If the Massachusetts Legislature passes a bill supported by preservationists across the state, developers and homeowners could be eligible for a tax credit for restoring historic structures like the Walter Baker Chocolate Factory administration building in Dorchester Lower Mills.
Historic buildings in Massachusetts may become more attractive to developers in the future.
Several local and state preservation groups, not to mention a few developers, are pushing for the passage of an economic stimulus plan that would establish a 30 percent tax credit for the redevelopment of historic commercial and residential properties in a concerted effort to revitalize downtown centers and promote economic growth across the state.
“The bottom line is that the bill’s finally in play and could have a major impact,” said Albert Rex, executive director of the Boston Preservation Alliance, one of the key supporters of the bill.
Advocates say the bill would encourage the rehabilitation of older properties in the centers of Boston and other cities, and would promote smart growth as opposed to suburban sprawl. The credit, disbursed only after the work is completed, would apply to commercial buildings and historic homes. According to the Boston Preservation Alliance, the state’s historic register lists between 50,000 to 60,000 homes, as well as 20,000 commercial properties, and generally ranks first or second in the nation.
“People often think of us as being part of an art movement, concerned only about saving character, but that’s not true,” Rex said. “It’s about what’s best for the past and the future. This stimulates the economy, and developers can’t get the credit until all the work is done.”
‘Underlying Issues’
Preservationists say that their vision includes the revitalization of key cities outside of Boston, including Lawrence, Worcester, Springfield, Holyoke and Lowell.
“The issue here is that it’s been a lot easier to bring developers into Boston because it’s so vibrant,” said Jim Igoe, executive director of Preservation Massachusetts and former head of Preservation Worcester. “With these other cities, the issues are different. Finding developers and convincing them that this is where they want to be is difficult.”
Igoe said that it’s not so much that the buildings themselves that turn off developers but the overall locations, a problem that gets more difficult in the western portions of the state.
“This credit could be the carrot that would make the difference,” he said.
The group began drafting legislation about 18 months ago, after a study of Maryland, Rhode Island and New York’s state tax credit programs. About 25 states in the country have passed a state tax credit that complements and enhances the federal program.
“I’m as surprised as anyone else that there isn’t a state tax credit yet [in Massachusetts],” said Cara Metz, executive director of the Massachusetts Historic Commission. The plethora of historic buildings, and the proven return on investment demonstrated by the model states, proves that a state tax credit in Massachusetts would be a smart move, she noted.
Metz’s research includes a Maryland study that shows a $1.20 return on every $1 of state tax credit after one year. After five years, the return jumps to $3.40. The best part, Metz said, is that Maryland experienced a 34-cent return before the state disbursed any funding.
Metz said the group hasn’t had trouble finding supporters.
“Everyone sees exactly the same benefits,” she said. “There are some concerns about what it means for the state’s economy, but the fact that the money’s paid out after work is finished has relaxed a lot of fears.”
But not everyone agrees with the premise behind the legislation. While the Boston-based Pioneer Institute hasn’t taken a formal position on the bill, Chief Executive Officer Stephen Adams said tax subsidies that encourage development in distressed urban areas typically don’t achieve the goals they seek.
“They can backfire by painting an area as uneconomical,” he said. “What’s better is understanding the market barriers – is there high crime? Is it the environment, the workforce? It’s so easy for the government to throw money at a problem when it’s often more complicated. On urban development, we’d like to see the state look at the underlying issues and improve the competitive nature of that zone.”
And that, Adams said, is a more sustainable approach.
Larry Curtis, managing partner of Cassin Winn Development, the company behind the planned Columbus Center project that will connect Boston’s Back Bay, Bay Village and South End sections, said the legislation will result in a true economic stimulus.
Curtis said there are at least three major benefits: It promotes housing or mixed use in smart-growth areas, in cities where people want to live; it helps generate the rehabilitation of historic buildings; and it produces construction and other jobs in areas that need it.
Rex said that the support a state tax credit would offer is crucial for cities like Lowell, New Bedford, Fall River and Worcester.
“People don’t realize that 96 percent of preservation happens in the private sector,” he said. “There’s not a lot of public money to support private owners and no incentives to help them … Preservation is infectious; once you do one, the others will come.”
Kristie DiSalvo may be reached at kdisalvo@thewarrengroup.com.
