Historic Preservation: Incentivizing Companies through Tax Credits

By Adorno, Ejulius | Journal of Corporation Law, Fall 2017 | Go to article overview

Historic Preservation: Incentivizing Companies through Tax Credits


Adorno, Ejulius, Journal of Corporation Law


I. Introduction: The Importance of Historic Preservation

The preservation of historic structures not only helps preserve the cultural history of communities across the United States, but it also provides these communities with an enormous amount of economic benefits that come in the form of jobs, revenue, and increased property values. Company investment in historic structures has been a vital part of historic preservation and bringing these benefits to communities all across the country. The single largest way to get companies to invest in local historic structures is to provide a monetary incentive in the form of tax credits.

This Note looks at the role tax credits play in incentivizing businesses to invest in historic preservation. Particular interest is placed on the unique characteristics different states use in their tax credit programs and how different states are better able to incentivize investing in historic preservation through their respective tax credit programs. First, the Note will give a brief background on historic rehabilitation tax credits at the federal and state level and look at the economic benefit historic rehabilitation provides for states, local communities, and companies. The next part will comparatively analyze the tax credit programs of three different states to determine what types of characteristics best incentivize companies to invest. Finally, this Note recommends that states alter their tax credit programs to include several features that will likely increase company investment in historic structures in their state.

II. Background: The Development of Historic Preservation Tax Credits

In recent decades, historic preservation, or landmarking, has developed into one of the most vital tools to protect American architectural culture and heritage.1 Historic preservation is utilized to maintain traces of historical events, persons, and spaces that have shaped communities across the United States.2 Today, historic preservation is a complex system of laws, policies, and advocacy groups at the national and local levels of government with participation from private and public sectors.3 The benefits of historic preservation-including increased economic activity, job growth, increased tourism, neighborhood stabilization, and the promotion of arts and culture-are far reaching and drastically outweigh any possible disadvantages that come with preservation.4 As a result, the Federal and state governments provide tax incentives or credits for individuals and companies who invest their money in purchasing and rehabilitating historic structures.5 The tax credits help to encourage companies to rehabilitate and invest in historic structures.

A. The Development and Process of Historic Preservation

Preservation began late in the nineteenth century when citizens of Virginia sought to preserve Mount Vernon, the historic home of George Washington.6 However, historic preservation did not gain momentum until the early twentieth century, when Congress enacted the Antiquities Act of 1906, which gave the President power to designate historic landmarks and structures located on federal land.7 In the 1960s, Congress began increasing historic preservation efforts and raising public awareness, which culminated in the National Historic Preservation Act of 1966 (NHPA).8 The NHPA authorized the Secretary of Interior to maintain a National Register of Historic Places, such as districts, buildings, and certain monuments to protect historic property at a national level.9

Additionally, the NHPA encourages states to maintain their own preservation programs by following the guidelines and criteria set forth by the NHPA.10 Governors of each state are required to designate a State Historic Preservation Officer (SHPO) to implement and oversee a state preservation program, as well as implement the required federal preservation program.11 The responsibilities of the SHPO include conducting a survey of historic properties statewide, identifying and nominating historic properties to the National Register, and overseeing the applications for listing historic properties on the National Register. …

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