Washington – A tax break that was key to the rehabilitation of the Colt complex in Hartford, a Victorian opera house in Norfolk and dozens of other historic properties throughout the state is on the chopping block in Congress.
The House Republican tax overhaul, which the chamber hopes to vote on Thursday, would eliminate the 20 percent federal investment tax credit for historic preservation projects, a tax break Congress approved about 40 years ago to spur investment in historic properties that has helped revitalize many of the nation’s downtowns.
“With that one initiative, we hope to send your tax dollars back to your communities,” said former President Ronald Reagan, who championed the tax break. “Our tax credits have made the renovation of our older buildings not only a matter of respect for beauty and history, but of economic good sense.”
The preservation tax credit is available to all properties on the National Register of Historic Places, a roster that includes 90,000 sites, more than 1,200 of them in Connecticut.
The nation’s historians, and developers, have been lobbying frantically for the GOP to restore the credit. But as of now, it is gone in the House bill and cut in half – to 10 percent – in the Senate bill.
“Without it there’s no incentive not to demolish and build new structures,” said Leah Glaser, president of Connecticut Preservation Action.
To Glasser, the preservation credit “gets rid of blight, puts properties back on the tax rolls,” and helps communities maintain a connection to their past.
“It’s the only carrot we have, and it’s a very successful one,” she said.
To receive the tax credit, a property owner must complete an application for historic preservation certification, which is managed by the National Park Service and Internal Revenue Service.
To qualify for a 20 percent break on eligible rehab expenses, a building must be income-producing or used in a trade or business.
The preservation credit has been used to renovate 51 structures in Hartford, including an old equipment maintenance building for a fire station that’s located on John Street that had been shuttered since the 1980s.
The tax break was also used to rehab the old Norfolk Opera House, which is now the Infinity Music Hall and Bistro in that city, and turn a YMCA building in New Haven into an apartment complex.
Coupled with a similar state tax break for preservation of historic properties, Larry Dooley, the developer of Colt Gateway in Hartford, said he used the federal credit to renovate factory buildings that produced the famed Colt firearms and housed workers.
Dooley has turned those buildings into apartments and office spaces.
“It would have been impossible to do Colt without the credit,” Dooley said.
The developer has a big, $13.6 million project left, the North Building, built right before World War I and used for the production of gun barrels. He’s worried how the tax bill might affect the effort to turn an old factory into 46 new apartments.
Dooley also said he’s been looking at other historic properties in Hartford to develop, and the end of the credit could put a damper on those plans.
“There’s no chance” for widespread urban renewal of Connecticut cities like Hartford, Bridgeport or New Haven without the tax break, he said.
Republicans eliminated many tax breaks as part of their effort to deliver across-the-board tax relief by lowering rates on individuals and businesses.
The House tax overhaul also would eliminate the personal exemption and deductions Connecticut taxpayers can take now for state taxes they pay, medical expenses and tuition loan interest. It also would cap the deductibility of property taxes at $10,000.
Despite universal opposition to the tax overhaul by Democrats, Republicans in the House may have the votes to pass it. But the GOP can afford to lose no more than 23 of their 240 House members.
President Donald Trump, whose company sought the preservation tax credit when it turned a historic post office in Washington into the glitzy Trump International Hotel, plans to head to Capitol Hill on Thursday and make a final pitch to House Republicans before they vote on the plan.