"The practical problem irrespective of party is the thinness of the budget," Lally said.
Historic preservation tax credits, preservationists argue, not only provide windfalls for homeowners, they also create jobs for contractors, increase property values and taxes, and prevent further sprawl into exurbia.
Paul Ferguson, and his wife, Karen Keyes, shown with sons Timothy, 5, and Daniel, 2, used Virginia's 25 percent tax credit to expand their Arlington home -- on the state's landmarks register -- to fit a growing family.
(Hyosub Shin For The Washington Post)
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Credits and Contacts
Here is a summary of local historic preservation tax credits:
Maryland
• Amount of credit: 20 percent
• Limitations: Owners must spend at least $5,000 over a 24-month period. The maximum credit allowed is $3 million. The law is set to expire on June 1, unless the Maryland General Assembly extends it.
• Receiving the credit: The state issues a check for the amount of the credit beyond a year's tax bill.
• Contact: Maryland Historic Trust, 410-514-7639; www.marylandhistorictrust.net/taxcr.html
Virginia
• Amount of credit: 25 percent
• Limitations: Owners must spend at least 25 percent of the value of the structure itself. Expenses for additions or enlargements are not eligible.
• Receiving the credit: Property owners can carry over the unused amount of the credit for 10 years or until it is used up.
• Contact: Department of Historic Resources, Winchester office (which serves Northern Virginia), 540-722-3428; www.dhr.state.va.us.
District of Columbia
• Amount of credit: Varies from 15 to 35 percent
• Limitations: The credit is not currently funded. If the program were funded, recipients could live only in certain designated historic neighborhoods and would have to make 120 percent or less of the median income. There would be a $25,000 cap per project.
• Contact: Office of Historic Preservation, 202-442-8818
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"One advantage is you've enhanced local property taxes because in some cases, you've taken some shell of an old building that's not raising diddly in revenue and given it a much higher property value," said Donovan Rypkema, principal of Place Economics, a Washington-based consulting firm specializing in economic revitalization of downtowns and historic preservation.
"A really underappreciated value of the credit is that you're not eating up land at the edges of cities, but rather are preserving buildings in the interiors of urban communities," he said.
Here's a look at the credits locally:
Maryland
Maryland homeowners could apply for the credits beginning in 1997. Last year, 310 Maryland owners and 92 businesses applied.
Since the law was enacted, the amount homeowners could take credit for on their tax returns has yo-yoed from 10 percent to a high of 25 percent. For projects completed in 2002 through 2004, the credit is 20 percent. The project must cost at least $5,000 to be eligible.
Maryland is the only state to allow tax credit recipients to receive a check directly from the government to cover the credit. Say a $60,000 project was completed in 2003. The taxpayer would be eligible for a $12,000 tax credit, but perhaps only owes $4,000 in state taxes. In addition to not having to pay the $4,000 that year, the homeowner would also receive a check for the $8,000 remaining in the credit. Most of the 15 or so other states with tax credit programs allow taxpayers to deduct the amount of the credit from future taxes until the money runs out or for a set number of years.
But the future of the program is now in jeopardy. Unless the Maryland General Assembly passes legislation to continue the program by the time the session ends Monday, the tax credit program will stop June 1. As of late Thursday, no action had been taken. "Even though the program is scheduled to sunset this year, the law was written more to take a look at the how the program has been faring rather than shut it down," said Dan Sams, a preservation officer with the Maryland Historical Trust, the state government office that oversees applications for the tax credit program.
A task force on the program set up by Gov. Robert L. Ehrlich Jr. (R) and chaired by William Donald Schaefer, comptroller of the treasury, concluded in February that the program should be extended until 2010. Its report noted, "The program has been extremely successful in revitalizing deteriorated downtowns and neighborhoods, combating blight, creating jobs, strengthening local tax bases, stimulating Maryland's economy and preserving historic resources. Key major projects would not have been undertaken if the credit had not been available."
Preservation Maryland's Gearhart said he is "cautiously optimistic" that the bill will pass the state legislature, although he said he's worried as it reaches the eleventh hour without action.
If the bill does pass, there will be some changes. There will be a cap of $50,000 per project for residential projects, and a cap of $15 million total to be allocated for commercial projects.
The oft-changing law has made applying for the credit complex, said Joy Austin-Lane, who serves on the Takoma Park City Council and owns a 1922 bungalow in the city's historic district, the largest in Montgomery County. Although she has done work on her house, she said she did not apply for the credit.
Still, she is an advocate for preserving the credit, and testified in favor of it before the Maryland General Assembly in March.
