Preservation Tax Credit’s Uncertain Future Puts Local History in Danger
The historic tax credit, which has helped preserve thousands of old buildings in cities across the country, is at risk of being eliminated.
The Manomet Mills in New Bedford, Mass., were built in 1903 to manufacture textiles. Fast-forward 100-plus years, and those mills are about to take on a new life as mixed-income housing for city residents over age 55. The renovated brick and masonry buildings will preserve New Bedford’s industrial history, rejuvenate a blighted waterfront area and feed a growing demand for senior housing.
At least that’s the plan. Historically, projects like this have led to huge economic benefits for downtowns impacted by years of recession and suburban flight. When vacant buildings in these centers are restored and reused, they generate jobs and tax revenue and bring back residents.
Since 1996, Lowell, Mass., which turned portions of its industrial heritage into a National Park in 1978, has redeveloped and reoccupied nearly 3 million square feet of historic buildings for residential and commercial use. “It was a pioneering concept at the time,” says Adam Baacke, Lowell’s assistant city manager, “that in a post-industrial city you could use historic preservation as a vehicle for economic development.”
In its efforts, Lowell took advantage of the federal historic tax credit (HTC), which has existed for 32 years. So far, cities have used it to revive 38,000 vacant or underused buildings, create 2.2 million jobs and attract nearly $100 billion in private investment, according to the National Trust for Historic Preservation. The credit can reduce development costs by as much as 40 percent. Lowell has used it to kick-start 30 revitalization projects valued at more than $300 million. It’s also used historic tax credits offered by Massachusetts.
More than 30 states offer historic tax credits to cities and developers. But with tax credits generally unpopular in state capitols and on Capitol Hill now, they could be in trouble. Everybody’s talking tax reform and that’s put the HTC under scrutiny, says Tom Cassidy, vice president of government relations and policy at the National Trust for Historic Preservation. “The HTC is at risk,” he says. “It’s been so effective for so long that everyone assumed it would always be there.”
Its possible demise has sent historic preservation advocates like the National Trust scrambling to lobby for it in Washington and beyond. In March, the Missouri Senate approved a proposal to slash its historic tax credit program. In 2008, Rhode Island eliminated its credit, slowing the number of historic preservation projects in the state.
Such actions worry Larry Curtis, president and managing partner of WinnDevelopment, the company rehabilitating Manomet Mills. He’s done similar projects in 24 other states and says the HTC isn’t a cost to taxpayers: “[It’s] a benefit. Main Street USA as we know it wouldn’t exist without the credit.”