Bill would extend Maine's historic rehabilitation tax credit to 2040
FILE PHOTO/ Maureen Milliken
The Motherhouse, a senior housing project in Portland, is one of many housing projects in the past decade that have used historic preservation tax credits.
A bill that would extend Maine's Rehabilitation Tax Credit for historic property to the year 2040 as a way to increase affordable housing, incentivize development and mitigate climate change is set to be introduced today by Sen. Nate Libby, D-Lewiston.
The credit cuts the costs for developers who restore historic property. and is considered a key incentive to restore older properties.
The program has generated $3 million more in state and local tax revenues than it has cost in tax credits since 2016, a study released last year found. Estimates are that that the net economic benefit to Maine state and local governments will double to at least $6 million annually by next year.
LD 201, which will be introduced by Libby at a Taxation Committee hearing on Thursday, extends the sunset date for the credit from 2025 to Dec. 31, 2040.
“A lack of affordable, safe housing is one of the biggest problems facing our state today," Libby said in a news release. "This bill would extend a very successful tax credit program that helps preserve historic structures, primarily in downtowns, and makes their redevelopment affordable and practical. Many of these projects provide affordable housing for working families. To protect the character of our downtown neighborhoods for generations to come, and to help working-class Mainers, extending this tax credit just makes sense.”
The extension from 2025 to 2040 has been advocated by a variety of stakeholders, including Maine Preservation, Coastal Enterprises Inc., Greater Portland Landmarks, GrowSmart Maine and the Maine Real Estate & Development Association for reasons stemming from affordable housing generation to climate change mitigation. The Maine Legislature in January 2020 extended the sunset from 2023 to 2025.
Economic impact
The Maine State Rehabilitation Tax Credit allows 25% credit for any historic rehabilitation that also qualifies for the federal 20% Historic Preservation Tax Credit. Projects are paid for up front and must meet benchmarks throughout the development to qualify for the credits, which are applied after a project is finished. The Maine credit includes an additional 5% if the project includes affordable housing.
A study last fall found that since the Maine credit program was adopted in 2008, close to 1,300 affordable homes have been created or preserved, and almost 700 new full-time year-round jobs have been generated by businesses occupying commercial spaces and in building maintenance. Some $166 million has been added to local tax rolls, including $17 million in new property tax payments.
Environmental impact
The credit helps to reduce greenhouse gases by encouraging redevelopment of housing that's within walking distance of downtown stores and services, which reduces the need for new construction and the dependence on motorized transportation. In fact, greenhouse gas reduction and promoting weatherization are part of the bill's title.
The bill also stresses that preserving and rehabilitating buildings, particularly weatherization, has more of a positive impact on greenhouse gas emissions that building new or leaving older buildings as they are.
Sarah Hansen, executive director of Greater Portland Landmarks, said at a news conference introducing the report last September that the state's focus on mitigating and adapting to climate change, as well as challenges brought on by the pandemic make it an "optimal time" to extend the program.
The state program piggy-backs on the federal one, which requires a building to be listed on the National Register of Historic Places and is administered by the National Park Service. In Maine, there is also a credit for small projects that don't meet the federal cost threshold — projects that cost between $50,000 and $250,000 can also credit 25% of costs that qualify.
At the time of the study last summer, 106 historic preservation tax credit projects had been completed in Maine in the past decade, and there were 59 that were somewhere in the process, including 16 under construction.
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