Congress should expand, or at least maintain, historic tax credits
Federal tax reform measures include the reduction or elimination of a tax credit program that helps make most historic renovations financially feasible. Passage of either proposal will negatively impact revitalization efforts throughout the state.
The U.S. House tax reform package calls for elimination of the federal Historic Rehabilitation Tax Credit. The Senate bill repeals a portion of the program and cuts the remainder by half.
Currently, up to 20 percent of eligible historic structure rehabilitation expenses can be reimbursed through tax credits that, in turn, are used to offset income tax liabilities. In most cases the tax credits are crucial to ensuring financing for the kinds of renovation and re-purposing projects that have transformed historic buildings throughout the state. Without the full 20 percent incentive, preservationists and developers say Iowa’s landscape would look very different, Iowans would miss employment opportunities, and far fewer historic properties would be on local tax rolls.
From 2002 through 2015, the credit was used on 105 redevelopment projects in Iowa’s 1st Congressional District, including 25 flood-ravaged properties in Cedar Rapids’ New Bohemia neighborhood. The $62 million in tax credits that flowed into the region has generated more than $73 million in taxes and created more than 9,200 jobs (2,878 construction and 6,338 permanent). Total qualified rehabilitation expenditures — otherwise known as private investment — was more than $311.5 million.
Statewide, a total of 257 projects received the federal credits between fiscal year 2002 through 2016, according to the National Park Service, which administers the program in cooperation with the Internal Revenue Service and state historic preservation agencies. Nearly $200 million in tax credits came into Iowa, creating more than 19,000 jobs and generating more than $229 million in taxes.
Proponents believe these statistics are proof that the 40-year-old tax credit, championed by the Reagan administration, is fulfilling its mission of spurring investment in historic properties and revitalizing communities.
An economic impact report by the parks service and Rutgers University found that for every dollar in tax credits, the program created $1.20 in business, income and property taxes and construction activity.
“Our tax credits have made the renovation of our older buildings not only a matter of respect for beauty and history, but of economic good sense,” explained President Ronald Reagan.
Ending or reducing the program threatens economic revival, and leaves large and small Iowa communities with little hope of addressing disaster-stricken, abandoned or otherwise problematic historic properties.
Revitalizing Iowa communities is serious work that deserves more than an ill-conceived choice between half or nothing. Iowa’s Congressional delegation need only view the progress already made to know any tax code revision should expand such proven, pro-growth investment.
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