Mr. Speaker, tax credits the 'magic sauce' to protect historic buildings

Jon Christensen
Guest columnist

In one of the company’s clever TV commercials, GEICO’s Gecko jumps back and forth on State Street in Bristol, which straddles the Tennessee and Virginia border. What the commercial doesn’t show you is the downtown building restoration and renaissance occurring in Bristol, Va., and not in Bristol, Tenn.

Why, because Virginia has a state historic tax credit, Tennessee does not. Historic tax credits work. When married with the federal historic tax credit, a building owner can see at least a 30 percent tax credit on their investment which makes the numbers work and reduces the risk involved with restoring iconic buildings in rural and urban areas alike.

Thirty-four states have a state tax credit, and Tennessee has introduced legislation to bring historic building rehabilitation activity onto their side of State Street.

Jon Christensen

The federal Historic Tax Credit is the magic sauce that makes it all work and that is why Ronald Reagan signed it into law in 1981. President Reagan understood the carrot and stick mentality; he understood what it would take to save historically significant buildings and he knew these buildings, from Peoria, Ill. to Mt. Airy, N.C., built a narrative of our great nation. He knew the bricks and mortar were not just materials for a building but a story line of a great memory to be told and retold. Buildings destroyed are lost forever. From generation to generation, lessons are learned when history does the teaching.

Like Karen Hester, owner of Cranberry Lane in Bristol, Va. When Karen was looking
where to build her store 17 years ago, she wanted to be in downtown Bristol. She
purchased several of the old storefronts on State Street, renovated them with the help of state and federal tax credits and now boasts one of the largest country decor stores in the area. It didn't just happen by accident; it took support from local developers, contractors, elected officials and her passion for watching the downtown she grew up in,preserved as her legacy for the coming decades to enjoy. Signs on Main Street boast the town as “a good place to live,” but clearly Virginia’s tax credits make for a very enticing “carrot” for where historical rehabilitation occurs first.

Research conducted for the National Park Service by Rutgers University’s Center for
Urban Policy Research shows that since the federal Historic Tax Credit was enacted, it has leveraged $131 billion in investment in historic rehabilitation across the nation. It has also created 2.44 million jobs and rehabilitated 42,293 historic buildings. For every dollar of public expenditure, investors contribute four dollars toward the rehabilitation of historic properties. Since the credits are not approved until the building is placed in service, many of the economic benefits from construction jobs, materials purchased and federal payroll taxes paid are generated before the tax credit is awarded.

As Congress works to achieve its tax reform goals, it should keep in place this critical
incentive to redevelop our communities’ most difficult properties and bring investment to distressed and overlooked down towns and main streets. The Historic Tax Credit improvement Act (H.R. 1158 and S. 425) do just that by strengthening the current law and enhancing it for our small, midsize and rural communities.

The Gecko might help you save 15 percent on your car insurance, but supporting both federal and state legislation to improve these credits will help save both sides of State Street.

Jon Christensen served in the United States Congress from 1995-99 and served on the Ways & Means Committee. He is an attorney with Husch Blackwell, LLP in
Washington, DC.