Historic Tax Credits: A Piece of the Funding Puzzle
. One of the unique features of Albion’s downtown is its historical background. Many of the buildings that still stand downtown today had many of the same historic features when they were built. The Big Albion Plan is honoring Albion’s history through historic preservation while bringing the buildings up to 21st century standards. Jessica Flores, an individual who specializes in historic preservation, referred to the process as a facelift.
Jessica Flores serves as ARC’s consultant for the historic preservation and historic tax credit component of the Big Albion Plan. She has a background in historic preservation and economics, which makes her perfect for the job. In the past, Flores has run an antique shop, attended trade school, and learned how to work on historic buildings. As the founder of Preservation Forward, Flores has been helping property owners with historic preservation projects since 2003. Flores believes that historic preservation is an important aspect of many Michigan cities. However, she recognizes these projects come at a price. The extra costs include skilled labor and the time it takes to work on historic buildings. Incentives like Tax Credits at the Federal and State levels help to offset the additional costs. Governor Snyder cut Michigan’s Historic Tax Credit in 2011. Flores recently sat on a task force that worked to have the tax credits reinstated into Michigan law in late 2020.
Superior Street is a Historic Commerical District listed on the National Register for Historic Places (NRHP). This means that all the buildings, including those that are a part of the Big Albion Plan, are historic. This registry sits at a federal level, and historic structures, sights, and objects need to be in the registry to qualify for the Historic Tax Credits. Currently, the Big Albion Plan has 20% of its fundings coming from federal Historic Tax Credits. This may change due to Michigan just resigning its Historic Tax Credit back into law. The State Historic Tax Credit would fund an additional 25% of the total cost of the project. This would mean that the Federal and State Historic Tax Credits would fund a combined 45% of the Big Albion Plan. A project that has lots of tax credits available makes it more enticing for investors to invest.
Here’s an example of how this process works:
An investor provides a $1 million investment for a historic preservation project like the Big Albion Plan. Over the next 20 years, investors are repaid the full amount of their original investment. On top of that, the investor will receive $200,000 in federal tax credits. This process helps both parties; ARC receives the necessary capital for the Big Albion Plan and the investors can use the tax credits to decrease what they have to pay in taxes to the federal government and eventually make back their entire initial investment. Another benefit of the Historic Tax Credit is that investors do not receive the tax credits until the project is completed. This helps to ensure that the investors see the project all the way through.
Aside from how it will help fund the project, committing to the historic rehabilitation of many of Albion’s most iconic buildings has many benefits. People, residents or visitors, are drawn to unique, authentic places like Albion. One of the reasons Flores is so passionate about historic preservation is that individuals get a certain experience in historic towns that they can not get anywhere else. Flores said, “Old buildings have stories, and I am helping preserve those stories for the next generation.” Whether it be the Big Albion Plan or another project in Albion there is both monetary and intrinsic value to choose to rehabilitate a historic property. If the choice is to save pieces of our history or tear it down and start over, we choose to save and honor our history.