Historic preservationists in Western Pennsylvania worry federal tax credit will become thing of the past
Western Pennsylvania historic preservationists are rallying to preserve not a building but a little-known provision of the federal tax code that helps fund the rehabilitation of old buildings and spurs economic development.
They warn that if the Historic Rehabilitation Tax Credit is not kept in the House Republicans' tax reform bill, a valuable tool for historic preservationists will be lost.
Karamagi Rujumba, spokesman for the Pittsburgh History & Landmarks Foundation, said the 20 percent tax credit currently is not included in the tax reform package being considered by the House Ways and Means Committee.
“We're trying to get the word out that this is not one to leave out,” Rujumba said. “In the field of historic preservation and restoration, it's one of the key financial tools for rehabilitation projects.”
Although it dates back to the late 1970s, the tax credit was promoted by the Reagan administration as a way to “send tax dollars back to communities.”
In a 1984 speech, Reagan said, “Across America, people are getting the message — our tax credits have made the preservation of our older buildings not only a matter of respect for beauty and history, but of economic good sense.”
In Western Pennsylvania, the tax credit has been used on projects such as Pittsburgh's Market Square, Wilkinsburg's Hammett Place, and Greensburg's Troutman's Department Store, downtown Greensburg's Stark/James Building, and the Train Station.
The latter two were projects of the Westmoreland Cultural Trust in the late 1990s and early 2000s, said President Michael Langer.
“With that as the tool, we were able to restore the outside of the (Stark/James) building to its origin of 1896. We were able to save that building. We took an abandoned and dilapidated building and put it back into commercial use,” Langer said.
The expansive building at 41 W. Otterman St. is bounded by The Rialto and a RE/MAX real estate office.
Langer noted that the two projects spurred other economic development in downtown Greensburg, including the Seton Hill University Performing Arts Center.
The historic tax credit covers 20 percent of the cost of restoring a qualifying building — one that is either on the National Register of Historic Places or in a National Register district, Rujumba said. Developers have used the credit to restore, rather than demolish, old buildings that have commercial potential.
“It incentivizes developers to restore those buildings, as opposed to tearing them down. When you get a 20 percent tax credit, that's a huge cost in their financing package,” Rujumba said.
Unlike a tax deduction, which lowers one's taxable income, a tax credit provides a dollar-for-dollar reduction of one's income tax liability, he said. Developers can either take the credit or sell it to a third party, such as a bank, to raise part of the equity funding for a project — thus reducing the amount of debt financing needed.
Rujumba said the tax credit's long-term impacts, such as job creation, also would suffer with its removal from the tax code.
The Pittsburgh History & Landmarks Foundation, Preservation Pennsylvania and other organizations lobbying against the change are encouraging people to contact their congressman about the issue.
Stephen Huba is a Tribune-Review staff writer. Reach him at 724-850-1280, firstname.lastname@example.org or via Twitter @shuba_trib.