Of the shortcomings in the proposed tax reform bills being pushed through Congress (and there are many), the ones with the most far-reaching economic and community impacts are proposed slashing or exclusion of federal historic tax credits.
In just the last decade, historic tax credits have leveraged more than $40 million in investment in downtown Waterloo alone. Since the program’s inception nearly 40 years ago, the development incentive has been used to help revitalize communities large and small. In the last 15 years, it has spurred more than $1 billion investments in Iowa from sources ranging from multi-million dollar developers to individual homeowners.
Historic tax credits swivel properties from blighted to bright spot. In just this year, SingleSpeed Brewing Co.’s brewery, taproom and restaurant, Sidecar Coffee’s newest shop and roasting operations, KWWL Television’s renovation, Cibo Street Food restaurant and the near-completed Courtyard Hotel at TechWorks came to fruition. These projects have come together because historic tax credits made it economically feasible to renovate the historic spaces they occupy.
These businesses already are drawing visitors and new employees to downtown Waterloo. They have created dozens of jobs and turned vacant spots into vibrant destinations. Buildings eligible for the credits have much higher property value per square foot compared to new construction and retain their relatively higher value.
However, the effect of federal historic tax credits goes beyond the easily demonstrable economic impact. (Again, the above examples were from one district in one community in one year.) Old buildings are what make a place unique and memorable. They create an experience that can’t be duplicated anywhere else. This is what makes a community worth living in and worth visiting. Without incentives to spur investment in historic buildings, ones needing rehabilitation will continue to deteriorate or worse – be demolished.
The program is not a giveaway or a tax shelter like the numerous ones still in place in the reform bills. Instead, it is a 20 percent return of money already spent or invested in rehab work. On a national scale, the program has helped rehabilitate more than 42,000 buildings and has cost the U.S. Treasury $25 billion, according to a 2017 Rutgers University study. That investment led to more than $132 billion in historic rehabilitation projects and generated nearly $30 billion in federal taxes. It would be shortsighted and foolish to discard a program that nets a near 20 percent investment return.
The Senate’s version of tax reform cuts the FHTC in half. The House of Representatives eliminates them completely. I urge anyone who has enjoyed the renaissance our communities have seen these last few years to contact Rep. Rod Blum, (202) 225-2911; Sen. Charles Grassley, (202) 224-3744, and Sen. Joni Ernst, (202) 224-3254, to urge them to represent those communities and restore an important cultural and economic development tool.