(CN) - Drive through almost any part of Richmond, Virginia, and you’re bound to see a piece of the past.
The city’s confederate statues made headlines over the summer, but its massive inventory of old buildings might become just as newsworthy if the House’s tax plan comes to fruition as currently written.
That's because a tax credit that’s lead this old city to invest billions in historic buildings is set for the chopping block.
The program, known formally as the Federal Historic Preservation Tax Incentives program, and less formally as “rehabilitation credits” or “historic tax credits,” were created in the early 1980’s by the Reagan administration. It allows developers to turn 20 percent of the cost of rehabbing older, income-producing buildings into tax credits that are distributed over 5 years after the project is completed.
“With that one initiative, we help to send your tax dollars back into your communities,” said President Reagan in a national address in 1984, three years after the program's inception.
“Our tax credits have made the preservation of our older buildings not only a matter of respect of duty and history, but economic good sense,” the president said.
Now, in 2017, the House version of the GOP tax overhaul removes those credits entirely.
“You won't see buildings being renovated, it's a pretty easy calculation,” said David White, a managing member of Historic Housing LLC, if the tax credits disappear.
White’s business specializes in rehabbing old buildings throughout central Virginia using the credits provided by the federal program as well as some offered by the state. He’s been part of the nearly 700 HTC-funded projects that make Richmond the municipality with the largest total number of developments to receive this support.
Richmond’s high number of HTC projects happened for a number of reasons. A large part has been the state’s embrace of the program and its creation of a state-level program that similarly offers 25 percent in tax credits over five years after a project’s completion.
“I could never fathom a city like Richmond being what it is today without tax credits or something that is equally valuable to a developer,” said Julie Langan, Director of the Virginia Department of Historic Resources which oversees the state-level credits and helps people apply for federal credits as well. She said the cost of rehabbing older buildings is often way too much for a developer to incur alone.
White agreed, and while some may argue the program offers an unfair federal handout to businesses, he points to the nation’s rapid expansion after World War II as the earliest example of federal involvement in the housing industry.
“Eisenhower went to Europe and saw the roads the Germans had built, and he said ‘We need that for our military in times of a national crisis,’" White said. “That started the national highway system. And they are a great part of our economy, but they made an unlevel playing field for development in the cities. So I think the HTCs, to some extent, level the playing field.”