Strengthening PA’s Historic Tax Credit Would Bring Investment to Greater Philadelphia
/By Paul Steinke, Executive Director, Preservation Alliance for Greater Philadelphia
Pennsylvania has more historic resources than almost any other state. These can be leveraged for economic development through the Pennsylvania Historic Preservation Tax Credit program. Established in 2012, the program has facilitated the rehabilitation of many irreplaceable historic structures across the Commonwealth.
Through the program, developers of qualified historic buildings are granted a 25% tax credit against rehabilitation expenses up to $500,000. The program was initially funded at $3 million annually in 2012 and increased to $5 million in 2019. Compared to our neighboring states, this is a highly inadequate and uncompetitive sum.
Thirty-seven states have enacted historic tax credit programs, with sixteen having no annual cap. The average cap of those that do is $36 million. Every state that borders Pennsylvania has a more robust state credit. We are dead last in the region, behind even tiny Delaware, and fourth worst in the nation. Pennsylvania’s cap of $5 million is too low to incentivize large preservation projects. Changes to the program could better assist preservation projects and stimulate job growth, community revitalization, and economic development across the Commonwealth.
A statewide coalition led by two historic preservation groups, Preservation Alliance for Greater Philadelphia and Harrisburg-based Preservation Pennsylvania, is working with Senator Nikil Saval to introduce legislation this spring that would increase the program’s annual cap to at least $50 million. This would encourage more developers to invest in and repurpose buildings that currently sit empty and face demolition.
It’s a fact- rehabilitation projects create more jobs than new construction and put vacant properties back on the tax rolls. In the first five years of Pennsylvania’s program, $15 million in credits were awarded, representing $700 million in investment. According to a 2019 study by Place Economics, Inc., a $1 million investment in a historic rehabilitation project generates 6.4 direct jobs and 5.6 indirect jobs in PA, more than any other industry, even the gas industry.
Across the country, state historic tax credit programs have proven to be a highly effective stimulus that unlocks the potential of underutilized historic buildings, making complex historic rehabilitation projects feasible. To better compete with our neighboring states and attract greater investment, Pennsylvania’s historic tax credit program’s annual cap should be raised to $50 million.
Paul Steinke, Executive Director of the Preservation Alliance for Greater Philadelphia, is a passionate civic and non-profit leader committed to exploring ways to improve the quality of life and image of one of the nation's most vibrant and livable cities.