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Pennsylvania conservationists want more money for historic revitalization in the state budget

Monument conservationists and property developers are keeping their fingers crossed for new government funding to revitalize historic buildings.

Two bills introduced last month would significantly raise the annual cap on the state’s Historic Preservation Tax Credit program, a public grant program that developers often use to finance the redevelopment of vacant historic buildings on the National Register of Historic Places.

At $5 million, Pennsylvania’s program cannot meet demand for these loans, advocates say, discouraging developers and putting irreplaceable property at risk.

“We are lagging woefully behind our neighboring states,” said Mindy Crawford, executive director of Preservation Pennsylvania, a statewide organization.

Pennsylvania has one of the lowest annual caps in the country. Of the 39 states with historic tax credits, only three offer fewer funds each year.

A bipartisan proposal introduced in the Senate would change that by setting the program’s annual cap at $50 million, putting Pennsylvania on par with New Jersey and ahead of Maryland and Delaware, which offer $20 million and $8 million, respectively.

Ohio has an allocation of $120 million. There is no cap on New York’s program.

“One of the reasons we love Pennsylvania is because we love our historic fabric. And we hate to lose it. And we hate to lose it for lack of support. And I think that’s widely felt,” said state Senator Nikil Saval (D-Philadelphia), the bill’s lead sponsor.

A companion bill currently in the House would raise the annual cap to $20 million. The committee recently rejected the bill, bringing it one step closer to passage.

Neither measure is facing much resistance.

Paul Steinke, executive director of the Preservation Alliance for Greater Philadelphia, is not surprised by the bipartisan support. He said the state tax credit program is an economic engine that creates jobs and tax revenue when properties are returned to productive use.

He describes the program as a “win-win situation” for “everyone who cares about the health and vitality of our cities and communities across the Commonwealth.”

“When you fill a vacant building that contributes little to nothing to tax revenue with homes, offices, businesses, retail stores or restaurants, the impact on communities is immediate and can be transformative in terms of revitalizing cities large and small across the state,” Steinke said.

Proponents say the program also poses little financial risk to the state.

Under the program, developers who receive these tax credits do not receive the subsidy until the project is completed. The funds can still be used to finance other projects, including construction loans that many developers rely on to complete these projects.

“And if the project doesn’t go ahead, there won’t be any tax credit,” Crawford said.

Developer David Waxman has applied for and received historic preservation tax credits for three projects in Philadelphia, including the $42 million renovation of a historic brewery.

The massive brick building in Brewerytown dates back to 1870. Beer was brewed here until Prohibition, later it was used as a warehouse before returning to its frothy roots for a while.

The building had been vacant for almost two decades when MMPartners acquired it in 2019.

“It was deteriorating, and if it had been vacant for another year or two, it probably would have been beyond repair and would have had to be torn down. And then this gem that reflected the history of the neighborhood would have been gone and replaced by what we like to call spaceship buildings – these newly built mid-rise buildings with 10 materials on the facade and built kind of crappy,” Waxman said.

MMPartners transformed the dilapidated building into the Poth Brewery Lofts, a mixed-use building with more than 100 apartments and 25,000 square meters of commercial space.

Although the value of the tax credits – $200,000 – was small compared to the project’s bottom line, Waxman said the grant was an important part of the capital his company presented to lenders.

Like Crawford and Steinke, he hopes that more funding will be available in the future so that more of the state’s historic buildings can be saved and renovated – regardless of who does the saving.

“It’s very difficult to get financing for these projects in this market, so any kind of subsidy you can add is extremely helpful,” Waxman said.

Lawmakers must pass a budget by the end of the month.

If no additional funds are allocated for the tax credit program in this year’s budget, supporters are prepared to push for it again.

Read more from our partners, Why.

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