Tax Credits Fuel Preservation

            Since the federal historic rehabilitation tax credit took effect in 1981, tax credit programs for rehabilitation of historic buildings have changed the landscape of preservation, says Linda Spencer, the outgoing administrator of tax credit programs in the Connecticut Commission on Culture and Tourism’s History Division—the State Historic Preservation Office. “No one could have imagined the success of these programs,” said Spencer. “The tax credits made preservation a player in ways it never had been before, in economic development and municipal planning. It’s been a remarkable change in a generation.”

            The federal program, which offers tax credits for approved rehabilitation of income-producing buildings listed on the National Register, has been used in thousands of Connecticut projects, and generated more than $1 billion in construction. While there have been low periods—the number of projects dropped after Congress reduced the amount of the credit in 1986, and economic downturns have seen less activity than flush times—activity has been constant and has touched every region of the state.

            The federal tax credit has since been joined by three Connecticut tax credits. The Historic Homes Rehabilitation Tax Credit, passed in 1999, can be used by owner-occupants of buildings with not more than four units, listed on the National or State registers and located in low-income census districts. More than 165 projects have qualified, with both individuals and nonprofit housing developers taking advantage of the program.

            The second state program is the Historic Structures Rehabilitation Tax Credit, approved by the General Assembly in 2006, offers tax credits for the conversion of historic industrial or commercial buildings to residential use. It can be combined with the federal tax credit to increase the economic incentives.

Finally, in 2007 the General Assembly passed the Historic Preservation Tax Credit, for mix-use conversion of historic commercial and industrial buildings, where commercial uses can subsidize residential units above, which will help ensure the long-term viability of rehabilitation projects. An additional five percent credit is offered for affordable housing units. Regulations for this tax credit have just been approved by a legislative committee, and the program should be up and running in early 2009.

            Spencer believes that Connecticut is a leader in tax credit programs. “The fact that Connecticut has two programs for commercial and industrial buildings is very significant. It really makes the state a model for encouraging reinvestment in underutilized resources. It increases the tax base and provides a benefit for cities, bringing new life to downtowns.”

            She comments that passing the state tax credits wasn’t easy—each took several years of combined effort by nonprofits, developers, preservationists, the Connecticut Conference of Municipalities, and the State Historic Preservation Office. What she doesn’t mention is that passing a law is only part of the process. Crafting the regulations that spell out how each tax credit will actually work can be equally difficult, though much less visible to the public than the legislative process. For instance, it has taken Spencer nearly a year and a half to write the regulations for the conversion tax credit.

            When asked about particularly memorable tax credit projects, Spencer cites several that have represented important developments in preservation practice.

Washington Park, Bridgeport. This was a large project in a deteriorated urban neighborhood. A lot of buildings were involved, so it had a major impact. Many of the buildings were devastated, but the quality of the work was outstanding: the buildings were meticulously restored on the exterior and rehabbed for affordable housing inside. The project won an award from the National Trust for Historic Preservation in 2002 (see CPN, November/December 2002).

 
Bigelow factory, Enfield. This was a breakthrough project in the mid-1980s, vastly bigger than any federal tax credit project in Connecticut up to that point. Bigelow was a mammoth complex, long vacant and very deteriorated. It required a lot of vision on the part of the developer and it required the National Park Service to acknowledge that not every building in the complex could be saved if the project was to be economically viable. The chief of the NPS appeal board visited the site and finally signed off on the project. This was a turning point, a bold project that demonstrated what the tax credit could do.

 One of the buildings at Bigelow carpet mills in Enfield, before rehabilitation in the 1980s.

credit: James Higgins, Mill Town Graphics

Cheney Mills, Manchester. The town, with a grant from the Connecticut Historical Commission, commissioned a feasibility study and a preservation plan, and then sold the mill buildings gradually to several developers, who rehabilitated them. It was a wonderful combination of tax credits and preservation planning.

Mortson-Putnam Heights, Hartford. This was the first project under the state home ownership tax credit, and it demonstrated that this characteristic Hartford building type, the Perfect Six, could be reused in the late 20^th century to create family housing in an ownership situation.

Phoenix Building, Hartford. Phoenix has demonstrated a remarkable commitment to its headquarters, first getting it listed on the National Register, under the exception for buildings less than 50 years old but of outstanding importance, and then rehabilitating it with federal tax credits. From the outside, the building looks just as it always did, but the inside now functions as a 21^st-century office building. This project points the way to more and more reinvestment in significant mid-20^th century architecture in the future.Phoenix Building, Hartford: rehabilitation of landmark mid-20^th century buildings will be an increasingly important preservation activity in the future.

Phoenix Building, Hartford: rehabilitation of landmark mid-20^th century buildings will be an increasingly important preservation activity in the future.

credit: C. Wigren

Despite years of successful projects, Spencer reports that many developers still have the feeling that the standards required for tax credits are inflexible and require an approach that’s economically infeasible. “That’s just not true,” she says. “We work with developers, and usually can find a solution that satisfies everyone.”

            Summarizing her career, Spencer says, “It’s been great fun. It’s been wonderful to be exposed to such a wide range of historic resources. I’ve enjoyed working with developers to encourage and facilitate their projects. The most rewarding thing is to see the results and know that you’ve had a small part in that.”

For more information on preservation tax credit programs, visit www.cttrust.org and look under “Restoration Help” and then “Funding Directory.”  Also visit www.cultureandtourism.org and look under History.