Advocacy Issues Federal Issues

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03/08/2023
By Dana Cohen

Preservation News: Sen. Cardin Introduces Tax Credit to Encourage Revitalization of Distressed Homes Nationwide

 U.S. Senators Ben Cardin (D-Md.) and Todd Young (R-Ind.)have introduced legislation that would expand the Historic Tax Credit to foster economic growth and urban renewal, revitalizing housing in distressed neighborhoods nationwide. In 2021 Maryland passed state legislation that that made financial assistance available to help close appraisal gaps in historically redlined and disinvested neighborhoods.

Federal Issues

Federal Preservation Tax Incentives

The Program: The Federal Historic Preservation Tax Incentives Program–a 20% tax credit–began in 1976. Since then, the program has completed over 38,000 projects with over $62 billion in private investment. As a result, the historic tax credit is now the single largest federal program specifically supporting historic preservation.

Preservation tax incentives are available for any qualified project that the Secretary of the Interior designates as a certified rehabilitation of a certified historic structure. A certified historic structure is any building that is listed individually in the National Register or located in a registered historic district and certified as historically significant to the district. A certified rehabilitation is any rehabilitation of a certified historic structure that is certified as being consistent with the historic character of the property and the district in which it is located.

Since 2001, in Maryland this credit has made possible over $1.5 billion in rehabilitation projects in nearly every county. A map of all Maryland projects since 2001 can be found here.

The Challenge: Although initially cut from House Republican’s comprehensive tax reform bill, thanks to the tireless efforts of historic preservation advocates, the Historic Tax Credit was retained in the final version of the tax bill. While the credit amount remains 20% of the Qualified Rehabilitation Expenditure, the disbursement period has been lengthened to 5 years instead of the previous one-time payment.

Our Position: Any efforts to comprehensively reform the tax code must preserve the federal rehabilitation tax credit. The credit currently generates more income than it costs the treasury – meaning an elimination of the program would be a net loss in revenue to the nation. The need for the credit increases yearly and remains as important and valuable as it was when introduce in 1976.

Preservation Maryland supports the bi-partisan Historic Tax Credit Improvement Act (S. 425) which was re-introduced by Senator Cardin in early 2017. The new legislation would make changes to the program to further encourage building reuse and redevelopment in small, midsize, and rural communities. Learn more about that legislation here.

Section 106 of the National Historic Preservation Act

The Program: Section 106 of the National Historic Preservation Act of 1966 (NHPA) requires Federal agencies to take into account the effects of their undertakings on historic properties, and afford the Advisory Council on Historic Preservation a reasonable opportunity to comment.

Once an agency begins this process they must work to determine if there is an ‘adverse’ effect on historic resources. If an adverse effect exists, they must work to resolve the adverse effects through consultation with federal, state, local, non-profit and community partners. Learn more about Section 106 from the Advisory Council on Historic Preservation.

The Challenge: Efforts to cut government ‘red-tape’ often indiscriminately impact important laws, such as Section 106. Recently, members of congress have attempted to carve out exceptions to Section 106 for issues of ‘national defense’ and other emergency declarations.

Our Position: Preservation Maryland opposes any efforts to limit or weaken Section 106. Laws like Section 106 were created in response to massive government projects that indiscriminately impacted historic resources and destroyed large swaths of historic architecture, neighborhoods and landscapes. The era before Section 106 is not an era to which we should ever return.

The Historic Preservation Fund

The Program: In 1976, Congress established the Historic Preservation Fund (HPF) to support the initiatives mandated by the National Historic Preservation Act. Modeled after the Land and Water Conservation Fund (LWCF), the HPF receives its funding through offshore oil and gas lease revenue from the outer-continental shelf using funds from one non-renewable resource to fund another non-renewable resource, our Nation’s heritage.

The National Park Service administers the HPF. Eligible grant recipients include: State and Territorial Historic Preservation Offices (SHPO’s); Tribal Historic Preservation Offices; Historically Black Colleges and Universities (HBCUs) and the National Trust for Historic Preservation.

State Historic Preservation Offices must provide a 40% match of non-federal funds (dollars and in-kind donations). The HPF also stipulates that 10% of each allocation to SHPO’s be passed through to Certified Local Governments (CLGs) in the form of matching grants. Once the amount awarded to SHPO’s exceeds $65 million, 50% of the overage is additionally awarded to CLGs. CLG grants fund a variety of preservation activities ranging from survey and education programs to bricks and mortar assistance.

The Challenge: Despite being authorized for funding up to $150 million, annual appropriations have never exceeded $94 million. In 2015 the appropriation was just $56 million – nearly $100 million below its authorized level. As a result, the ability of State Historic Preservation Offices (SHPOs) to carry out their important missions is severely curtailed. Surveying historic resources, providing brick-and-mortar grants, and providing preservation education programming is cut as a result.

Our Position: Appropriations should be equal to need and be fully funded at the authorized level of $150 million. America deserves a fully funded Historic Preservation Fund.

Section 4(f) of the Department of Transportation Act

The Program: Section 4(f) is the nation’s strongest preservation law. This section of law is intended to protect significant parks, recreation areas, wildlife refuges, and historic sites from the effects of transportation projects. Under Section 4(f), historic sites and other protected resources must be avoided, unless there is “no feasible and prudent alternative” and all “possible planning to minimize harm” has been utilized. In Maryland, 4(f) once prevented a massive highway deck from being constructed nearly on top of Fort McHenry – birthplace of the national anthem – which is one of the clearest examples of the value of this law.

The Challenge: Efforts to cut government ‘red-tape’ often indiscriminately impact important laws, such as Section 4(f). Any and all efforts to undermine this law must be avoided. 

Our Position: Section 4(f) has been critical to the preservation of Maryland’s historic resources and must be preserved in law. This law keeps massive transportation projects from unmitigated destruction of historic properties and must be protected.

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