Federal Historic Tax Credit

Quick Stats

  • LOCATION: Statewide
  • STATUS: Saved
  • BUILT: 1986
  • SITE TYPE: Legislative
  • GEOGRAPHY: Statewide
  • OWNER AT TIME OF LISTING: Public, Federal
  • THREAT AT TIME OF LISTING: House Ways and Means Committee tax reform bill that proposed eliminating the program.

(Photo: Prairie Street Brewing Company, Rockford. Example of a completed Illinois preservation project that used the tax credit. credit: Liz Chilsen)

Historic Significance

The Federal Historic Tax Credit is a vital incentive in encouraging the reuse and rehabilitation of historic buildings throughout the nation. Initially enacted in 1978 and made permanent in the tax code in 1986, the Historic Tax Credit is administered by the National Park Service and IRS in conjunction with the State Historic Preservation Offices. The 20 percent income tax credit is available for the rehabilitation of historic, income-producing buildings.

The Federal Historic Tax Credit has been used to help finance the reuse, rehabilitation and preservation of schools, warehouses, factories, retail stores, apartments, hotels and office buildings throughout the country. It enables projects that may not be economically feasible otherwise, attracting private capital—$120.8 billion nationwide since inception—to revitalize often abandoned and underperforming properties.

From 2002 to 2015 alone, Illinois was awarded $509 million in Federal Historic Tax Credits. By 2017, the 253 projects completed with these credits statewide had leveraged over $2.5 million in historic redevelopment, an estimated $3 billion in total development and created approximately 40,000 jobs (17,000 construction jobs and 23,000 permanent positions). Historic rehabilitation greatly outperforms new construction in job creation, with a higher percentage of cost going to labor versus materials. In addition to hiring local labor, historic rehabilitation materials are more likely to be purchased locally. As a result, approximately 75 percent of the economic benefits of these projects remain in the communities where these buildings are located.

In addition to revitalizing communities and spurring economic growth throughout the nation, the FHTC returns more to the Treasury than it costs by generating new tax revenues. The Treasury receives $1.20-$1.25 in tax revenue for every $1 invested. According to a study by the National Park Service, since inception, $23.1 billion in federal historic tax credits have generated more than $28.1 billion in federal tax revenue from historic rehabilitation projects.

(Photo: Prairie Street Brewing Company, Rockford. Example of a completed Illinois preservation project that used the tax credit. credit: Liz Chilsen)

Threat at Time of Listing - 2017

Despite these obvious benefits, however, the Federal Historic Tax Credit was placed in jeopardy in 2017 by a proposed tax reform bill. The House Ways and Means Committee proposed the removal of the Federal Historic Tax Credit in proposed legislation. To fight this elimination, which would have severely hindered historic rehabilitation projects in Illinois, Landmarks Illinois included this crucial tax credit on our 2017 Most Endangered list. Specifically, Landmarks Illinois highlighted historic preservation projects in Belleville (Belleville Hotel), Danville (Bresee Tower), Peoria (Chic Manufacturing Building) and Rockford (Ziock Building) that would be severely threatened if the Federal Historic Tax Credit was not retained.

(Photo: Ziock Building, Rockford. Example of a preservation project underway that could use the tax credit. credit: Liz Chilsen)

Preservation Efforts

In response to this multi-layered threat, Landmarks Illinois joined forces with numerous advocacy groups and grassroots supporters across the country to save the bulk of the Federal Historic Tax Credit. Although the 10% credit for non-historic, non-residential buildings built before 1936 was ultimately eliminated, the new federal tax bill passed in December 2017 preserved the critical 20 percent credit for certified historic structures. With Illinois legislators in key positions, the advocacy of Landmarks Illinois and partners proved critical in retaining this key preservation incentive. This rescue was a win for historic reuse and rehabilitations projects throughout the country and our state. In Illinois, over 1,800 historic properties are currently eligible for these crucially important tax incentives, which save historic sites, create jobs, spur the economy and help to revitalize our communities.

Landmarks Illinois and other preservation advocacy groups continue to push for the improvement of the Federal Historic Tax Credit through corrections bills and other legislation. The Historic Tax Credit Improvement Act of 2017, for example, proposed long overdue changes to the Historic Tax Credit, further encouraging building reuse and making rehabilitation work easier. Additionally, the bill included a new 30% credit for smaller deals to make sure rural and non-urban areas have the same ability to take advantage of the credits. While the 2017 bill did not pass, similar legislation is expected to be introduced during this session of Congress. With such efforts, we hope to continue to improve incentives for historic reuse and rehabilitation across America. In the meantime, the Federal Historic Tax Credit continues to serve as the backbone of preservation activities in our state.

(Photo: Ziock Building, Rockford. Example of a preservation project underway that could use the tax credit. credit: Liz Chilsen)

Further Reading

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