An architects’ group is pushing the Legislature to reinstate Indiana’s historic tax credit for commercial buildings, in an effort to create more Incentives for developers to restore open, damaged community structures in communities across the state.
The Indiana chapter of the American Institute of Architects is working with the House and Senate to build support for the proposals contained in House Bill 1399 and Senate Bill 174 that would restore the historic building. The tax credit was abolished in 2016 and replaced with a subsidy. program that critics say is too limited.
“Every town in Indiana has a Main Street. They have an old prison. They are old school,” said Terry Bradbury, a member of the Indiana chapter of the American Institute of Architects. “I’ve had three or four tax-advantaged school transitions. They make a world of difference in the community.”
The House bill was written by Republican Rep. Sharon Negele, R-Attica, would give developers an income tax credit of about 25% of their renovation costs, or up to 30% if the project is not available some income. This means, for example, a company that spends $10 million on a project can deduct $2.5 million to $3 million from its taxable income, depending on the circumstances. project information.
The Senate bill written by Sen. Dan Dernulc, R-Highland, is similar, but would allow tax credits to be used in corporate taxes or insurance taxes.
Negele’s bill would limit the amount of debt each company can take on annually to $20 million. The Senate bill has no limit. The Office of Legislative Services estimates that the bill could reduce tax revenue by $9.8 million to $59.8 million in the first year.
Either way would raise more money for historic preservation than was allowed under Indiana’s old tax credit law, which limited the amount of the credit to $450,000 a year.
It’s an important investment, Negele said. In his own city of Attica, the large amount of debt can be an incentive for developers to preserve the historic city through regeneration, he added.
“The truth is, if you don’t have these kinds of programs, it’s very difficult to find developers and people who are interested in fixing it,” Negele said. “So this tool is It’s a great incentive to make that happen.”
Indiana is one of only 13 states without a historic tax credit program for commercial buildings, according to Indiana Landmarks President Marsh Davis. Although one was created in 1993, Davis said the annual budget of $450,000 was “very embarrassing” making it the smallest program in the country.
Despite the lack of funding, the state continued to issue tax credits, Davis said. This led to a 13-year accumulation of beneficiaries, which means that developers can give tax credits for projects that are built in one year but will not be able to claim that they reduce their tax bill for more than a decade.
In other words, the program was sleeping because of the error.
Prosecutors blame the program’s failure on retired House Ways and Means chairman Tim Brown, a Republican from Crawfordsville, who said in a recent phone interview with IBJ, he’s not a fan of the tax credit. But Senate tax chairman Brandt Hershman, a Buck Creek Republican who chaired a commission that reviewed the effectiveness of the tax credit, said at the time that he did not believe the tax history motivated the many enterprises, especially because of the federal tax credit. also available for projects.
Under the leadership of Brown and Hershman, the Legislature revoked authorization for a $700,000-a-year property rehabilitation grant program.
Davis said the relief program has worked well, but it hasn’t provided the energy boost that a large tax credit would generate.
Brown and Hershman have retired from the Legislature, and there is a belief that the politicians will have a better chance to restore the tax program and increase its revenue.
Negele, who served on the board of Indiana Landmarks and spent eight years on the House Ways and Means Committee, advocated for the funding of the program. But his previous efforts have been canceled by the Legislature without a review by the committee.
Indiana’s artist group is hoping this year changes.
Jason Shelley, the group’s executive director, said he’s seen the environmental change historic property restoration has brought to his hometown of Madison and believes the tax credit could bring more of that to the entire state.
Madison’s Eagle Cotton Mill, built in 1884, recently became a boutique hotel and conference center. Shelley said the work took a long time because the money was hard to come by.
“In a way they were able to do it. But it took them many years to complete this project,” he told IBJ.
For Indiana Landmarks, the purpose of the tax credit will encourage developers to preserve some of the historic buildings on its “10 most endangered” list. The tax credit can often be a stepping stone to getting a job over the finish line, he said.
Marsh said the debt could be most important in saving the Hulman Building and Garage in downtown Evansville, a 10-story Art Deco building built in 1929.
“It is just one of the jewels of the state. It needs to be fully restored, but the developers are looking at it, the numbers can’t be satisfied,” Davis told the IBJ. “The state tax credit will help fill that gap.”
The blessings
Advocates say the historic preservation credit not only can help attract developers to historic buildings and districts, it can also encourage cheaper, more sustainable development to become available. have local jobs. In addition, with the “bones” of a structure already in place, improvements can occur faster than new buildings.
“You are bringing new life into that area and providing quality housing, in some cases to areas that were previously affected,” said AIA Indiana President Desma Belsaas.
And because renovation projects can require a high level of craftsmanship and a deep understanding of architecture, Shelley said, they often increase local investment.
At a time when Indiana is struggling for professional workers, Shelley also said that the creation of places that come from the preservation of unique historic buildings can help bring people to the state.
Davis said the debt makes Indiana more competitive. Developers are currently being discouraged from investing in Indiana’s historic preservation projects because of the lack of a historic tax credit program, he said.
“Some of the developers who are doing these historic projects are taking their businesses to other states because they have state debts,” said a Davis. “Indiana, I think, is lost in the absence of one.”
It’s a financial question
It may be a difficult task for the Legislature to fund the program at the level requested.
The state is heading into a year with reduced funding for COVID, and the Governor’s Public Health Commission is requesting an additional $240 million annually to help fight the low levels of the state in public health. In preparing the next two years of the budget, the Legislature will hear from many agencies and cause them to fight for another part of money.
However, the tax value of $ 10 million to $ 20 million per year is much less than the $ 150 million per year that it is said that Ohio is investing in them historic preservation program.
Negele said that his job is to educate his colleagues on the importance of credit.
“There are some wonderful programs out there that other states can learn from that are working on trying to preserve some of these historic buildings, and if there are incentives, they should do it,” said Negele.
He said that Attica, which has five historic districts, needs thanks to help preserve its historic buildings.
“It’s just frustrating, you know, even to persuade the developer there to save a building without these permits available to them – it’s the only way and it won’t happen.”•