After years of consideration, Pennsylvania finally offers a tax credit for the rehabilitation of historic, income-producing properties, modeled after the Federal Rehabilitation Tax Credits, and preservation advocates are rightly applauding this as a real victory.
Too bad the Commonwealth’s new tax credit won’t do much to incentivize the rehabilitation of huge, historic properties like the Divine Lorraine, as an Inquirer headline Wednesday suggested.
Why? Put on your green eyeshades:
Each preservation project is only eligible for a credit of up to 25% of “Qualified Rehabilitation Expenses,” with a per-project cap of $500,000. That means to take full advantage of the credit’s 25%, the project’s expenditures should hover around $2 million. But for a more expensive project – something on the scale of the Divine Lorraine or Beury Building – that $500,000 starts looking mighty small.
That said, every little bit does count and this credit could help make certain projects possible in combination with other tax credits for rehabilitation or affordable housing.
For the first year Pennsylvania’s program is capped at $3 million, so very few projects will likely be able to take advantage of the credit. But now that the law is on the books, we can hope that someday the State Historic Tax Credit will have higher caps making it a more powerful redevelopment incentive. Philly could sure use the help.