Regardless of where members of Congress stand on tax reform, most leaders in both parties have long understood that some tax programs are extremely effective, bringing notable returns on the initial investment. The Historic Tax Credit (HTC) is clearly one of these, but its continued existence is now threatened by the two tax reform bills in Congress.
Established in 1981 under President Ronald Reagan as a means of stimulating economic development through historic preservation, the program allows developers of income-producing properties listed in the National Register of Historic Places a tax credit of 20% of eligible expenditures as an incentive to rehabilitate historic properties and continue them in economic use. The tax credit often makes the difference between a preservation project “penciling out” or not, and can help to overcome development and investment bias against rehabilitation in favor of new construction.
Even President Trump’s family business benefited from substantial tax credits in the development of the Trump International Hotel on Pennsylvania Avenue in Washington, DC, inside the landmark 1899 Post Office and Clock Tower. Architectural historian Calder Loth has called the program “the only urban renewal program that has actually renewed urban neighborhoods,” and President Reagan praised it for making “preservation of our older buildings not only a matter of respect for beauty and history, but of economic good sense.”
According to the National Trust for Historic Preservation, “Over the life of the program, the historic rehabilitation tax credit (HTC) has created more than 2.4 million good-paying local jobs; leveraged $131.8 billion in private investment in our communities; used $25.2 billion in tax credits to generate more than $29.8 billion in federal tax revenue; and preserved more than 42,293 buildings that form the historic fabric of our nation.” In 2016 “use of the federal historic tax credit (HTC) reached an all-time high” as a total of $1.2 billion in credits were allocated for $5.9 billion dollars in qualified expenditures, resulting in 1,039 buildings being rehabilitated. The program returned to the Treasury $1.20 for every dollar invested last year.
One argument in favor of HTCs has not been sufficiently noticed: In addition to the usual arguments for preservation, the credits incentivize the conservation of heritage environments that can show us how to build structures and cities sustainably. Only by retaining those models will we learn how to increase affordable housing, address climate change, conserve scarce resources, and retain places of beauty and inspiration.
“We restore,” the French writer Francoise Choay declared, “in order to learn how to build.” From this perspective, historic preservation is not properly about the past, but about deciding what we want to take with us into the future. It cannot be solely defensive or against all new development. Preservation must be for something, and that must be the building up and care for cities that are beautiful, sustainable, and just.
For several decades, the HTC program enjoyed broad bipartisan support, but this year, the Republican-controlled Congress is in a different frame of mind. Despite its superb track record and the notable economic growth it has stimulated—to say nothing of the irreplaceable historic buildings and neighborhoods that have been preserved—this program is in danger of being diminished or terminated as part of the current drive to “simplify” and “reform” the tax code. The HCT was eliminated altogether in the House Ways and Means Committee and cut in half—from 20% to 10%—in the Senate Finance Committee. Congressional deliberation is continuing but will probably draw to a close this week or next.
Leading the fight to retain the tax credits is the National Trust for Historic Preservation and its president, Stephanie Meeks. Her recent book, The Past and Future City: How Historic Preservation is Reviving America’s Communities (Island Press, 2016) makes a persuasive case for the economic, social, cultural, and even psychic benefits of historic preservation. Our legislators should read this book before voting on the future of a tax credit program that is preservation’s most powerful tool.
Let your Senators and Representatives know that you support retention and expansion of the Historic Tax Credits as an investment in the future of our communities.
For more information on how you can petition your representatives, click on the National Trust’s webpage here.
Featured image: the 1899 Post Office and Clock Tower in Washington, D.C.. The received historic tax credits and is now the Trump International Hotel.