Advocates urge tax incentive remains

Published 11:56 pm Wednesday, March 12, 2014

Selma could lose an incentive to restore historic buildings, if a Michigan congressman is successful in repealing a federal tax credit.

U.S. Rep. Dave Camp, R-Mich, recently introduced a tax reform plan that would reduce seven income-tax brackets to two and lower the corporate tax to 25 percent. Part of his plan would repeal a historic tax credit that local realtor A.C. Reeves said is vital to rehabilitating historic buildings in Selma.

“Especially in a place like Selma, it’s so very important to have it because of our large historic district,” Reeves said. “If it was repealed, we really would not be able to continue.”

Reeves renovated two buildings, one in October 2011 and December 2012. The first was on Broad Street, in downtown Selma. The second was on the 100 block of Lauderdale Avenue. Reeves said both buildings have remained fully rented since the renovations.

The federal tax credit provides a 20 percent credit for certain types of construction work. So, a $100,000 project would receive $20,000 in federal tax credits.

Under the proposed tax plan, the federal credit would be repealed, effective for amounts after 2014. Under the plan, the credit would continue applying to expenditures incurred through the end of 2016. The continuation credit would only apply to a structure acquired before 2015.

The plan says the repeal would increase federal revenues by $10.5 billion from 2014 to 2023.

David Schneider, the former head of the Alabama Trust for Historic Preservation, doesn’t agree with the proposal’s math.

“In the worse case scenario it would be revenue neutral,” Schneider said. “The reality with the federal credit is that every dollar [in credit] usually generates $5 in revenue. The federal tax credit works just fine the way it is now.”

Revenue is generated once buildings are renovated and realtors begin renting the property, he said. Renovations also help in boosting tourism, according to Schneider, who is now an independent preservation consultant.

“How could Selma be Selma without its historic buildings,” he said. “The communities that manage to preserve their historic buildings are in turn able to generate tourism.”

Schneider and Reeves said the federal credit is especially valuable when paired with a state tax credit, passed during the 2013 Alabama Legislative Session. The state credit is 25 percent. When paired, the two would provide a 45 percent total tax credit, Schneider said.

“In a simplified world, that’s how it would be,” he said. “Obviously it is a big incentive. Having both of them is exactly the kind of incentive to spur some of the projects needed on.”