Lawmakers are having another go at an incentive program meant to encourage revitalization of New Jersey’s historic properties, a move proponents argue could help pull New Jersey out of its COVID-19 recession.
Proposed Senate Bill 412 – or the Historic Property Reinvestment Act – passed out of the Senate State Government, Wagering, Tourism and Historic Preservation committee meeting on Wednesday morning, after 10 minutes of testimony in its favor.
New Jersey is missing out on a proven tool for … economic growth and revitalization.
— Michael Hanrahan, past president, Preservation New Jersey
It calls for tax credits for homeowners and business owners, equaling 25 percent of the expenses for revitalizing the property. The tax credit would be capped at $25,000 over a decade for homeowners, scrapping that money off what they would owe on income taxes.
Business owners would enjoy an uncapped tax credit – still a quarter of what they shelled out for the restoration project – scraped off what they owe each year in corporate businesses tax payments.
“I don’t know of a more critical time than now, because with the coronavirus and the pandemic, our economy has been crushed,” the bill’s sponsor, Sen. Shirley Turner, D-15th District, said before casting her vote.
“We have historic properties here in New Jersey second only to a couple of states, but we need to take advantage of that opportunity,” she said.
New Jersey is after all, one of the nation’s original 13 colonies, with settlements dating back to the mid-17th century when the region was in the hands of the Dutch. Over 30 states have such a tax credit program, New Jersey excluded.
And while it does have some of the oldest surviving buildings in the nation, many historic buildings are still in good enough shape to be used as residential and historic properties, proponents argue.
“New Jersey is missing out on a proven tool for … economic growth and revitalization,” Michael Hanrahan, past president of the nonprofit Preservation New Jersey, said at the Wednesday hearing.
Gov. Phil Murphy unveiled a similar proposal in late 2018, alongside the expansion of the Brownfields redevelopment program, to help developers absorb the costs to renovate underutilized or abandoned historic or polluted properties respectively, turning them into housing or businesses.
“Preserving and rehabilitating these historic buildings, whether commercial buildings on a Main Street such as Boonton, Camden or Paterson, or homes in residential historic districts such as Hacketstown … contribute to the viability, character and economic vitality of all New Jersey communities,” Hanrahan added.
The tax credit Murphy previously floated would be capped at $20 million a year. Under S412, the program would have a $15 million during its first fiscal year, $25 million in the second year, $40 million in the third year, and from then on, $50 million per year.
The proposal mirrors many features of a similar historic preservation tax credit program at the federal level, operated by the National Park Service.
The criteria for properties that qualify for the tax credit under that program are relatively straightforward: They have to be on the National Register of Historic Places, or a historic district from a “period of significance,” such as the mid-19th century to before the Second World War.
The Roebling Lofts apartment building on a redeveloped brownfield site in Trenton. – AARON HOUSTON
Projects taking part in either program have to generate income once they are completed – such as commercial properties – though only the New Jersey version would limit the tax credit available for homeowners.
Each state’s historic preservation office oversees tax credit applications for projects in their state—New Jersey’s is run out of the Department of Environmental Protection, which said that in 2018, 82 projects were completed, resulting in more than $24 million spent on New Jersey businesses and vendors.
Many developers would use financing from both the federal and state tax credit, suggested William David Henderson, principal at HHG Development Associates, which flipped the historic Roebling factory complex in Trenton, retrofitting the interiors into storefronts, offices and apartments, some by use of the federal incentive.
“It will also revitalize cities and town centers that have faced decades of disinvestment,” and where many of these historic properties are located, Henderson said. “The location of historic buildings tend to be where you want to invest, where you want to catalyze.”
