Time for NJ to Have Historic Tax Credit
By Albert B. Kelly
This past week, the committee that oversees wagering,
tourism, and historic preservation to a fresh look at the “Historic Property
Reinvestment Act” which was initially floated back in 2011. Politics being what
they are, the legislation was vetoed at that time. But times change as do
administrations and with Governor Murphy looking to assemble new tools for
investment and reinvestment in New Jersey, the timing may be right to include
historic preservation in the tool kit.
I say this as the mayor of a community that has the State’s
largest historic district with an inventory of 2,000-plus properties. Along
with this inventory, Bridgeton is a resource-poor community which means we also
have all of the challenges you might expect when it comes to preserving this aspect
of our housing stock and doing justice to the architecture and the history
behind it.
Because of the age of our housing stock and the economic challenges
confronting our residents, much of the focus is on repair and maintenance of the
major components whether roofing, heating, electrical, or plumbing. This often
leaves little capacity to focus in any type of a serious way on the
architectural vernacular that prompted the creation of our district in the
first place.
Beyond that some see the historic district and the
regulations governing it as somewhat of a millstone around their necks, an idea
that might have its benefits for a different community, perhaps one with more
wealth and capacity, but not so much in a community with a median household
income of $36,208.
But it doesn’t have to be that way in any community and part
of changing things includes creating a statewide historic tax credit program.
The idea is to provide homeowners and commercial property owners with an
economic incentive to help revitalize older neighborhoods including downtowns.
Beyond carrying out revitalization, the program would also create or retain
hundreds or thousands of skilled jobs- at least that’s the idea.
If I understand the bill correctly, it would allow a
successful applicant to get a credit against their taxes due for 25% of the
cost of the rehabilitation provided that the cost of the rehab project is 50%
or more of the assessed value and that no more than 60% of the total cost of
the rehab work be attributed to interior rehabilitation. The credit would apply
to the tax year it was issued and the cumulative amount of the credit for a
given property can’t exceed $25,000 within any 10-year period.
If there is one thing I would like to see included in this
program, it would be some consideration for landlords. I say this as the mayor
of a town that also has a housing stock that is roughly 60% rental with a fair of
these located within our historic district. Some of these properties have
amazing architecture and some of our landlords have taken on projects knowing
full well that they’ll never get to the breakeven point in terms of their
investment, but they did it anyway.
So it would be useful and prudent, at least to my way of
seeing things, to create some type of incentive to help landlords undertake and
complete historic restoration on qualifying projects. This is particularly
needful in communities with large historic inventories where rentals are one of
the larger industries contributing to the tax base. I understand the mindset
that distinguishes between primary residence and income property, but that
matters less when we’re talking about preserving architecture.
According to Preservation NJ, which promotes historic
preservation as a sustainable strategy in New Jersey communities, over a
37-year stretch from 1978 to 2015, the National Park Service’s federal Historic
Tax Credit for income-producing buildings led to $28.1 billion in federal tax
receipts against approximately $23.1 billion in credits allocated, making the
$5 billion ROI no small thing.
There are similar historic tax-credits in other states and
from all appearances these efforts have generated tax revenue for the states in
which they operate. Talking with those who are knowledgeable about these
programs, the consensus is that historic rehab tax credits, while not a silver
bullet, are an effective tool for economic development and revitalizing housing
markets.
With these things in mind, it may well be time to revive the
“Historic Property Reinvestment Act” as one additional tool in New Jersey’s
development and revitalization tool kit.