State tax credits needed
Gavel to Gavelpublished in The Journal Record | February 25, 2016
Drive through any downtown in Oklahoma, and you’re bound to see one. A remnant from the community’s history, now boarded up or perhaps just not being used to its full potential. The bones are still there. You can see them, and you envision what might be.
Maybe you’re a member of the community’s local government. Maybe you’re with the Chamber of Commerce or Main Street program. Maybe you actually own the building or one of its neighbors. Where do you turn to make the dream into reality?
Communities across Oklahoma often turn to the federal historic rehabilitation tax credit, which offers a tax credit equal to 20 percent of “qualified rehabilitation expenditures” on buildings listed on the National Register of Historic Places or contributing resources in certain historic districts. The federal government also offers a tax credit equal to 10 percent of the cost of rehabilitating buildings constructed before 1936 that do not otherwise qualify for the 20-percent credit.
For now, Oklahoma’s historical buildings can also benefit from a state historic rehabilitation tax credit, which piggybacks on the federal credit. If a project qualifies for the federal tax credit, then it automatically qualifies for an additional state tax credit in the same percentage.
These complementary tax credits offer a significant economic benefit to developers as dollar-for-dollar reductions in tax liability. They can make historic renovation an economically viable alternative because they help offset the additional costs necessary to renovate a historic structure rather than simply construct a new building. They are models of accountability because credits are not earned until the project is complete, and developers have to maintain ownership for five years.
As with most government programs, there are rules to follow and oversight from government agencies. It is a small price to pay for the benefit provided.
As everyone is aware, the state faces massive challenges in balancing its budget this year. Tax incentive programs, including the Oklahoma historic rehabilitation tax credit, are potentially on the chopping block. Sacrifices will be required, but this successful program should be allowed to continue to incentivize public-private partnerships across Oklahoma.
This article appeared in the February 25, 2016, issue of The Journal Record. It is reproduced with permission from the publisher. © The Journal Record Publishing Co.