed tax reform bill.
“Since its inception in 1978, this tax credit has spurred economic activity and has directly aided in the revitalization of Main Streets and rural communities nationwide. Over 40% of the projects using this credit have been in rural communities, breathing new life into their downtowns and attracting investment,” said McKinley.
With the program funding everything from asbestos abatement to insulation replacement, the backlash to eliminating the HTC is only expected to grow as this latest attempt at tax reform makes its way through the House.