Sen. Collins pushes bill to enhance federal historic tax credits
Courtesy / Maine Preservation
Here's how the completed 48-unit affordable senior housing project at the old Cony High School in Augusta looks after a renovation that received historic tax credits from Maine State Housing Authority allowing developers to raise $6.8 million toward the $11 million project.
U.S. Sen. Susan Collins, R-Maine, has joined a bipartisan effort in Congress to enhance the federal historic tax credit program that is used extensively to spur real estate investment to preserve and enhance historic buildings.
The Historic Tax Credit Improvement Act is supported by GrowSmart Maine, Maine Preservation and other organizations.
These reforms would be the first major changes to the HTC since the Tax Reform Act of 1986.
In a statement announcing the proposed legislation, which has co-sponsors in both the U.S. Senate and U.S. House, Collins characterizes it as an improvement in the federal historic tax credit program that will make it easier for small rehabilitation projects to use the credit.
“The Historic Tax Credit incentivizes the restoration and preservation of historic buildings,” Collins said. “It is a proven tool for revitalizing communities and catalyzing economic development in Maine and across the nation.”
Greg Paxton, executive director of Maine Preservation, stated in an email alert about Collins’ bill, that since Maine passed a companion HTC in 2008, the federal and state historic credits have been used together in 75 projects completed or under construction across the state, with total investment exceeding $400 million, creating more than 5,000 jobs and 1,200 rental units, 770 of which are affordable housing.
“These projects have repurposed abandoned schools, mills, inns, and apartment buildings transforming Biddeford and Saco, Norway, Portland, Lewiston, Dover-Foxcroft, and many other towns,” he stated. “The federal and state credits together have resulted in five times as many projects and nine times the investment as prior to 2008. But the average project size is over $5 million. Many small projects now cannot use the federal credit, which this bill would fix.”
The Historic Tax Credit Improvement Act makes changes to the HTC to further encourage building reuse and redevelopment in small, midsize, and rural communities, according to Collins’ office. It also makes the rehabilitation of community projects like theaters, libraries, and schools easier while maximizing the impact of state historic tax credits.
Finally, the bill would make more historic properties eligible to use the credit by updating program requirements to reflect current industry practices.
Courtesy / Arnold Development Group
This 'before' and 'after' image shows the historic Mayo Mill in Dover-Foxcroft, which was extensively renovated with financing that included a $2.5 million CEI construction loan, including participation by CEI Investment Notes, Inc., and a $2.2 million CEI State Historic Tax Credit equity investment; $200,000 investment from the Maine Community Foundation and a $1 million permanent construction loan from Bangor Savings Bank.
Impact in Maine, nation
Kevin Bunker, a partner with the Developers Collaborative in Portland, has used the credits to complete several projects, including the Gilman School in Waterville; Healy Asylum in Lewiston; and the Emery School in Biddeford. The release from Collins’ office also noted the federal HTC supported the renovation of the former Eastland hotel in Portland and the redevelopment of the Moosehead Manufacturing Mill in Dover-Foxcroft.
The program is jointly managed by the National Park Service and the Internal Revenue Service, in partnership with state historic preservation offices.
In its fiscal year 2015 report, the National Park Service reported 870 completed historic rehabilitation projects were certified nationwide, representing $4.47 billion in estimated rehabilitation on costs qualifying for a 20% federal tax credit. Another 1,283 proposed projects were approved in FY 2015.
Since its creation in 1978, the report added, the federal program has leveraged over $78 billion in private investment to preserve 41,250 historic properties. It also generated $134.7 billion in GDP, with about 29% (691,000 jobs and $38.9 billion in GDP) being in the construction sector.
A recent study by the National Trust for Historic Preservation estimates that every $1 of credits generates a minimum of $4 of private sector investment.
“The federal historic tax credit is the driving force behind rehabilitation projects that have given new life to historic buildings, created millions of jobs and attracted billions in private investment,” Stephanie K. Meeks, president and CEO of the National Trust for Historic Preservation, said in a statement supporting the bill.
Collins is joined by U.S. Sen. Ben Cardin, D-Md., U.S. Reps. Mike Kelly, R-Pa., and Earl Blumenauer, D-Ore., in introducing the legislation.
Some 'before' and 'after' examples
Here are two example of how historic tax credits were used in Maine, courtesy of Maine Preservation:
The first set of images shows the historic building at 660 Congress St. in Portland's Congress Street Historical District that was renovated by Freeport developer Kenn Guimond, who runs The Guimond Group, after his 2011 purchase of the property from Roxanne Quimby, the philanthropist and Burt's Bees founder. The project used federal and state tax credits available for designated historic structures to offset renovation costs.
660 Congress
The second example shows the 83-year-old Cony High School in Augusta, developed by Portland-based Housing Initiatives of New England Corp., which received tax credits from the Maine State Housing Authority to attract $6.8 million in private investment for the $11 million project. The high school was converted into 48 senior housing units and was one of six low-income housing projects to receive funding in a November 2013 round of tax credit allocations from the housing authority.
Cony HS
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