The new tax reform proposal submitted by Republican lawmakers today would cut a much-loved program for city development and renovation, potentially adding to opposition from the development community.
The tax reform bill introduced in the House of Representatives today would eliminate the federal Historic Tax Credit program (HTC). The program, which encourages the redevelopment of historic and abandoned buildings, has, according to analysis from the National Trust for Historic Preservation, been used to renovate more than 40,000 structures and channel $117 billion in private investment since being enacted by the Reagan administration in 1981.
The program provides a 20 percent tax credit, which is paid out over five years, and is only provided once the project is complete. The bill helps fix blighted and empty buildings and expands the tax base, according to Paul Muller, executive director of the Cincinnati Preservation Association, with “the private sector assuming 100 percent of the risks.” In an editorial today, he also cites a National Park Service/Rutgers University Economic Impact reports that found for every dollar in tax credits, the program created $1.20 in construction activity, business taxes, income taxes, and property taxes. The research found the program generated 86,000 jobs in 2015 alone.
Stephanie Meeks, president of the National Trust for Historic Preservation, said eliminating this tax credit would hinder efforts to rebuild and renovate cities and small towns, a point that many local lawmakers and preservation groups have echoed.
“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,” she said in a statement this afternoon. “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.”
Members of Congress who are presumably being asked to vote for tax reform and the elimination of the Historic Tax Credit program have come out in favor of the program. Representatives Rod Blum (R-IA) and David B. McKinley, P.E. (R-WV), wrote a letter to the House Committee on Ways and Means stating that, “There are few federal tax incentives which generate the type of economic growth the Federal Historic Tax Credit has enacted in countless small and midsize cities nationwide.”
President Trump has benefitted from this tax credit in the past. His development of the Old Post Office in D.C. received $40 million from the program.