INDIANAPOLIS — To lure investors to put money into abandoned historic structures in the downtowns of Indiana cities and towns, the Legislature created a special tax credit nearly 20 years ago.
But the small cap on the credit and the big demand for it has rendered the program nearly useless as a stimulus for economic recovery.
Now the Indiana Legislature is returning to the issue to consider raising the cap on how many credits can be doled out each year.
Under a bill that’s gaining support, the maximum annual amount of historic-preservation tax credits available to investors would quadruple.
“If there is one thing that almost every community in Indiana has, it’s a vacant or underused historic building,” said state Rep. Ed Clere, R-New Albany, who authored the bill. Historic preservation advocates have been trying for several years to boost the amount of state tax credits available for rehabilitating old buildings and transforming them back into income-producing properties. The legislation that created the program was drafted in a way to give preference to historic structures in hard-hit downtowns and rundown neighborhood.
But the current law only allows the state to award a total of $450,000 in historic-preservation tax credits each year. That has to be stretched to projects statewide.
Marsh Davis, president of the nonprofit Indiana Landmarks, says that amount pales in comparison to other Midwest states.
He said Ohio sets aside $60 million in tax credits for investors willing to put their money into historic preservation projects; Iowa offers $45 million in tax credits; Missouri offers $140 million. Kentucky offers 10 times more credits than Indiana does.
Indiana has had no lack of interest from investors. The state’s Division of Historic Preservation in the Department of Natural Resources has already certified so many eligible projects that all the historic preservation tax credits for commercial projects have been claimed up to the year 2023.
With no tax credits available for more than a decade, that’s a long waiting list, Davis said. “The program is almost unusable,” he said. “We don’t even promote it anymore as an incentive.” Clere’s bill would raise the cap on the total amount of tax credits that could be granted to $2 million a year — more than four times the current cap.
That’s not much to go around the entire state, Davis said, but it would help boost small projects that aren’t likely to qualify for the federal tax credits that are designed for major, multi-million historic preservation projects.
The bill would also put an end to the granting of the tax credits deep into the future, as a way to avoid the kind of long wait list that currently exists.
The intent of the bill remains the same: An incentive to put money into a historic structure that has architectural value and commercial potential.
“It’s called the Historic Preservation Tax Credit bill, but it’s really an economic development bill,” Clere said. “We’re talking about existing resources that are cherished in most communities and using them to create jobs and put properties back on the local tax rolls.”
The legislation passed the House without opposition. It’s scheduled for a hearing in the Senate appropriations committee today. If it gets out of committee, it could go for a full vote in the Senate by next week.