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| Historic Lincoln School Apartments | Shawano, WI Completed in October 2014, this former high school was converted to a 24-unit affordable housing apartment building. |
State tax credit programs come in many shapes and sizes, but
one commonality is the economic impact they have of bringing investment to
historic cities throughout a state. Many
of these cities have historic resources related to a period of industry that
certainly once shaped the community but now sit abandoned. Repurposing these buildings
is a viable and important path to reinvestment.
Another commonality is that state historic tax credit
programs are often threatened from the beginning, as there is inevitably a
debate between the dollars coming in as investment versus the dollars going out
as tax credits.
Just such a debate has been ongoing in Wisconsin for the
past year. Governor Walker proposed to cap the state tax credit program, which
was just raised to an uncapped 20% program in January 2014, while the
legislature has been working to preserve it in its current form. Since the program change, just 18 months ago,
25 projects have utilized the 20% credit resulting in an estimate of $480
million in construction spending and $88.7 million in annual operations
according to a study done by Baker Tilly.
As consultants on
historic rehabilitation projects, we often see immediate results on these state
programs once they are signed into law. “Our Midwest Office noticed a surge in
the volume of Wisconsin rehabilitation projects in 2014 and 2015 due to the new
state credit, including more small and medium sized projects which may not have
been viable without the added bump from the increased state credit,” notes
MHA partner and Midwest director, Allen Johnson. “We are also seeing projects
being undertaken in small towns and cities where previously our work was wholly
in Milwaukee.”
The good news is that the Wisconsin legislature prevailed
and the program will not change in the coming year.
Meanwhile another scenario is playing out in North Carolina where
several tax credit programs, mostly targeted at the state’s large resource pool
of historic mills, have been allowed to sunset despite showing a strong
economic impact since their creation in the late ‘90s. Myrick Howard, President of Preservation North
Carolina, noted in his recent op-ed piece for the News & Observer that “the revival of downtown Durham, Raleigh,
Winston-Salem, Asheville, Salisbury, Mount Airy, New Bern and Edenton, to name
a few, hasn’t been coincidental. Nearly $2 billion have been spent by the
private sector, stimulated by this statewide incentive.”
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| NODA Mills | Charlotte, NC |
Wisconsin is fortunate
to have preserved its credit and will certainly have a competitive advantage
when it comes to attracting developers, especially from another state in its
region, Michigan, which lost its state historic credit several years ago. Developers
that are experienced in using the historic tax credit programs are expanding
beyond their home states in order to take advantage of these benefits
elsewhere.
In a time of
shrinking state budgets and less federal support, legislatures often look to
“grow” their state budgets by eliminating historic tax credit programs despite
several studies that show there is a positive return on investment from these
programs. In addition to the
construction dollars and jobs generated by rehabilitation projects, there is a
long-term affect at the local level of taking a building that may have been
completely off the tax roles and returning it to use, which generates increased
real estate taxes that often funds schools or other local infrastructure.
Hopefully North
Carolina and other states will follow Wisconsin’s lead in supporting programs
that can have a significant economic at the local level while knitting back
together the architectural fabric that makes these cities and towns whole.
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