URGENT – Take Action NOW to Save the Rehabilitation Tax Credit

Tax reform bills introduced in both houses of Congress in Washington, DC will impact the Federal Historic Rehabilitation Tax Credit – potentially eliminating this valuable incentive for preservation. Repeal of this tax credit would be a huge blow to the preservation movement and to the people who make their living by working on projects that rehab and adaptively reuse historic buildings—from contractors to architects to historical consultants. It is important for all of us who value preservation to speak out now on this issue.

In mid-November, the full House of Representatives voted in favor of a version of the The Tax Cuts and Jobs Act (TCJA) that entirely eliminates the Historic Tax Credit. The Senate Finance Committee’s first version a tax reform bill cut the Historic Tax Credit in half, from 20% to 10% for historic buildings. Thanks to an amendment by Sen. Bill Cassidy (R-LA), the full 20% value of the credit was restored, but the bill calls for claiming the credit over a five-year period, rather than all at once when the building is placed in service, as is the current practice. The full Senate is expected to vote on the bill by Dec. 1, and further amendments may be added once the bill hits the Senate floor for debate. If the House and Senate bills do not align, further work will be done in committee to reach a bill that is acceptable to both the House and the Senate. President Trump has said that he wants to sign a tax cut bill into law by Christmas.

Please contact your Representative, as well as Senator Amy Klobuchar and Senator Al Franken, and ask them to retain the HTC in tax reform bills, undiminished. (Not sure who your U.S. Representative is? Look it up here!)

The fate of the Historic Tax Credit (HTC) will be determined over the next few weeks, so it is important for preservation supporters to be outspoken now. Specifically, ask your Representative to work with House leadership to insert the HTC back into the final House bill. Ask Senators to go to the Senate Finance Committee and Senate leadership and express support to retain the HTC in the Senate tax reform bill undiminished.

Need more information, or some talking points? Read on!

The projects made possible by the Rehabilitation Tax Credit have been vital economic growth engines in Minnesota. Since 2010, when a state tax credit was passed with bipartisan support and signed into law by Gov. Tim Pawlenty, over $2 billion of economic activity has been generated by private-sector rehabilitation of historic buildings in Minnesota. Directly, the tax credits have leveraged over $1.1 billion in construction activity over the past seven years, almost $400 million of which has been paid in middle-class construction wages. Professionals who specialize in this work, including contractors, suppliers, architects, interior designers, consulting historians, and CPAs, also stand to have their wages cut if the Rehabilitation Tax Credit is eliminated. Since 2002, at least 110 historic buildings have been rehabilitated in Minnesota using the Historic Tax Credit, creating more than 18,000 jobs.

The positive ripple effects of rehabilitation investment are evident in communities all across Minnesota. In Minneapolis’ North Loop neighborhood alone, over a dozen historic buildings have been successfully rehabbed using this tax credit, totaling more than $142 million in construction expenditures. The vitality of this reclaimed historic district has prompted new development, spurring small business growth through new restaurants, bars, breweries, and retail stores, and attracting corporate expansion with tenants such as Amazon, global software company Calabrio, and Arctic Cat.

Duluth and St. Paul have seen similar rates of economic investment in historic buildings, with over $27 million and $200 million of rehabilitation construction expenditures respectively since 2006. Cities outside of the metro benefit from this tax credit too. Notable projects include:

  • The Faribault Woolen Mill in Faribault, which was in operation from 1865 until 2009 and was brought back to life in 2011 thanks to approximately $1 million in Historic Tax Credits and over $5 million in investment by the new owners, Chuck and Paul Mooty
  • The Second Street Professional Building in downtown Chaska, rehabilitated in 2006
  • Conley-Maass-Downs Building, downtown Rochester, rehabilitated by first-time, local developers to house a restaurant on the ground level and a co-working space on the upper story

More places in Minnesota await the opportunities that home-grown economic development like this would create: the vacant former state hospital complex in Fergus Falls, the Duluth Armory (one of young Bob Dylan’s favorite venues), and the Fort Snelling Upper Post, which has stood idle and deteriorating for over 40 years despite its status as a National Historic Landmark. All of these places – and the people in these communities – will lose out if the Rehabilitation Tax Credit is repealed and the critical economic tools for reclaiming these places is eliminated.

The Rehabilitation Tax Credit is a worthwhile investment that accomplishes the goals of the Tax Cuts and Jobs Act: it is focused on growing our economy, it brings jobs back to our local communities, and it increases paychecks for our workers.

The Historic Tax Credit has been a permanent part of the Federal Tax Code since 1986. Then-President Ronald Reagan called it “economic good sense.” More information, as well as historic video footage of President Reagan championing the Historic Tax Credit, is available on the website of the National Trust for Historic Preservation and from the National Trust Community Investment Corporation. Detailed articles, including this one on the CNBC website and this compilation of information by PolicyMap, provide more information about the potential impacts of this bill.