|

Opinion: Preservation is good economic sense; keep the federal historic tax credit

By BETSY HATFIELD
Guest columnist

Saturday, Nov. 11, 2017 — In 1986 when the Federal Historic Tax Credit was permanently included in the Reagan Administration’s pro-growth tax code, President Ronald Reagan described the program as “not only a matter of respect for our beauty and history, but good economic sense.”

In today’s fervor for what promises to be the biggest tax reform since 1986, The House Ways and Means Committee axed the Federal Historic Tax Credit (HTC) in its first draft tax bill, and the Senate could very well do the same.

BETSY HATFIELD

It is astonishing that with the stated goal of economic growth Congress would eliminate a quantifiably proven incentive that creates jobs, stimulates local economies, revitalizes communities throughout the country, and nets a positive revenue for the federal treasury.  Instead, it should be one of the top credits retained in the proposed tax reform legislation. The Kentucky Heritage Council administers the Federal Historic Tax Credit program in partnership with the National Park Service.  The incentives are for private investment in historic buildings.

A tax credit lowers the tax owed by an individual or entity.  It differs from a tax deduction in that an income tax deduction lowers the amount of income subject to taxation, while a tax credit is a dollar-for-dollar reduction in income tax liability.  In other words, a tax credit of one dollar reduces the amount of income tax owed by one dollar.

Few programs have had the far-reaching and sustainable financial, historic and cultural return on investment that the Federal HTC delivers.  The facts speak for themselves: • More than $131.8 billion in private investment has been leveraged because of $25.2 billion in Federal Historic Tax Credits.  In Kentucky, $558 million in private investment was leveraged with $92.7 million in federal tax credits from 2002-2016.

• Nationwide, more than 2.4 million jobs have been created by the Federal Historic Tax Credit.  In Kentucky, 4,535 construction jobs and 5,048 permanent jobs were created from 2002-2016.

• The Federal HTC returns more to the Treasury than it costs: $25.2 billion in allocated credits have returned an estimated $29.8 billion to the federal treasury. In Kentucky, the Federal HTC has generated a combined total of $27.7 million in state and local taxes.

• On average, more than $5 of private investment is leveraged by every $1 of Federal HTC funding, creating highly effective public-private partnerships.

• Nationwide, 42,293 historic buildings have been rehabilitated and preserved with the Federal HTC.  In Kentucky, 345 historic rehabilitation projects were completed with the HTC from 2002-2016.

The Federal HTC is a powerful tool for downtown revitalization because it saves historic buildings, often through adaptive reuse.  This preserves the architectural integrity of the buildings, while stabilizing them and making them more appropriate for the current and future needs of businesses, residents or other entities—and in many cases making them more energy-efficient in the process.

Consider an empty, decaying building on the property tax rolls at salvage or greatly diminished market value.  Preservation efforts increase the taxable value many times over and the resulting property tax revenues are thus realized for many years to come.

In blighted areas where redevelopment is challenging, the Federal HTC is a worthwhile catalyst for investment.  The beauty of the credit is that it works in large urban areas such as Louisville, Lexington and Northern Kentucky; in smaller cities such as Frankfort, Paducah and Pikeville; and in rural communities such as, Jenkins, Bloomfield and Buffalo, to name a few.

Instead of abolishing the Federal Historic Tax Credit Program, Congress should explore ways to expand it and make it more feasible for smaller projects to participate. Kentucky ranks fourth among states in terms of the most sites on the National Register of Historic Places.  This consistently places us in the top ten states with the number of projects utilizing the Federal HTC.  More than 40 years of Federal HTC projects have re-enriched the fabric of communities across the Commonwealth and made far-reaching impacts on the growth of Kentucky’s tourism, bourbon, agricultural, real estate, building trades and retail industries.

Without the Federal Historic Tax Credit, many historic building projects throughout the state would never have started.  Still more will not be completed if the tax credit isn’t included in tax reform.  The loss of this important pro-growth tool will kill an economic incentive that has encouraged historic building owners and real estate developers to rehabilitate buildings that draw businesses, residents and tourists to towns and are often the centerpiece of their respective Kentucky communities.

Leaving the Federal Historic Tax Credit out of the tax reform package will be devastating to special places in Kentucky—costing Kentuckians millions in lost revenue from payroll, property and sales tax, and damaging industries and communities where our heritage and historic buildings play major roles.

Betsy Hatfield is Executive Director of Preservation Kentucky, the statewide nonprofit whose mission includes advocating for preservation-friendly legislation on the local, state and national levels.

-30-


Print pagePDF pageEmail page

Comments are closed

Archives

WBRT LIVE STREAM