National Trust Urges Administration to Support Tax Package That Benefits Revitalization of Older Neighborhoods

2/28/2003

From: Katie Callahan of the National Trust for Historic Preservation, 202-588-6141

WASHINGTON, Feb. 28 -- The National Trust joined today with the National Council of State Housing Agencies to express concern over a tax proposal endorsed by the Bush Administration that could have a devastating effect on the Federal Historic Preservation Tax Credit (HPTC), one of the nation's most successful and cost-effective tools for stimulating community revitalization through the rehabilitation of older buildings. The Administration's proposal to change the corporate dividends tax structure would have the effect of penalizing corporate taxpayers that invest in the HPTC and other tax credits that benefit neighborhoods most in-need.

The proposed change could also adversely affect other tax credits that link historic preservation with community revitalization and housing production such as the Low-Income Housing Tax Credit, the New Markets Tax Credit, and historic tax credits enacted by 21 states. The Federal Historic Preservation Tax Credit (HPTC) program fosters private sector rehabilitation of historic buildings and promotes economic growth. At the same time it provides a strong alternative to government ownership and management of historic properties.

The Trust urges the Administration to support a formulation of the dividend exclusion proposal that would not penalize corporate taxpayers and adversely impact the Federal Historic Preservation Tax Credit.

"If the dividend exclusion were enacted in its present form, corporations would opt to increase the distribution of tax-free dividends to shareholders at the expense of investing in preservation tax credits," said Richard Moe, president of the National Trust. "If this happens, we would lose one of the most valuable tools for bringing new life to downtowns and low- and moderate-income neighborhoods."

President Reagan's Economic Recovery Tax Act of 1981 created the basic structure for a 20 percent credit for eligible expenditures related to the rehabilitation of historic properties. A 10 percent credit is currently allowed for similar expenditures on older, non-historic buildings.

Historic preservation tax incentives produce significant benefits for the nation. The National Park Service administers the program in cooperation with the IRS. Their research shows that:

-- the tax incentives have stimulated private investment of over $18 billion; -- more than 27,000 historic properties have been rehabilitated and saved; -- more than 149,000 housing units have been rehabilitated -- more than 75,000 new housing units have created, including over 30,000 for low and moderate-income families.

OMB estimated that HPTCs cost the Treasury in FY 2002 to be $230 million dollars.

The National Trust for Historic Preservation is a private, nonprofit membership organization dedicated to protecting the irreplaceable. Recipient of the National Humanities Medal, the Trust provides leadership, education and advocacy to save America's diverse historic places and revitalize communities. Its staff, regional offices and 21 historic sites work with the Trust's quarter-million members and thousands of local community groups in all 50 states. For more information, visit the Trust's web site at http://www.nationaltrust.org.