Don’t abandon the Historic Renovation Tax Credit

The early 20th century comedian and humorist W.C. Fields once said, “It’s not what they call you that’s important, it’s what you answer to.” When you look at policy decisions in our fair state it seems like one label some leaders don’t want to answer to is being called “forward thinking.” It’s as though to be labeled such is equated with being called a “progressive,” or, God forbid (gulp), a liberal. Even when a forward-thinking policy is set in place and turns out to be wildly successful, in our state’s political climate it runs the risk of being, well, destroyed.

Such is the case with the Historic Renovation Tax Credit set in place about three years ago. The tax credit was instituted to meet a serious need: urban renewal. According to the National Trust for Historic Preservation, a nonprofit organization established by congressional charter in 1949, “Research has found that an effective state [historic tax credit] program leverages the use of the federal historic tax credit.” Such programs do so by adopting laws “creating credits against state taxes to provide incentives for the appropriate rehabilitation of historic buildings.”

The NTHP further notes that when states put together well-designed and actuarially sound historic tax credit programs, they have greatly increased the number of rehabilitation projects. “To further support the federal historic tax credit,” the group notes, “it is essential to also advocate to protect, expand and gain tax incentives at the state level.”

Thirty-three states currently have such programs in place. For the last three years Alabama has ranked among these states, allowing both the federal tax credit and the state tax credit to be used in tandem to create a rebirth in areas and structures long abandoned and forlorn. It seems that is all about to change.

Due to expire this month if not given new life during this legislative session, and with only a few days of the session remaining, the program seems sure to flatline. However, it’s not because of a lack of success.

The $60 million in historic tax credits given over the past three years has been responsible for $384 million in private investment. Additionally, the tax credit has been responsible for the creation of 2,133 direct construction jobs and 1,373 operational phase jobs. It has been responsible for the resuscitation of antiquated buildings in cities across the state, and with that, the resuscitation of hope for the urban centers of these cities.

It’s one of those rare programs that’s been wildly lauded by a cross-section of interests and ideological perspectives. From preservationists to politicians, bankers to business people, Realtors to community leaders, there has been a chorus of support for the program’s renewal and continuation.

But its detractors see something altogether different. They see it as wasteful. Although an independent review of the program conducted by a nationally recognized accounting firm concluded that over a 20-year period every tax credit dollar allocated will put $3.90 back into state and local government coffers — making the program basically one that would pay for itself — it has not been enough to sway detractors.

The tax credit has been labeled a market distorter or manipulator, yet it can more accurately be described as a market jump-starter. That’s what it’s done to the area around the old Buick Building on St. Louis Street in downtown Mobile. Sitting in the section of downtown Mobile once known as “Automobile Alley” due to the concentration of automotive-related businesses, its rejuvenation and use has led to other properties nearby being purchased with plans to restore them to economic viability. Blight and disuse is giving way to splendor and purpose.

This scenario is happening time and time again in cities across the state as properties the market said weren’t worth the investment, weren’t worth the time or expense, are being rehabilitated and transformed. Many of those properties have sat vacant, in many cases for decades, and would most likely continue to sit vacant if not for an incentive set in place to spur development and renewal.

The program is not subsidizing the rich, or picking real estate or business winners, it’s energizing communities. Our own mayor has already stated how the tax credits have been invaluable to the revival of downtown Mobile, and having them in place is a critical part of keeping the resurgence of the city’s core going.

May is National Preservation Month. What better way to celebrate than by keeping alive something that is contributing to us preserving our past in a way that benefits our present and future? Preservation and forward thinking go hand in hand.

After decades of suburban sprawl and urban neglect, it has become abundantly clear the urban core of a city is where its economic, cultural and social heart resides. In many cities throughout Alabama the heartbeat of their urban core is the strongest it’s been in a long time. Let’s continue to facilitate and stimulate that growing pulse.