Historic tax credit cut by Congress could devastate OKC, state preservation efforts
It’s not a done deal, yet, but amid the rapidfire news coming out of Washington, D.C., one pending action already passed by the House of Representatives could have drastic consequences locally for historic properties yet to be saved.
The scariest outcome, if this deal passes the U.S. Senate, is the loss of $40 million in federal tax credits that have been approved by the National Park Service for redevelopment of First National Center.
Like every project, the payout for the tax credits is not realized until the job is done, and the $230 million redevelopment is just getting underway on the full faith that Congress was not going to do away with this decadesold program.
For now, First National developers Gary Brooks and Charlie Nicholas are faced with soldiering on under such uncertainties. The potential of losing the credits they’re counting on is a serious concern.
Mark Beffort, who along with Andy Burnett is redeveloping the 1907 Pioneer Telephone Building, is hoping the tax credit will be retained by the U.S. Senate. But even the Senate has indicated they will keep half of the 20 percent credit — still a devastating hit.
“Projects with historic buildings are very complex and virtually unfeasible without some assistance,” Beffort told me. “Renovating a building of that age costs more, typically, than building a new structure. Our project is underway and we hope it doesn’t happen.”
For years I’ve warned owners who have sat on historic buildings to sell soon and to not assume these tax credits would
survive forever. I was assuming the hit would come from the state, not Congress.
We’ve seen some movement since, with successful redevelopments of the Main Street Arcade and Sunshine Cleaners. The Walcourt finally sold to a respected developer, Brent Swift. And that project also could be harmed by these contemplated cuts.
The Church of Christ-Scientist in Midtown and the Luster Mansion in Deep Deuce could be doomed. The 1928 Telephone Building at 405 N Broadway owned by AT&T and now up for sale is already a challenge for any developer. I’m not sure how the building can be salvaged if the tax credits are killed.
The pain will be even more devastating for struggling small towns throughout Oklahoma.
An economic impact study by Place Economics and commissioned by Tulsa Foundation for Architecture last year reported Oklahoma’s rehabilitation tax credit attracted more than $520 million in investments, and was directly responsible for the creation of more than 3,000 jobs.
Seventy-seven historic building renovations have been completed statewide using the credits, directly generating 3232 jobs, with another 3514 jobs linked to the tax incentive. Those jobs meant $166,939 in direct salaries and wages, with indirect and induced wages totaling $142,869.
The state historic tax credit program created an average of 450 jobs per year. Have no doubt the same results can be tracked to the use of federal historic tax credits which are often used with the state historic tax credits.
So now all eyes in the preservation community are turned to the U.S. Senate, which also appears to be going against the house in killing the New Markets Tax Credit, which is used with distressed buildings and contaminated properties. The New Markets Tax Credit was used with the Skirvin and is also part of the financing mix for First National Center.
Oklahoma City is blessed to have seen many of its distressed historic buildings brought back to life with the historic tax credits, but the job is not done.
We can all hope the tax credits are saved, but speculators and reluctant sellers are on notice; if these tax credits go away, you will lose most of your property’s value and any real chance of ending up with anything left but overpriced dirt.