The federal historic building tax credit program, which has facilitated the redevelopment of aging downtowns across America by enabling developers to recoup some of the cost of their projects, has survived in the final version of the federal tax reform bill that passed today in Congress.
That’s welcome news to a broad coalition of preservationists, developers, lenders and civic leaders, who for weeks had been lobbying to keep the incentive intact at its current level.
“This is a huge victory,” says Fairleigh Jackson, executive director of Preserve Louisiana. “Without the historic tax credit program, numerous redevelopment projects across our state would not happen.”
The program, which enables developers to recoup 20% of the cost of renovating a historic building, was initially reduced by 50% in the House version of the GOP-led tax reform bill. Critics argued it costs the federal government money by subsidizing private development.
But preservations and developers joined forces and produced data to show that the costs are more than offset by the benefits of returning aging buildings to commerce, where they can generate payroll, property and sales taxes.
They were helped by a united Congressional delegation in Louisiana, particularly Republican Sen. Bill Cassidy, who successfully pushed an amendment in the Senate version of the bill to keep the credit at 20%.
“The tireless efforts of Preserve Louisiana in demonstrating the value of the federal historic tax credit to the Louisiana delegation played a pivotal role in saving this critical preservation tool,” says David Brown, executive vice president of the National Trust for Historic Preservation.
Louisiana has been a particularly big beneficiary of the program, which has been crucial to the redevelopment of downtown Baton Rouge, as well as the rehabilitation of older neighborhoods throughout the state. Among the dozens of local projects made possible in recent years by the program, which is typically used in conjunction with a 25% state building tax credit program, are downtown hotels like the Watermark, Hotel Indigo and Hilton Baton Rouge Capitol Center, as well as major residential projects like the Commerce Building and 440 on Third, and mixed-use properties like the Kress Building.
In one important change to the program, developers must now take the credit over five years instead of all at once.
—Stephanie Riegel
