Federal Historic Tax Credit

I’m generally skeptical of tax credits to businesses and I’d like to see them all eliminated were the government and everyday citizens to be empowered to fill in the gaps that these credits sometimes cover when do well. But since my utopian world is far away, it’s important to separate the useful tax credits from the corporate welfare. The Federal Historic Tax Credit is one of the former, allowing redevelopment of dying downtowns and reshaping urban cores in ways that draw back residents and businesses and reducing urban sprawl. Of course Republicans don’t like those things and so it is under attack in the House. Whether it has enough political and lobbying support to survive, I don’t know. Michael Allen provides the compelling reason to keep it, using downtown Rockford as an example of its use:

Something is visibly afoot in downtown Rockford, Ill. For years in this smaller city with a 13.4 percent unemployment rate, businesses fled to the outskirts and left the downtown quiet and neglected. Yet vacant commercial buildings have sprung back to life with street-level retail and new apartments. The historic Peacock Brewery is set to serve beer once again, its imposing redbrick exterior cleaned and tuckpointed.

Downtown Rockford is changing quickly, with some $40 million in renovations underway and $15 million in the works. All of this work involves historic buildings, and all of it uses the federal historic rehabilitation tax credit, which returns 20 percent of the cost of building restoration to developers.

“Rockford would never have had a chance without it,” says local architect Gary Anderson. “The appetite of banks is not to take a risk here, and the tax credits are a motivator to get them to lend.”

“The program is so easy,” Anderson continues. “It’s the least amount of bureaucracy for the greatest gain.” When he first started working to bring economic activity back to downtown Rockford, Anderson examined many incentive programs, including New Markets Tax Credits. Few, however, put so much of their cost back into the buildings themselves, so Anderson and his partners turned to the federal historic tax credit.