GOP tax plan nixes program for historic rehab

Some congressional Republicans want to end a program once used to turn the old Toms Brook School into apartments for low-income residents.

The Republican tax plan would eliminate the Federal Historic Tax Credit – an incentive used in communities across Virginia to attract new businesses, create jobs and revitalize cities and towns. U.S. Senators Tim Kaine and Mark Warner issued statements this week expressing concern that the tax plan proposed by Republicans in the House of Representatives would eliminate this incentive program.

U.S. Rep. Bob Goodlatte joined more than 30 congressmen who signed a bipartisan letter in October to U.S. Rep. Kevin Brady, chairman and ranking member of the House Committee on Ways and Means, urging that the tax-reform legislation include the Federal Historic Tax Credit program.

“I support the Federal Historic Tax Credit, which has been utilized to help revitalize numerous buildings in communities throughout the Sixth District,” Goodlatte said in a statement. “While tax reform legislation was being drafted, I requested on several occasions that this credit be included in the final text, and I am disappointed that it was not preserved. While I am pleased that the House’s tax bill will allow current recipients to continue using the FHTC for two years in which to complete ongoing projects, I will continue to advocate for the inclusion of the Historic Tax Credit as tax reform advances.”

The Federal Historic Tax Credit program helps attract development projects by providing a tax credit to developers after the restoration of qualifying buildings.

The National Park Service lists the Toms Brook School project as a case study for tax incentives. Toms Brook School, built in 1935 and 1936, serves as the largest building in the town. The building sat vacant for years and fell into disrepair. The roof failed and allowed moisture to enter the building, leading to extensive interior damage.

People Inc. pursued a project to rehabilitate the building and convert the structure into apartments for low-income residents. The nonprofit organization used low-income housing tax credits as well as state and federal historic rehabilitation tax credits to subsidize construction.

The Senate version of the Republican tax plan also aims to limit the Federal Historic Tax Credit. Warner co-sponsored a measure to amend the legislation to protect and expand the program. Warner serves on the Senate Finance Committee scheduled to debate the Republican tax plan this week.

Virginia received federal funding used to help redevelop more than 1,200 buildings across the state since 2002. Projects covered affordable housing, office space, restaurants, hotels, retirement homes, child-care centers and shopping centers. A total of 1,286 projects received certifications from the National Park Services between fiscal 2002 and 2016 resulting in more than $3 billion in development.

A list provided by National Parks Services shows the projects across the state that incorporated the tax credit program. In the valley, a 2013 project rehabilitated the Sharpe House, 214 Sharpe St., Strasburg, with $253,343 in spending that qualified under the program. Developers rehabilitated three properties in the 5400 block of Main Street in Stephens City between 2007-2012, with more than $1.15 million in spending that qualified under the program.

Nearly $3.4 million spent on the Toms Brook School project, completed in 2013, qualified under the program.

Warner expressed concern that targeting the program would leave many localities in Virginia hanging while some companies and high-income earners receive a tax break. Kaine, a former mayor of Richmond, said he’s heard from local leaders across the state who call the proposal to eliminate the program short-sighted, adding that Congress should help Virginia’s rural communities move forward. The Republican proposal would hurt rural communities’ ability to succeed and redirects that money toward tax cuts for the wealthy, Kaine states.

Between Fiscal Years 2002 and 2016, developers completed more than a thousand projects in Virginia using the Federal Historic Tax Credit. Elected officials have also voiced concern that eliminating this credit may impact the completion of buildings that are part of existing projects, which localities have already invested in.