Home News Business & Ag Life Restore Oregon proposes rehabilitation tax credit to spur investment, growth in historic downtowns
Restore Oregon proposes rehabilitation tax credit to spur investment, growth in historic downtowns
PORTLAND — After four years of research and public workshops aimed at addressing the physical and economic deterioration of Oregon’s historic downtowns, Restore Oregon has released a special report on Revitalizing Main Street that calls for a state rehabilitation tax credit to spur economic development and job creation.
As proposed by Restore Oregon, approximately 2,600 historic commercial buildings in at least 75 communities statewide could benefit, including retail stores, apartment buildings, warehouses, office buildings, and barns. The vast majority are in traditional downtowns.
The list of cities includes Baker City, La Grande, Enterprise, Huntington, Joseph and North Powder.
The organization notes in a recent press release that many of Oregon’s traditional downtowns are at a tiping point. For decades, big box stores, strip malls, and sprawl have drawn customers away, leaving buildings in a downward spiral of disinvest-ment and demolition-by-neglect.
Today historic buildings are being rediscovered as hip and authentic places to live and work.
But the cost of restoration, code up-grades, and seismic reinforcement often creates a “development gap,” placing rehabilitation out of reach, especially for small town property owners.
Across the country there is a growing movement to turn this around. Thirty-four states are attracting investment in their main streets by offering a state rehabilitation tax credit. This has opened up opportunities to re-activate historic downtowns as centers of business incubation, housing, shopping, and heritage tourism.
“It’s time Oregon did the same,” said Peggy Moretti, Restore Oregon executive director. “Preservation and reuse has been a state priority since the 1960s, but our current financial toolkit is incomplete, leaving millions of dollars on the table, hundreds of rehab pro-jects undone, and thousands of workers un-hired. In many cases, a state rehabilita-tion tax credit would make the difference and bring historic buildings back to life.”
How does it work? A state income tax credit is provided based on a percentage of rehabilitation costs – 20 percent to 25 percent is typical. This has been proven to stimulate private investment and can be taken direct-ly by the property owner or transferred to a finan-cial partner who provides funds for the rehabili-tation work.
State rehab tax credits (sometimes known as historic tax credits) can be paired with federal tax credits and local incentives to help cover the cost of refurbishing older buildings, bringing them up to code, and ad-dressing seismic upgrades. The rehab work must retain historic character and make the building economically viable.
The Revitalizing Main Street report is available online at www.Restore-Oregon.org/rehab-tax-credit.
Acknowledging that tax credits have come under scrutiny of late, Restore Oregon notes that state rehabilitation tax credits have received bipartisan support nation-wide because they work, creating a significant ripple effect in local economies. In Ohio, each rehab tax credit dollar leverages $6.25 in investment. In Minnesota, every tax credit dollar creates $8.32 in economic activity. And in North Carolina, every tax credit dollar generates $12.51 in economic benefit.
The federal rehabilitation tax credit produces a net gain of over 20 percent in federal tax revenues.
Early response to this recommendation is reportedly enthusiastic and Restore Oregon is working to advance legislation to enact a Rehab Tax Credit during the 2015 legislative session.