Tax reform could negatively impact historic credits
Downtown Shreveport’s rebirth that has seen beautiful historic buildings rehabbed into apartments, condos, and offices could face a serious derailment with the Federal Historic Tax Credit (HTC) under threat.
The just-released House Tax Reform bill has eliminated the HTC. A vote is expected by mid-November and the Senate tax reform bill is expected to be released before Thanksgiving.
In Shreveport, HTC has assisted in bringing the Ogilvie Hardware Building, the old Sears building and two adjacent buildings, the old Crystal Oil Building, and the old United Mercantile Building back to life.
“It would substantially inhibit opportunities to save and rehab some of our most significant downtown buildings,” said Shreveport Downtown Development Authority Director Liz Swaine. “The reason I say that is because most of the remaining buildings (to be rehabilitated downtown) are large and troubled, and they are going to need some additional help that the federal HTC credit can provide.”
She told BIZ. that there is currently a case where two developers in the process of rehabbing buildings will walk away if the HTC goes away and at least in one case, lose the building altogether.
“These buildings are incredibly large or in incredibly poor shape or both, and need that extra boost provided by the federal HTC,” she explained.
Swaine noted that nine times out of 10, the smaller buildings are not utilizing the federal HTC, the larger buildings such as the Slattery Building, Rubinstein Building, the Arlington Hotel will be the ones to utilize the Federal HTC.
“It’s not a case of developers being greedy — this covers 20% of qualified costs — private developer funding is 80%. But that 20% puts that building back on the tax rolls. It’s a building that has ceased being blighted, needing security and maintenance, and improving property values which means more taxes.”
Historic Tax Credits being under threat is nothing new for DDA as the state HTC is on the chopping block in the wake of Louisiana’s budget crisis. But the federal HTC is a whole new problem.
“We are very worried,” said Swaine. “The state historic tax credit is relatively easy to make the case for because the legislators we deal with are from all of these towns and cities that are directly impacted by it. When they go home they see what the state historic tax credit has helped create. At the Federal level, you have fewer people making decisions for more people. Not all representatives and senators have first-hand experience, and may not live in community impacted by the HTC.”
Swaine said that if the federal HTC is passed, there is no backup plan, explaining, “Nothing that fills this void. I would like to say DDA could step in and say, ‘We got this.’ But we don’t have the resources of the federal government.”