A bill introduced this month focuses on incentivizing historic preservation that would create housing in New Hampshire, and is strongly supported by NH Housing and the New Hampshire Preservation Alliance.
CONCORD, NH – A historic rehabilitation tax credit bill that would focus on creating housing, similar to one that passed last year but didn’t make it into the state budget, is going before the legislature again this session.
Supporters of a state historic preservation tax credit said that neighboring states are reaping the benefits of state programs that boost the federal historic preservation tax credit, and New Hampshire is missing out.
SB 364, which would establish a historic preservation tax credit for developers, got strong support from housing and historic preservation advocates at its first hearing Wednesday before the New Hampshire Senate Ways and Means Committee.
New Hampshire developers can take advantage of the federal historic preservation tax credit that since 1976 has played a part in more than 48,000 completed projects and leverage more than $122.90 billion in private investment, according to the National Park Service, which administers it. The program provides a 20% federal tax credit to property owners who undertake a substantial rehabilitation of a historic building in an income-producing use while maintaining its historic character.
Rob Dapice, executive director of New Hampshire Housing, told the committee Wednesday that since the 2017 Tax Cuts and Job Act weakened the federal program, his organization has seen a drop in historic renovation projects for housing.
Dapice emphasized the advantage neighboring states have by having a state tax credit.
He said, of New Hampshire, “These projects have improved neighborhoods and increased property tax revenues, created jobs in local design, engineering, construction industries; preserved cultural heritage and made New Hampshire more attractive to visitors and residents, and provided affordable housing in an environmental way.”
Since the 2017 tax changes, though, “Fewer of the projects are able to make the numbers work without that credit. A state credit could layer onto the federal credit and make projects more likely to be feasible.”
States that combine a state credit with the federal one “are better able to ensure the maximum utilization of the federal credit.”
“The federal credit is doing work in those states to make those neighborhoods beautiful and vibrant and attractive to visitors that it’s not doing in New Hampshire, and this bill would be a great step in the right direction to fix that,” Dapice said.
Some 39 states also have some form of state historic preservation tax credit, including the five other New England states [see accompanying box below] making it more financially possible for developers to renovate historic buildings.
Eligible properties for a New Hampshire credit would include those that qualify for the state or national historic register or certified on the state or national registers.
Sen. Dan Innis, R-District 7, the bill’s sponsor, said the credit would “not only work toward solving our housing problem in the state by providing additional support,” but also keep around those historic buildings that matter and those that are listed on the national register of historic places…and encourage developers to convert these buildings into housing that will be useful for folks going forward.”
The credit would be administered by the Housing Finance Authority and capped annually at 65% of contributions and, overall, at $10 million. Any contribution made would be allowed an investment tax credit against the Business Profits Tax, Business Enterprise Tax and/or the Insurance Premium Tax. A tax credit reduces the amount of taxes owed, and goes into effect after a project is completed. The program would be in addition to the federal historic preservation tax credit.
The program would also contribute $15 million to InvestNH, which provided $100 million in American Rescue Plan Act funding to accelerate the approval and construction of affordable workforce housing in the state. The overall financial impact on New Hampshire’s proposed program hasn’t been estimated.
Sen. Cindy Rosenwald, D-District 13, said she was concerned about the impact the credit would have on the insurance tax. She also asked about setting parameters on the amount of affordable housing in a development.
Innis said the bill’s sponsors are “not committed to” including the credit on the insurance tax, and are amenable to amendments.
Regarding set numbers for the amount of affordable housing in a project, he said he didn’t believe there were any numbers set right now, but “I think that’s a very reasonable position to take.”
Sen. Timothy Lang, R-District 2, asked how the $15 million contribution to InvestNH would work, but Keen Wong, tax police council for the Department of Revenue Administration, said that was probably a better question for the state treasury department.
Lang, committee chair, also asked Innis whether one developer could scoop up the entire annual limit of $10 million in credits.
“I suppose that’s possible,” Innis said. “It’s something we could take a look at, we could put a cap in place, but at the same time you don’t want to discourage preservation of a truly historic structure.”
Elissa Margolin, director of NH Housing Action, said that the state’s housing crisis is one of the worst in the nation “and we need an all-hands-on-deck type of approach.”
“This bill complements the package that you included in the most recent budget and leverages solutions that will open up new avenues,” she said. “Investments like this and new tools like a historic housing tax credit would create much-needed housing while preserving historic structures.”
Margolin added, “It offers communities opportunities to revitalize and preserve treasured history.”
Jennifer Goodman, executive director of the New Hampshire Preservation Alliance, said the tax credit would be “a missing tool in the toolbox.”
She said studies show that revitalizing old buildings for new uses, like housing, leverages catalytic private investment, increases rehabilitations, which in turn support job growth, conserve energy resources and “provide broad benefits to communities.”
“Underutilized buildings in your communities that could benefit from this sort of investment,” she added.
Goodwin, like Dapice, noted that neighboring states have historic preservation tax credit programs. “We’re frankly losing commitments to [rehabilitation projects] to those states.”
Sen. Lou D’Alessandro, D-District 20, noted that historic properties have been lost over the decades, and focus must be on preservation. “Can this do it?” he asked Goodwin.
“I think it could help do that, to see more revitalizations instead of loss,” she said. Communities that are “struggling to find the win-win” may benefit from the tax credit.
Goodwin said the credit would not only help keep the momentum going in Manchester and other cities, but also help small communities. “There’s been really tenacious efforts to try to save older buildings, but there are ones being left out that are just hanging there in the balance and this kind of tool can be a very useful help in that.”
Dapice, of NH Housing, said the organization could work with NH Preservation Alliance to provide resources for smaller projects that don’t find the federal credit financially feasible. Such projects, “might be able to make the numbers work with the state tax credit.”
Dapice noted the disconnect between creating housing out of historic properties and of not-in-my-backyard opposition.
“It’s something that we see all the time in housing work,” he said. “And we find it so deeply ironic that the places that people love most in their communities are often illegal to build now because of parking requirements and setbacks and things like that…codified in zoning at the local level. That’s just very very complicated to unwind in spite of the fact that people like these old buildings, and we have this wonderful asset in a lot of communities. They’re complicated and at times expensive to rehabilitate, but I think this this credit would be an important step in the right direction to preserving those properties, keeping our neighborhoods beautiful and providing housing in one go.