Protecting Virginia’s Historic Rehabilitation Tax Credit

Posted on by cguske

On behalf of AIA Virginia, President Nick Vlattas, AIA, attended the Aug. 29 meeting of the Joint Subcommittee to Evaluate Tax Preferences to urge legislators to reject a repeal, sunset or cap to Virginia’s Historic Rehabilitation Tax Credit (HRTC). [Read his public testimony.] He was joined by Vice President of Government Advocacy Tim Colley, AIA, member Kathleen Frazier, AIA, and representatives from dozens of other businesses, homeowners, non-profits, associations, churches, and communities who came from all over the Commonwealth to speak in support of the credit.

During the formal agenda, the committee heard from Kathleen S. Kilpatrick, Hon. AIAVA, who is Curator of the Virginia Capitol & Executive Director of the Virginia Capitol Square Preservation Council. As the director of Virginia Department of Historic Resources (DHR) when the credit was established, she was well prepared to speak about the history and purpose of the program and early amendments.

They also heard an informative report from John Accordino, Ph. D., FAICP, Professor, and Director of VCU’s Center for Urban & Regional Analysis, who presented data on the economic impact of the Virginia HRTC.

Legislative Services staff member, David Rosenberg, gave a summary of other state’s historic tax credit programs.

Julie Langan, from DHR, presented a report on the program itself, calling out a number of successful projects and responding to several inquiries posed during the subcommittee’s meeting in June.

And finally, a staff member from Virginia’s Department of Taxation provided follow-up information to several additional questions that arose during the last meeting.

Unfortunately, the public comment period was limited to 30 minutes, so only a small handful of citizens were able to share their views.

Legislators asked a number of very probing questions, focused on the program’s ROI and the heavy concentration of investment in the Richmond metro area compared to other areas of the state. They also suggested several topics for further study. The subcommittee is reviewing these tax preferences as part of its systematic review of all tax preferences in the Code of Virginia. After its review, the subcommittee will make a recommendation to continue, expand, modify, or eliminate it. Their particularly close scrutiny of the HRTC program (and many others) is likely due to the need to narrow or close a projected 1.5 billion dollar shortfall in the two-year budget.

It is clear we have much more work to do to protect Virginia’s Historic Rehabilitation Tax Credit. Based on their inquiries, we’re working with a coalition to gather data.

Members with insights into how a cap to the credit might impact the program, the profession, or experience working within HTC models in other states (particularly Ohio) are encouraged to contact Rhea George at rgeorge@aiava.org or (804) 237-1768.

Read the Richmond Times-Dispatch’s analysis for more information (plus a great quote from Kathy Frazier’s remarks before the subcommittee).

AIA Virginia Position
AIA Virginia, a Society of the American Institute of Architects, strongly supports the Virginia’s Historic Rehabilitation Tax Credit as an important tool for economic development and a critical driver in the preservation of Virginia’s rich cultural heritage.

SURVEY RESULTS
A survey about the HRTC was sent to 2,116 members on Aug. 4, 2016
821 individuals opened the survey message
244 responded

97% support Virginia’s Historic Rehabilitation Tax Credit
(2% have no opinion; >1% do not support)

73% believed that their businesses would be harmed if the credit were eliminated or capped

70% report that they’ve worked on historic tax credit projects

 

Historic Rehabilitation Tax Credit Threatened

Posted on by cguske

Virginia’s Historic Rehabilitation Tax Credit (HRTC) program is currently under review by the General Assembly’s Joint Subcommittee to Evaluate Tax Preferences, and we believe it faces a serious threat.

AIA Virginia strongly supports Virginia’s HRTC and has sent a letter to the Chair urging the committee to reject a repeal, sunset or cap to the credit. We’ve been working actively with a coalition of 12 other organizations to educate legislators on the benefits of the program and will have a presence during the next Committee meeting on Aug. 29. We’ll also be sending action alerts directly to AIA members who are the constituents of committee members. If you’d like to take individual action, you can do so by emailing taxpreferences@dls.virginia.gov. Consider sharing an HRTC success story, how your firm might be impacted by a repeal or limitation of the credit, or use this sample letter.

The credit was created in 1996 and implemented in 1997 as an incentive to catalyze economic development through the rehabilitation and reuse of the Commonwealth’s rich inventory of historic structures. Since its inception, the credit has been widely used as a redevelopment tool, helping revitalize cities, towns and rural communities all across Virginia.

Not only does the HRTC have a proven track record for stimulating economic growth through private investment, it helps to preserve Virginia’s cultural heritage for future generations. It is exactly the kind of market-based incentive needed to leverage private investment in historic properties. Already, nearly $4 billion in private funds have been invested and at least 31,000 jobs have been created in the Commonwealth as a result of this credit.

The credit has statewide impact. Eighty out of 95 counties in Virginia and all 11 metropolitan areas have benefitted from the program through revitalized properties used for a wide variety of purposes. Since its inception, more than 2,375 historic buildings in Virginia have been preserved and put to use. Not only does this mean work for architects and architecture firms, but these projects also generate state and local tax revenue, create jobs, and act as an incredible catalyst for community revitalization.

Other states across the nation look to Virginia as a leader in this arena and the program is working. In 2012, the Joint Legislative Audit and Review Commission’s study on the effectiveness of tax preferences, found that the state tax credit program was only one of two tax preferences that achieves its intended goal.

HOW DOES THE CREDIT WORK?
The HRTC program allows property owners to receive a state tax credit of 25% of eligible expenses for approved rehabilitation work on certified historic structures, provided that the work meets the Secretary of Interior’s Standards for Rehabilitation. The program is managed by Virginia’s Department of Historic Resources.