As President Trump and Republicans wrestle with tax reform, much of the public attention has been on things like corporate taxes, middle-income taxpayers, and deductions for mortgage interest and state and local taxes. Lurking in one of the reform proposals, though, is a change that would have a major impact on Rochester and many other cities: elimination of the Historic Tax Credit.
Under the 41-year-old federal legislation, owners of income-producing historic buildings can get a 20 percent income-tax credit to renovate them. And for owners of historic buildings in New York State, the legislation has been particularly beneficial: they can get an additional 20 percent state historic tax credit.
“The state credit is tied to federal credit,” says the Landmark Society’s executive director, Wayne Goodman. “The only way you can use the state credit is if you piggyback on the federal.” If the federal credit dies, so does the state’s.
The credits aren’t available to individual homeowners for work on their own home, but there are major public benefits, and not simply from the jobs created for construction workers and craftspeople. Picture downtown Rochester with the Sibley building deteriorating year after year. Sibley’s transformation from a million-square-foot former department store into residential, retail, and office space is happening thanks to the federal and state tax credits.
If it weren’t for the tax credit, says Goodman, reuse of Sibley’s wouldn’t be possible.
Sibley’s is simply the largest of Rochester’s tax-credit buildings. There are numerous others: the apartments at the corner of Alexander Street and East Avenue, the landmark Stone Warehouse at 1 Mt. Hope Avenue, the Button Lofts on Monroe Avenue, the Eastman Dental Dispensary, and many more in Buffalo.
The Landmark Society, the State Historic Preservation Office, the National Trust, and preservationists throughout the country are urging members of Congress to keep the tax credit, and they’re urging voters to contact their representatives in Washington.
For cities like Buffalo and Rochester – older cities with an abundance of buildings created for uses that no longer exist – loss of the tax credit would be particularly damaging. Among the tax-credit beneficiaries in Buffalo, for instance, is the massive HH Richardson-Olmsted complex, a former psychiatric hospital now transformed into a hotel and conference center.
More than 600 buildings in Pennsylvania have been renovated with the help of the tax credit. The tax-credit program, said a headline in the Philadelphia Inquirer last week, “drove Philadelphia’s revival.” USA Today reports that Memphis and surrounding Shelby County have 74 tax-credit buildings.
The credit was born as a bi-partisan program. Its prime movers in Congress were New York’s liberal Democratic senator, Daniel Patrick Moynihan, and the highly respected, conservative Republican representative from the Greater Rochester area, Barber Conable.
But now it’s under fire from critics on the right and left alike, says Goodman. Conservatives think government is throwing money away and believe the private market should bear the brunt of the restoration costs on its own. Some liberals insist that the credit simply helps wealthy developers.
(Liberals may take particular delight in pointing to one famous beneficiary of the federal tax credit: the Old Post Office building in Washington, DC, now lavishly restored and operating, with great publicity, as the Trump International Hotel.)
Some of Rochester’s tax-credit buildings have been turned into market-rate or luxury apartments. But some – like the enormous Carriage Factory, tucked away in the Susan B. Anthony neighborhood, and the Mills III apartments in the High Falls area – have been converted to affordable or low-income housing.
Holy Rosary Church and its campus, in the Edgerton neighborhood, are now the site of affordable housing and community services.
If there’s no tax credit, says Goodman, eventually, some of these “white elephant buildings” are going to move into the public’s hands. When they’re left vacant for years, they deteriorate and have to be demolished.
“And taxpayers pay for the demolition,” says Goodman, “and we have a vacant lot with no hope, no longer an energizing building” that can spur other development and contribute to the community.
“It’s towns like Rochester and Philadelphia and Buffalo – take your pick,” says Goodman, “post-industrial, rust-belt communities,” that have benefitted most from the tax credit and will suffer most if the credit is eliminated.
“It’ll impact New York City, but it’s not going to bring it to its knees,” says Goodman. “The economy is such that they’ll keep moving without it. Communities likeBuffalo, Rochester, Scranton, Cleveland: Without the credit, it becomes impossible to do these buildings. And the cost is far, far beyond” the amount of the credit.
By: Mary Anna Towler