Regardless, Historic Tax Credits Makes Dollars and Cents By Valentin Pulido In the state of Michigan alone, countless historic building rehabilitation projects have played an integral role for revitalizing communities. In many cases, these rehabilitation projects have been initiated by historic tax credits (HTC). Large scale projects, such as the Accident Fund building in Lansing require millions of dollars in development and in turn, create employment for high level jobs. The Accident Fund project took a massive power plant in the heart of downtown and converted it into an amazing office space. Had it not been for the tax credits, the project would not have been feasible and a beloved city icon would have been demolished. Tax incentives are designed to put private capital into historic preservation efforts. First, it is important to understand the process to becoming eligible for historic tax credits. The National Park Service is the federal agency that oversees the use of historic tax credits. The National Park Service works in conjunction with State Historic Preservation Offices to determine if a building qualifies as a historic structure. To obtain a federal tax credit, the qualified historic site also has to be income producing. Often, states offer a residential HTC. In 2011, historic residential state tax credits were cut in Michigan under Governor Snyder, although commercial tax credits remain. We need to examine common criticisms when discussing historic tax credits. For example, critics of the program argue that projects using the HTC would have been performed even without those tax incentives. This concept comes from questioning overall project viability that is dependent on incentives alone. Chris Edwards, director of tax policy studies for the Cato Institute, stated that many believe tax credits complicate the tax code and encourage corruption. The Cato Institute is a libertarian think-tank and oppose historic tax credits. Edwards said, “the organization prefers eliminating tax preferences and creating lower rates for everyone.� The primary function of Historic Tax Credits is so developers may use federal and state tax credits to attract private investment for historic projects. Without the incentives created by this program, important historic rehabilitation projects would have never occurred due to higher costs, design challenges, and difficult market location. Additionally, financial lenders and stakeholders benefit by using the credits to derive substantial tax breaks and proceeds from the projects' successes. Historic tax credits are a catalyst for community revitalization and economic development. Every year the National Park Service approves approximately 1,200 projects, thus leveraging nearly $6 billion in private investment into historic building rehabilitation. Last year, an estimated 108,528 local jobs were created to facilitate these projects. According to Preservation Buffalo Niagara, rehabilitation projects have resulted in millions of dollars in tax revenues. The group states, "in Western New York, the historic tax credit has resulted in over a half billion dollars invested in rehabilitation projects, the vast majority of which would not have come to fruition if it were not for the credits that close the gap between projected redevelopment costs and projected income."
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