Federal Historic Tax Credit: Transforming Communities, a new study by economist Donovan Rypkema and commissioned by the National Trust for Historic Preservation
But the real point of Rypkema’s study is that the effects of the tax credit reach beyond individual projects. Looking at projects in Georgia, Maryland, and Utah, he shows that across a variety of different projects that used federal tax credits to rehabilitate historic buildings, each one spurred additional development nearby.
“The cities and the projects vary widely but the results are the same—when the private sector rehabilitates a building using the historic tax credit there are positive benefits that ripple throughout the community,” Rypkema writes. “The federal historic tax credit isn’t just about transforming historic buildings within their four walls—it is about transforming communities.”
There are two reasons for this ripple effect, according to the study. First, each project improved a vacant, deteriorating building, making its surroundings more attractive for development and reducing the risk of private investment there. Second, the projects demonstrated the viability of redeveloping historic buildings, helping owners of similar buildings to see the potential in their own properties.
Despite its successes, the federal credit faces an uncertain future. The political climate calls for simplifying the federal tax code and reducing tax rates, and the proposals being put forth involve removing or ending many credits or deductions, among them the federal historic rehabilitation tax credit.
In light of these proposals, the National Trust gave the federal historic rehabilitation tax credit “watch status” on its 2014 list of America’s Most Endangered Historic Places. Rather than wait to battle repeal efforts, the National Trust hopes to prevent them by building widespread support for the tax credit. Rypkema’s study is one way of building that support.
In Connecticut, we will ask our Congressional delegation, who traditionally have supported the historic tax credit, to become Champions of the credit to demonstrate to their colleagues how important this incentive is for our state and for preservation. We also will ask developers using the credit and Mayors whose downtowns are benefitting from rehabs that use the credit, to sign on to a letter, being signed across the country, that urges Congress not to jettison this very valuable preservation tool.
To read The Federal Historic Tax Credit: Transforming Communities, along with other information on the federal historic tax credit, visit http://www.preservationnation.org/take-action/advocacy-center/policy-resources/Catalytic-Study-Final-Version-June-2014.pdf.