Listen to this articleWhat do the Four Seasons, Saenger Theatre, Sophie B. Wright School, and thousands of other New Orleans historical buildings that have been restored over the last 20 years have in common?
They were partially financed by the Louisiana Rehabilitation of Historic Structures Tax Credit Program, but that state historic tax credit program is in jeopardy.
The program, which is set to sunset June 30, 2025, is included among the possible state tax benefits and incentives that could be reduced or eliminated under Gov. Jeff Landry’s “Louisiana Forward” tax plan. The tax incentives for film production in Louisiana are also under discussion.
The tax plan is being discussed in a special legislative session that continues this week. The tax plan is aimed at reducing excessive state spending, creating a more sustainable state budget, and solving a budget shortfall that is expected to be upwards of $737 million.
This morning, New Orleans councilmembers Helena Moreno and JP Morrell filed resolutions in support of both the historic tax credits and film tax credits that are being discussed in the state’s special legislative session.
“The potential damage of repealing the historic tax credit would be simply catastrophic,” said Council Vice President JP Morrell. “Without the historic tax credit, countless buildings in Orleans Parish would have never been renovated and returned to commerce. If this important tax credit is repealed, even more blighted structures would dampen economic development and quality of life in New Orleans and across the state. Gutting the historic tax credit would be disastrous to Louisianians – plain and simple.”
The Louisiana Rehabilitation of Historic Structures Tax Credit Program, administered by the Louisiana State Historic Preservation Office (SHPO), reimburses up to 25% of expenses in the form of a state income tax credit to renovate a structure in a National Register, downtown development, or cultural district, and up to 35% in rural areas.
The program was created in 2002 by the Louisiana Legislature to encourage the redevelopment of income-producing historic buildings in Louisiana’s downtown development districts. In 2007, the legislation was amended to allow historic buildings in certified cultural districts to be eligible, and in 2023, the program was expanded to include National Register-listed buildings.
Proponents of the state historic tax credit program point to the more than 1,800 structures that have been restored over the last 20 years, and the close to $3 billion invested in Louisiana’s historic buildings, according to a study by the Louisiana Office of Cultural Development, Department of Culture, Recreation & Tourism. The study reports that for every $1 that the state of Louisiana provides in commercial historic tax credits, it spurs $8.76 in economic activity.
“I understand what this administration is trying to accomplish by streamlining the state’s tax system, and I agree with about 95% of it. However, there is no reason that the state historic tax credit program should be on the chopping block. It’s a critical resource to fund restoration projects that may not have been completed without the program in place,” said Kirk Williamson, CEO of JLV Construction, which has worked on more than 50 projects over the last 10 years that have been partially financed by state historic tax credits.
JLV’s recent projects that have incorporated historic tax credits have included 1212 Magazine St. – the transformation of an 1860’s Greek Revival building into the Heirloom Bed & Breakfast; 1816-1818 Fourth St. – an 1880’s Central City double shotgun transformed into two rental units; 3301 Chippewa St. – renovation of a 19th century corner bakery into an architecture studio; and 3707 S. Saratoga St. – renovation of a 20th century two-story house; to name a few.
“The state historic tax credit program is efficient and effective. It produces jobs. It grows the economy. It revives businesses and residences. It pays for itself,” said Williamson. “Katrina did not end this program. The economic downturn did not end this program. The 2015 budget cuts did not end this program. And COVID did not end this program. There is absolutely no reason to end this program now. We need this program.”
Danielle Del Sol, Executive Director of the Preservation Resource Center (PRC) of New Orleans, recently published an article on the nonprofit’s website, “Historic Preservation Under Threat: Louisiana Historic Tax Credit Crucial to State Economic Development.”
“Gov. Jeff Landry’s plan to weaken or eliminate the Louisiana state historic rehabilitation tax credit program would deal a blow to economic development and preservation efforts across the state,” wrote Del Sol. “Without the tax credit, these historic buildings likely would never have been renovated, and even more blighted structures would remain in neighborhoods across the state. Instead, these buildings now are back in commerce, generating tax revenue for the city and state.”
Under the state’s historic tax credit program, the property must be individually listed in the National Register of Historic Places (NRHP) or contributing to a NRHP Historic District or in a Cultural District or a Downtown Development District. There must be a minimum of $10,000 spent. It must be an income producing property (currently there is no owner-occupied residential credit), and all work must meet the Secretary of the Interior’s Standards for the Treatment of Historic Properties.
The state program is one of two historic rehabilitation tax incentive programs available to owners and developers within the state, in addition to the Federal Historic Rehabilitation Tax Credit Program, administered by the National Park Service. It is possible to stack the credits and apply for both programs if the property qualifies for both programs.
The federal program provides a 20% credit on qualifying reimbursable expenses, which include 1) listed in the NRHP or contributing to a National Register Historic District; 2) meet the basis test, in which you must spend the value of your building, which is the property value adjusted by subtracting the land value; 3) be an income-producing property; and 4) meet the Secretary of the Interior’s Standards for the Treatment of Historic Properties.
“These programs preserve valuable properties, allow them to be rehabilitated and converted into new uses that have spurred economic development in their specific neighborhoods, which also benefits the city and arguably the state,” said Nicole Webre, Principal Consultant of Webre Consulting, a New Orleans-based development and land use advocacy firm.
“I have been handling HTCs for clients for 11 years and witnessed first-hand the revitalization of several dozens of vacant properties in the city,” said Webre. “From former school properties to churches and warehouse buildings, the HTC programs coupled with the Restoration Tax Abatement program are excellent tools for economic development and preserving our cultural economy.”
Webre said she attended a roundtable discussion a couple of weeks ago to talk with members of the industry about the state’s special session considering HTC cuts. “We are all monitoring the legislation and voicing our concerns to our legislators about the importance of the state program,” said Webre. “This is a tool not only from a preservationist perspective, but from an economic development perspective as well. These tax credits can offset higher construction costs and justify and incentivize the restoration of and investment in these buildings.”
Webre estimates her company assists in about 20 HTC applications a year and advises at any point of the application process, including the filing. One recent Webre Consulting project using the Louisiana HTC program was the conversion of a Chinese Presbyterian Church into Mo’s Art Supply at 2525 Bienville St. “The state tax credits helped us convert a church that sat vacant for a long time into an operational retail store that brought commerce back into the Mid-City historic district,” said Webre. “The retail store was able to preserve the open space of the church.”
Another HTC project Webre is working on is the conversion of both 1800 and 1808 Prytania St. into multi-family housing of 11 residential units for a client. “The state HTC program is very important to off-set the cost to preserve the buildings and allow the continued multifamily use, since the underlying zoning no longer allows new multifamily,” said Webre. “Preserving the multi-family also preserves affordable housing options because most of New Orleans’ zoning was downzoned to no more than doubles for new housing.”
Both Webre and Williamson agree that impacting the state historic tax credit program right now would be detrimental to not only the New Orleans and the state’s economy, but also to the construction industry, including contractors, architects, investors, developers, consultants, etc.
“We don’t want to see any projects being postponed or reconsidered because of what is taking place at the legislative level, and that’s a concern within the industry right now,” said Williamson. “Another concern is with inflation, interest rates, rising insurance premiums, and the costs of construction and supplies, losing tax credits would kick another leg out from under us that no one can afford right now.”
(Except for the headline, this story has not been edited by PostX News and is published from a syndicated feed.)
