Historic preservation and tax incentives: The US experience

Abstract

ffAB~~A~~~~~. Vol. Y, No. I. pp. 1%24.1985 In recent years, the US Government has enacted several major legislative programmes to stimulate the preservation of historic structures and to encourage community revitalisation activity. The legislation, following years of neglect of our historic resources, aimed to reverse the imbalance in the US tax codes that had previously favoured new construction over rehabilitation efforts. The first major legislative initiative involved the enactment of the ~~tjo~~Z ~istor~cu~ ~reserv~t~o~ Act in 1966. The act established a decentralised structure of State Historic Preservation Offices (SHPOs) to promote the retention and reuse of historic structure under the purview of the Federal Department of the Interior. SHPO programmes, involving primarily review and technical assistance activities, included survey and inventory of historic structures, public info~ation and education, environmental review, and administrative activities. Although the programmes were helpful, they lacked sufficient financial incentives to have a significant effect on historic preservation efforts. The US Congress has attempted to remedy this situation by including historic preservation provisions in both the Tax Reform Acts of 1976 and the Economic Recovery Tax Act of 1981. Although both acts contain significant tax incentives to promote preservation, there has been little systematic investigation of their overall effects. The few national studies that have been conducted (Department of the Interior, 1982) have contained insufficient detail to adequately evaluate the land use, construction and community effects of the legislation. The purpose of this article, therefore, is to examine the overall impacts of the two major US tax initiatives to promote historic preservation in the hope that other nations may benefit from our experiences. Although both acts share the overall goal of promoting preservation, their specific provisions have resulted in significantly different community impacts. This article, therefore, examines the impacts by using national data and also case studies from the state of Georgia. The case study approach allows us to take advantage of such micro-data as floor area, original and new use of structures and extent of federal and state financial involvement in projects, that is not systematically available on a national basis. The study is organised into four parts. First, the provisions of the two major tax acts are reviewed and their known impacts evaluated. Second, the effects of the Tax Reform Act of 1976 are analysed based on a random sample of projects submitted for SHPO review in the state of Georgia from 1977 to 1982. Third, a similar investigation of projects and their effects under the Economic Recovery Tax of 1982 is undertaken. Conclusions and recommendations are presented in the final section.