(Editor’s Note: This story has been revised from an earlier version to reflect that U.S. Rep. Clay Higgins has now joined the other members of the Louisiana Congressional delegation in supporting the retention of the tax credit program.)
The federal historic building tax credit program—critical to the redevelopment of historic structures and the revitalization of aging Main Streets and downtown neighborhoods across the country—is not included in the Trump administration’s proposed tax reform package, which appears to be on the fast track in Congress.
Though the program, under which developers are able to recoup 20% of the cost of renovating a historic building, could still be rewritten into the proposed legislation, there’s no assurance that will happen, and a broad coalition that includes preservationists and developers alike is preparing for a fight.
“What this would do to redevelopment is devastating,” says Fairleigh Cook Jackson, executive director of Preserve Louisiana. “You talk to any developer and they’ll tell you without these tax credits their project didn’t happen.”
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: downtown hotels like the Watermark, Hotel Indigo and Hilton Baton Rouge Capitol Center; major residential projects like the Commerce Building, 440 on Third; and mixed use properties like the Kress Building, to name but a few.
Anticipating the change, Preserve Louisiana, formerly the Foundation for Historical Louisiana, has been working for several months with other preservation groups around the state and nation to try to keep the incentive program alive. The group is hardly alone in its fight. Developers, architects, lenders, investors and chambers of congress are united in their opposition to eliminating the program.
“It really is the cornerstone of how preservation gets done,” says Shaw Sprague, director of government affairs at the National Trust for Historic Preservation. “Since the program’s creation, more than 42,000 buildings have been rehabilitated using the program in communities in all shapes and sizes”.
While the program is on the chopping block because it is a tax incentive that technically costs the federal government money, data shows those costs have more than been offset by the benefits of returning aging buildings to commerce, where they can generate payroll, property and sales taxes.
According to a Rutgers University study, the program has cost the U.S. Treasury $25 billion since its inception in 1978. During that same period, however, it has generated nearly $30 billion in federal taxes alone, a $1.18 return for every $1 invested.
Louisiana has been a particularly big beneficiary of the program. From 2002-2016, some 782 projects in the state totaling more than $2 billion were made possible by $430 million in federal historic tax credits. Those projects went on to generate some $444 million in total taxes while also creating more than 38,000 jobs.
“It’s a misconception that this program costs tax dollars,” Jackson says. “It creates tax dollars.”
All the members of the Louisiana Congressional delegation have said they support writing the tax credit program back into the tax reform package.
—Stephanie Riegel
