Thursday night, President Obama is giving his big jobs speech. I doubt we’ll get any new programs or policy changes with the current state of Congress, but I want to float the idea of expanding the federal historic preservation tax credit program as a job creator. I outlined in an earlier post how this type of program helps local economies. This is an idea I’ve been working on since 2009, when I tried to get North Carolina’s historic preservation commissions to work on their representatives and senators to consider this strategy. Senator Richard Burr, a Republican who happens to live in my city of Winston-Salem, was the only one that seemed interested, but nothing got off the ground.
Here’s some background on how the program works: As it stands now, the Historic Rehabilitation Tax Credit gives a 20% federal tax credit for rehabilitation work on income-producing properties within National Register Historic Districts and landmark properties. While this sounds like a limited group of buildings and neighborhoods, it is actually quite broad — there are more than 13,600 of these districts in the nation. My state of North Carolina has 400 national register districts which include thousands of individual buildings.
The tax credit program could be changed in several ways that could stimulate the economy. Here’s a start:
1. Easily the most far-reaching change would be to expand the tax credit from exclusively income-producing properties to also include all residential properties. The vast majority of historic buildings are houses and this could encourage investment in older neighborhoods, particularly the rehabilitation of foreclosed properties. This idea is part of H.R. 2555, which is in committee, but here are some more ideas:
2. The amount of the tax credit could be raised. North Carolina has a state tax credit in addition to the federal program and is very successful. A 40% tax credit on income producing properties and 30% credit for non-income-producing properties, like residences, might inspire a great deal of investment in the rest of the country as it has in North Carolina.
3. The floor for the minimum spent on a project could be lowered. Right now, a person must spend at least $25,000 on a rehabilitation project in order to qualify for the tax credit. Lowering that amount would encourage some smaller renovations by people that can’t afford a wholesale renovation.
4. There is another element of the program that allows a 10% credit to rehabilitation of “older buildings,” currently defined as those built before 1936. If this definition was changed to allow buildings “fifty years old or older,” a number of properties would be included in the program that would not be otherwise.
5. Lastly, it’s difficult for non-profit organizations to take advantage of the tax credit program since they don’t technically have an income. There are a number of non-profit organizations involved in housing issues that would benefit by being included in this program.