A proposed change to the federal tax code could have outsized impact on Rhode Island, where historic but dilapidated mill buildings and commercial structures still abound.
The Federal Historic Tax Credit, in place since the Reagan administration, is eliminated under the last available House bill and cut in half under the Senate plan. While the status of the tax bills remains fluid, historic-preservation advocates have mobilized to try to save it.
Rhode Island could be disproportionately affected by a loss of the federal credit, which covers up to 20 percent of the project cost for a rehab that includes a commercial component.
Most of the historic buildings rehabilitated in the state in the past 15 years have had project financing through the credit, and its state counterpart, according to preservationists. The state program has not received new funding since 2013.
“I was shocked and surprised,” said Christine M. West, an architect and president of the board of the Providence Revolving Fund, which provides loans to projects that qualify for the federal credit. “It’s remarkably short-sighted,” added West, a principal of Providence-based KITE Architects Inc. “It’s such an effective economic-development tool.”
According to statistics provided by the nonprofit Preserve Rhode Island, 203 projects in Rhode Island received federal credit certification from 2002 through 2016, including 105 in Providence alone.
Providence-based arts nonprofit AS220 owns three historic buildings in the city that it has renovated for commercial use, and for artists’ work and living space. Excluding acquisition costs, the Dreyfus Hotel was redeveloped at a cost of about $7 million. The Mercantile Block was a $12 million project, according to Lucie Searle, the organization’s development and project manager. State and federal credits were used for both, she said in an email, with the federal credits covering 20 percent of the cost.
“Couldn’t have done it without them,” she said.
Rhode Island had $410 million in rehabilitation projects from 2011-2015, according to an annual report on the economic impact of the federal tax credit completed in 2016 by Rutgers University and the National Park Service.
Using census data, Grow Smart Rhode Island Director Scott Wolf found Rhode Island led all other states in per capita impact, with $388.54 per person in rehabilitation costs.
Wolf said the outsized impact in Rhode Island reflects the activity of the past 15 years. Through the state and federal historic tax credits, Rhode Island emphasized rehabilitation of historic structures.
The idea of losing all or part of the federal credit is disturbing, he said. Without federal and state credits, the untouched buildings won’t get done, he said.
“It would be a stark and regrettable reality,” Wolf said. “For the most part, these historic-preservation projects [aren’t affordable], unless you have both.”
