The Preservation Rightsizing Network raises strong concerns about the recent proposal from Rep. Dave Camp (R-MI) to eliminate tax credits that are essential to building strong neighborhoods across the country. Rep. Camp’s Tax Reform Act of 2014 proposes to remove tools that promote historic preservation, reuse of existing buildings, sustainable development, and neighborhood stabilization.
Rep. Camp is departing chairmanship of the Ways and Means Committee, so his proposal is more speculative than imminent. However, it certainly will impact future discussions on federal tax credits. The proposed changes take aim at a variety of credits that currently incentivize the reduction of vacant land and building stock, as well as sustainable new and historic development.
The following changes proposed by Rep. Camp all negatively impact rightsizing efforts:
Federal Historic Tax Credits: Rep. Camp proposes complete elimination of the federal historic tax credit, which provides a non-transferable 20% credit against expenses that are incurred rehabilitating certified historic buildings and a 10% credit for age-qualified buildings. These credits are essential for cities looking to strengthen historic neighborhoods and avoid the prospect of having demolition be the only blight-fighting remedy.
Energy Credit: Rep. Camp proposes eliminating the 30% federal credit against the cost of energy efficiency measures on existing and new buildings. This credit helps property owners enhance sustainability of older buildings, making their rehabilitation more feasible.
Low Income Housing Tax Credit: Rep. Camp proposes eliminating the 4% tax credit entirely. His bill would eliminate the increased basis rule for high-cost and difficult development areas and repeal the requirement that states should include energy efficiency and historic status of properties in their low-income housing selection criteria. For the 9% program, Rep. Camp would shift from allocating credit amounts to allocating qualified basis. These changes would make the program difficult to utilize for urban housing development and reduce the chances that the credit would prioritize rehabilitation of existing historic buildings.
New Energy Efficient Home Tax Credit: Rep. Camp proposes complete repeal of the tax credit for construction of qualified energy-efficient homes. This change would remove an incentive for sustainable residential development on vacant lots utilized in urban infill.
The Preservation Rightsizing Network promotes the retention of all of these incentives, because they are needed together to offer cities options for their futures. We call for our colleagues in historic preservation and allied fields—those that value sustainability and affordability, and work for lasting community revitalization—to stand against Rep. Camp’s proposal and those to follow that may adopt the anti-tax credit agenda.