Editorial: Historic preservation tax credit should be restored, expanded

We are excited to see that lawmakers are considering bills that would restore—and expand—a historic preservation tax credit program that was eliminated in 2016, leaving Indiana one of 13 states without such an incentive.

As reporter Taylor Wooten explained in the Jan. 20 issue of IBJ, the proposals—one in the House and one in the Senate—would award developers income tax credits worth 25% of their rehabilitation costs, or up to 30% if the project is not income-producing.

That means, for example, that a company that spends $10 million on a project could reduce its tax bill by $2.5 million to $3 million in a given year, depending on the project’s details.

We support the move as a way to jump-start redevelopment projects in communities of all sizes across the state.

Reuses of older buildings can bolster downtowns and provide momentum in older neighborhoods where infrastructure has fallen into disrepair. In addition, projects that incorporate historic structures often attract high-tech companies and workers looking for a more urban environment.

That’s certainly been the case with Bottleworks, a $300 million redevelopment of a former Coca-Cola bottling plant on Massachusetts Avenue on the northeastern edge of downtown. That project includes the restoration of a 100-year-old art deco complex, but it incorporates new construction as well, including an office building where tech incubator High Alpha has its headquarters.

You can see similar momentum in Fort Wayne, where a giant former General Electric campus is being transformed into a live-work-play destination, anchored by the Do It Best headquarters, a massive coworking space and a food hall.

Both of those projects took off without a state historic preservation tax credit program in place. But architects and preservationists say there are hundreds more projects across the state that just need a boost. We urge the Legislature to give it to them.

After all, lawmakers didn’t eliminate the old tax credit program because it was failing to encourage preservation projects. In fact, it was essentially because there was too much demand.

The previous program, which was launched in 1993, had an annual cap of $450,000, an amount Indiana Landmarks President Marsh Davis called “really embarrassing.” The cap meant the state couldn’t award tax credits worth more than that in any one year.

So when demand was higher—and it was every year—the state would award credits into future years. That meant the developer of a project completed in 2000 might not be able to claim the credit until 2005 or later.

Eventually, the backlog grew to 13 years, making the credit essentially useless. So the Legislature scrapped the credit and replaced it with a $700,000-per-year grant program that critics say is too small to be effective.

Now, the Indiana chapter of the American Institute of Architects is working with a handful of lawmakers to create a new tax credit program with a higher cap—or no cap at all.

We support the bills and urge lawmakers to pass a new tax credit program into law. We think the investments will pay dividends in communities across Indiana.•

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