By STEPHEN OLSCHANSKI
Capital News Service
LANSING — Michigan’s historic buildings could get a facelift under proposed legislation that would restore a preservation tax credit that was cut in 2011.
Sen. Wayne Schmidt, R-Traverse City, introduced a bill that he said would spur local economies and increase the tax base of Michigan cities.
And what it might take to boost the economies of some of these cities could be a single redevelopment spurred by the credit, he said.
“When you look at Escanaba, you look at the potential and what’s happening in Cheboygan, in Sault Ste. Marie — some of these places need that first one or two buildings (to be redeveloped) to get it going to invest more,” Schmidt said.
The bill passed the Senate Finance Committee on Nov. 30 and is headed to the Senate floor for a vote.
The tax credit was cut in 2011 and residents, businesses and cities have since had a hard time revitalizing historic buildings, said Nancy Finegood, executive director of the Michigan Historic Preservation Network.
“Ever since (the cut), small projects like on Main Streets and residential properties have had little incentives to make projects work,” Finegood said.
It’s also hurting smaller towns with historic districts. Currently, 78 communities have local historic districts overseen by historic district commissions that have authority to protect historic resources, according to the Michigan State Housing Development Authority.
“There’s nothing for residents any longer and it’s harder and to make those projects in smaller towns work,” Finegood said.
Renewing the credit would motivate residents in historic districts and owners of historic buildings to rehab their buildings, Schmidt said.
“When you look at a smaller city or village in Northern Michigan and the Upper Peninsula, it’s not just a building but rather is really part of an entire downtown or a neighborhood and the impact is that much greater,” Schmidt said.
The legislation would allow up to 25 percent of qualified expenditures for historic rehabilitation projects to be subtracted from state tax payments.
Qualified expenditures include the upkeep of the building, such as rehabbing the interior and exterior. It would not cover the funds to buy a historic building.
A federal tax credit is available for historic preservation which gives a credit of 20 percent of the expenditures, but the building must be registered on the national historic register and be used for commercial purposes.
If a building received the national credit, it could also apply to the state for an additional 5 percent credit.
For buildings that could not or don’t receive the national credit, the state could award a credit of up to 25 percent.
Schmidt said the former tax credit benefited many cities.
“When you (see) the redevelopment of historic buildings, historic homes in key neighborhoods, when you look at Heritage Hill in Grand Rapids, when you look at many of the buildings in Detroit or Saginaw or Flint or Kalamazoo, they have a very good return in terms of stabilizing and improving the neighborhood or business district,” Schmidt said.
The Michigan Townships Association said it supports the proposed tax credit.
The state tax credit would apply to buildings in a local historic district or individually listed as a local historic building. Homeowners could apply for the credit if their house qualifies.
Finegood said, “I know someone who did their kitchen and it qualified in Ann Arbor.”
An analysis by the Senate Fiscal Agency found that the addition of the tax credit would reduce tax revenue by approximately $10 million to $12 million per year. Most of that loss would reduce General Fund revenue.
The credit’s impact on the state could fluctuate depending on tax overhaul movements at the federal level, according to that analysis. The tax could be altered or eliminated depending on the legislative actions in Washington.
Many areas across the state would benefit from the credit, especially Detroit, Finegood said.
Schmidt said, “My goal is to get people in Michigan, in any size community but especially in Northern Michigan and the Upper Peninsula where we need that extra investment, to get that back there and to make sure that money is redeveloping (the community).”
The rehab projects would also benefit towns by bringing the buildings back onto property tax rolls and using local labor to do the projects, both Finegood and Schmidt said.
Ultimately, Schmidt said,it’s about keeping Michigan workers and Michigan developers in Michigan to work on Michigan projects.
“Improve buildings, keep people employed and keep those investment dollars working,” Schmidt said. “And obviously, preserving our sense of place in history.”
By STEPHEN OLSCHANSKI