Posted: October 23, 2017
An underappreciated but incredibly potent tool in the field of historic preservation is the Federal Historic Tax Credit. Established in 1976, the credit has enabled the rehabilitation of 42,293 buildings throughout the nation, and leveraged over $84 billion in private investment for preservation projects. Locally, the Cigar Factory, pictured above, is a prime example of a recent successful rehabilitation project using federal historic tax credits.
Developers across the country agree that the tax credit is a necessary part of nearly all large-scale historic preservation projects, as they often cost more than new construction, and certainly come with more risk. The credit is for 20% of the cost of the rehabilitation, and can be taken over 5 years, or sold to a bank for instant cash. The credit has been so successful, that 35 states have created their own historic preservation tax credit programs. In South Carolina, we have an array of helpful state credits that work effectively in concert with the Federal credit.
Additionally, because rehabilitation plans have to be submitted to the State Historic Preservation Office (SHPO) and to the National Park Service (NPS), the rehabilitations are done properly and the nation’s historic resources are protected.
The latest Federal budget proposes to eliminate the Federal Historic Tax Credit, delivering a major setback to historic preservation. The credit more than pays for itself in tax revenue—indeed, the new gold standard for state credits, the Ohio model, requires that applicants prove that the credit will pay for itself within a few years of project completion. The credit creates thousands of good, highly skilled blue-collar jobs across the country, and these projects employ craftsmen and skilled carpenters rather than relatively unskilled construction crews. Unlike new construction, a historic preservation project doesn’t require substantial new materials, which makes for a far more environmentally friendly project. For many, many reasons, the Federal historic preservation tax credit is an exceptional government program, and one of our country’s most successful.
HCF has been a leading advocate for the federal tax credit program on the national level. Annually, HCF staff travel to Capitol Hill in Washington to lobby South Carolina’s Congressional delegation to support historic preservation in our state and the tax credit, in particular. The National Trust for Historic Preservation, Preservation Action and the Historic Tax Credit Coalition are our essential partners in this advocacy.
Renewed efforts to overhaul the tax code could result in the removal of many elements of our byzantine tax laws, including many deductions and credits. While simplifying and reforming the tax code may be a noble cause, this process should not eliminate one of the most powerful incentives for preservation at the local level. The elimination of the Federal Historic Rehabilitation Tax Credit is one of the greatest current threats to historic preservation in America. Learn how you can help.