THE ISSUE: Federal tax credits for historic renovations.THE IMPACT: Lawmakers are proposing ending a tax credit that gives breaks to those who restore historic properties. Many feel that this will hinder or halt projects around the nation, including Pine Bluff.
Federal lawmakers are considering the proposed Tax Cuts and Jobs Act that would remove existing historic tax credits, which some preservationists believe could derail development in Pine Bluff. The House Ways & Means Committee, the tax-writing committee, is scheduled to begin a multi-day markup of the tax bill on Nov. 6.
The panel’s members will have the opportunity to propose changes and then will ultimately vote to send the bill to the floor. Ahead of the markup, Chairman Kevin Brady (Republican of Texas) will prepare a revised bill that could include changes negotiated with members outside the committee that would smooth the bill’s passage. Further changes could be made after committee passage but before the bill is brought to the floor.
House Speaker Paul D. Ryan (Republican of Wisconsin) has said he wants the legislation through the House by Thanksgiving. The Senate, meanwhile, will launch a parallel process in the coming weeks, led by the Senate Finance Committee.
The two chambers hope to resolve any differences and pass a final bill before year’s end. Rachel Patton is executive director of Preserve Arkansas, a nonprofit organization dedicated to saving Arkansas’ architectural and cultural heritage through advocacy. She urges Arkansas residents to contact Congressmen Rick Crawford, French Hill, Steve Womack and Bruce Westerman to support keeping Historic Tax Credits.
“The federal historic tax credit program began in 1981 and it is a 20 percent tax credit,” Patton said. “HTC allows owners of historic properties to recoup 20 percent of their qualified rehab expenditures by way of a credit on their federal tax liability. To qualify for a federal credit, the property must be listed on or eligible for the National Register of Historic Places. It must be used to produce income, and the rehab work must be done in accordance with the Secretary of the Interior’s standards for rehabilitation.”
“Besides the impact of what we call catalytic projects like the Hotel Pines, the HTC cannot be overstated,” Patton said. “With that one project completed, that will spur additional development in Pine Bluff. People pay attention and other projects start getting done. It can be a game-changer.”
Businessman Tom Reilley, CEO of Highkand Pellets, is an investor through Pine Bluff Rising. His investment partners and he are spending $55 million to revitalize Pine Bluff commercial properties, including the Hotel Pines downtown. “It is all at risk if the House and Senate don’t retain the Federal Historic Tax Credit,” Reilley said via email. “We encourage and ask that your readers contact their elected representatives to advocate that this is kept as part of the tax reform bill moving through the House and Senate. It’s critically important for downtown Pine Bluff, Hot Springs, and the Arlington Hotel as well as the rest of this state and country.”
“The figure for the restoration of the Hotel Pines is $35 million, of which approximately $5.5 million would be supported by historic tax credits,” Reilley said.
Mark Christ is the spokesman for the Arkansas Historic Preservation Program.
This agency processes applications of people who apply for the historic tax credits. “I will say that the 20 percent federal tax credit is one of the best tools that preservationists have toward rehabbing historic properties,” Christ said. “We have a 25 percent state tax credit.
People can realize up to 45 percent tax credit on a project, which is huge. A lot of successful renovation projects would not have happened without the federal tax credit.” Patton said the tax credit began with President Ronald Ronald in 1981 and that they are critical to economic development and job creation.
“It has a proven track record and it more than pays for itself,” Patton said. “It is used all over the United States and Arkansas. There have not been a lot of projects done in Pine Bluff. The DuBocage House has used the HCT. It has been under-utilized in Pine Bluff. There are many buildings in Pine Bluff that would benefit from the HTC. The HTC bridges a critical financing gap between the amount of money that banks will lend and the total cost of rehabilitating a historic building. It is critical to economic development.”
Joy Blankenship is the executive director of Pine Bluff Downtown Development. She said the existing tax credits help Pine Bluff through private investment by transforming dilapidated buildings into new creations.
“It is a great incentive for people to do things for downtown,” Blankenship said. “Anyone who pays income tax is eligible for this credit.”
Pine Bluff has a downtown commercial historic district and a Fifth Avenue residential historic district.
“These buildings have already been looked at and are in a historic district,” Blankenship said.
“We are working to urge our entire delegation to pay attention to this. Speak up, call, email, write to senators and congressmen,” Patton said. “The more people they hear from, the more they benefit. The Tax Reform Bill has been introduced on the House side. There is a timelime when they bring the bill to the floor for a vote. It is crucial people contact their congresspeople.”
“The Congressional Budget Office gives a score to show how much this credit will cost the federal government,” Patton added.
“The HTC costs $1 billion per year. But it is important to note they do not use dynamic budgeting when they calculate the score. How many people were hired to work on project X [or] to rehabilitate the Hotel Pines? There are many factors.
“Once the project is being put into service, you employ X number of people in a building that was previously sitting empty. Those people are going to earn wages that are taxed. It pays for itself. The numbers from the Congressional Budget Bill do not really reflect what the HTC does in our communities and the positive impact it has.”
Congressman Bruce Westerman and Congressman French Hill were not available when their offices were contacted on Friday at midday.
The Washington Post contributed to this report