As several recent reports have noted, redeveloping old buildings is important for preserving Maine’s character and its ability to draw new people. Such rehabilitation work is expensive and Maine’s tax credits have not changed with the times. A bill that was unanimously supported by the Legislature’s Taxation Committee earlier this year would improve the situation.
The difficulty, especially when there is a large shortfall in the state budget and spending on many programs has been frozen, is that it requires state financial support. The challenge for the measure’s supporters is to find a way to fund the tax credit without taking money out of the state coffers. Restructuring the state’s real estate transfer tax, with funds dedicated to the historic tax credit, may be an option.
Although Maine has a wealth of historic buildings, particularly homes, it ranks 42nd in the country for the number of projects completed using the federal historic tax credits between 2000 and 2005.
States that have used their own tax credits to supplement the federal program have seen large gains in the number of projects completed. In 2001, four years after Missouri reformed its historic tax credit rules and offered $25 million in tax credits, it saw nearly $350 million in project investments, which generated $660 million in historic tourism, according to the National Park Service.
The result of that investment, in addition to new living, work and commercial spaces, is to boost local property tax valuations.
In 1991, the taxable value of property in downtown Bangor was more than $90 million. By 2000, when many buildings stood vacant and in disrepair, the value dropped to $77 million. It has since risen to more than $96 million. There has been no new construction in downtown Bangor, notes the city’s Economic Development Director Rod McKay. The increased value came primarily from investments in older buildings.
Past projects that have benefited from federal and state historic tax credits include the renovation of the Seven Islands Land Co. offices on Broadway, Merrill Merchants’ rehabilitation of the Penobscot Theatre on Main Street and the remaking of the Dole Block on Hammond Street into a business and restaurant complex with an indoor courtyard.
Revamping old buildings is usually more expensive than new construction. Tax credits could bring the costs more in line, while preserving historic districts and properties. Redeveloping historic buildings, rather than constructing new ones, can also lower environmental impacts and help stem sprawl.
LD 263 would help at both ends by raising the tax credit cap to cover more of the costs of large projects while also offering credits to small projects that wouldn’t qualify for federal support.
Finding the small amount of money needed to boost Maine’s historic tax credit will pay dividends for years to come by making towns more attractive for businesses, residents and visitors.