The New Orleans area has seen a wave of investment activity from outside and local developers to restore and put historic, underused and dilapidated properties back into commerce. But a proposed tax reform package from the Trump administration could put future projects in jeopardy. The tax plan doesn’t include the Federal Historic Rehabilitation Tax Credit Program, which currently offers developers a 20 percent credit on qualified rehabilitation expenditures for a building that the National Park Service deems to be “certified historic structures.”
Projects such as the $50 million conversion of the former NOPSI building at 317 Baronne St. into a 217-room hotel and the $140 million renovation of the Jung Hotel at 1500 Canal St. used the tax credits to help developers. There is also a 25 percent state commercial and an 18.5 percent residential tax credit program that many use. Each program may be used independently, but there are certain instances where the all three programs, or some other combination thereof, may be used together.
Commercial broker Robert Hand, president of Louisiana Commercial Realty, said the federal historic tax credit helps developers offset their risk when they undertake renovations and redevelopments. He said any changes to this program would have “severe consequences” for New Orleans.
“This is a 300-year-old city, so most of the buildings are located in historic districts,” he said. “The discontinuation of this credit would make much development unfeasible and put a stop to this growth.”
According to a 2016 report by Rutgers University’s Edward J. Bloustein School of Planning and Public Policy, the federal historic tax credit cost the U.S. Treasury $25.2 billion and generated $29.8 billion in taxes since the program’s inception in 1978. The report says that in 2016, the program created 109,000 jobs and generated a combined $1.7 billion in taxes from the local, state and federal levels. According to Louisiana’s Division of Historic Preservation, which administers the credits, investors have spent more than $3.7 billion to rehabilitate historic structures in Louisiana since the program was instituted.
By: Andrew Valenti, Reporter November 2, 2017