Why the Federal Historic Preservation Tax Credit is worth saving

By Karen Gravel and Charles Lawrence

The United States Congress, urged on by national leadership, continues to push drastic tax reform that could cut back or even eliminate the Federal Historic Preservation Tax Credit, among many other programs. This credit, however, is not only worth saving for its economic benefit; it also allows communities to restore historic buildings and landmarks of cultural significance and to usher those buildings into the future as shining examples of economic development and prosperity. 

By rehabilitating historic buildings, the embodied energy of carbon and fossil fuel investments from their original construction are reinvested for the future with relatively minimal new expenditures. Programs like LEED, Green Globes, Smart Growth, the New Urban Agenda, and the International Sustainable Development Goals acknowledge the environmental benefits of preservation and the tax credit program helps achieve the commitments to these programs. To receive the tax credit, a project also must be consistent with the Secretary of the Interior’s Standards for Rehabilitation. Because of this, the quality of the project and the appropriate treatment of historic aspects of the property are built into the process.

Nationally over the life of the program, the historic rehabilitation tax credit has created more than 2.4 million local jobs, leveraged $131.8 billion in private investment in communities, used $25.2 billion in tax credits to generate more than $29.8 billion in federal tax revenue, and preserved the character and history of more than 42,293 historic buildings. The economic impact of each of these projects will continue throughout the life of the building, in addition to providing unique places that draw tourism and continued investment.

Tax credits encourage economic development. In the long run, it is far more cost effective to preserve a building through tax credits than to start from scratch. From a sustainability standpoint, it is important to teach the importance of preservation and reward it as a sustainable architectural practice.  Studies have shown that it can take more than 50 years for an energy-efficient new building’s operational energy savings to offset the embodied carbon of a demolished existing structure, with an upgraded existing structure offering the best environmental performance, particularly when historic passive design strategies such as daylighting and natural ventilation are fully leveraged. 

Aside from financial and environmental impacts, historic preservation plays a significant role in protecting the character and culture of cities across the country. Not only is it the architectural practice that best embodies a philosophy of “do no harm,” but it embraces, celebrates and carries on the stories and character of a building and community’s history. These buildings also draw tourists, engage residents and enhance the fiber of a community. 

Projects like these do more than return a bottom line investment to city and county governments. They bring communities together around a shared history and the promise of a better future. Many house startups and performing arts, innovative companies, and next generation thinkers. They are built on the principal that we can steward the resources we have for a better tomorrow. When we leverage the brick and mortar of our past for a better tomorrow, we are investing in our future.

As of today, it appears the Historic Tax Credit may survive largely intact thanks to Senator Bill Cassidy(R-La.)’s proposals to restore it; however, the 20 percent rate would be spread over the course of five years, at four percent each year. But the best way to protect the Historic Preservation Tax Credit is to voice your support to your local officials until the legislation is passed and signed. 

Karen M. Gravel, AIA, CDT, LEED AP  and Charles Lawrence, MSHP, CDT, work for Lord Aeck Sargent (LAS), an architecture, planning and interior design firm serving clients in the public and private sector. Gravel is a principal for LAS and director of the historic preservation practice area, and Lawrence is a conservator and preservation planner.