Since 2002, the state has provided a 30-percent tax credit for historic preservation.
Combined with the 20-percent federal tax credit, it made possible for a developer who spends, say, $1 million to refurbish a mill to get $500,000 in tax credits, which the developer often turns around and sells to investors to generate more cash for the project.
According to Richard Moe, president of the National Trust for Historic Preservation, 189 projects in the state have used the tax credits to leverage $859 million in private investment.
“In exchange for $257 million in tax credits between 2003 and 2011,” he said in a Jan. 11 speech at the Providence Foundation, “they will generate almost $444 million in income, sales and property taxes – a net benefit of almost $187 million. What’s more, these projects will provide more than 3,000 housing units, 20 percent of them for low/moderate income residents.”
The numbers are impressive, and they tell a powerful story. But you don’t need the big picture to understand the transformative power of the historic preservation tax credit. This week, you only need to leaf through the Providence Business News to see the momentum that’s built up in our region to reuse old buildings.
Looking around for the top development stories in the state, we found multiple examples of “adaptive reuse” – from the transformation of the old Training School cottages and chapel into a retail, office and residential complex, to the rebirth of the Royal Mills in West Warwick, to plans to turn a former bank hall and Boys & Girls Club in Pawtucket into a health center.
We didn’t plan it this way. It’s just that when you start taking the pulse of development in the region, you can’t avoid running into these kinds of projects.
In fact, the vitality of the present depends in no small part on the past – and that is a good thing. It allows us to celebrate both who we have been and who we would like to be without tearing down either group and reminds us that moving forward is best accomplished together.
But success has also made the tax credits costly for the state, and last year, the General Assembly came dangerously close to reducing them or imposing a moratorium. In the end, the credits remained but the state “processing fee” was raised to 2.25 percent of certain construction costs, applicable to all projects completed after last July 31. For the Royal Mills alone, the fee is expected to surpass $900,000.
Let’s not go any farther down that path. If nothing else, the recent success stories should give pause to our elected officials when they consider tinkering with the preservation tax credit.
Our feeling is that if it ain’t broke, don’t tear it down.
