Robert D. Loversidge, FAIA, President and CEO of Schooley Caldwell, Columbus, testified April 28 before Ohio General Assembly’s 2020 Tax Study Commission on behalf of Ohio’s Historic Preservation Tax Credit.

 Following is his testimony:

The Ohio Historic Preservation Tax Credit (OHPTC) has been a significant economic development tool since it was created by the Ohio General Assembly in 2006. According to the Ohio Development Services Agency it has directly benefitted 398 historic structures, in 52 Ohio communities, representing $4.4 billion in redevelopment investment.

OHPTC is an efficiently-run, ultimately fair, and effective incentive program that we believe should be retained or expanded by the General Assembly. Several reasons for this include: 

  •  Incentives are needed to encourage property owners and developers to pursue renovation of historically significant structures, especially in distressed downtown areas, where these structures are likely to be underutilized or vacant.
  •  The OHPTC program has a proven track record of being revenue-positive for the State. For every $1 million in awarded historic preservation tax credits, the return on investment is $6.7 million – this according to studies conducted by Cleveland State University. This report also notes that for every $ 1 million in credits, the return is $8 million in construction spending, $32 million in operating impact, 83 construction jobs and 299 operations jobs. This information is available on the Ohio Development Services Agency’s web site.
  • The Ohio program requires periodic cost-benefit analyses to check in on the effectiveness of the program. A recent cost-benefit analysis involving a project in Warren, Ohio demonstrated that 31% of the state’s investment of $630,800 in historic tax credits was recovered before the tax credit was awarded. One-hundred percent (100%) of the state’s investment will be recovered in new revenues by the fourth year of operation. By year 10 the building will have generated additional state and local tax revenues of $494,000 in excess of the amount of the credit, or a return on investment of 80%, and by year 15 the building will have generated approximately $839,000 in new tax revenues, representing a return on investment of 130%. 
  •  One significant advantage of the OHPTC program is that it is totally integrated/coordinated with the companion Federal Historic Preservation Tax Credit program, creating a powerful and complementary program that is administered concurrently and according to the same set of rules. The Ohio Historic Preservation Office (at the Ohio History Connection), using primarily Federal funds, reviews projects for both programs at the same time, saving the state money that might be needed to administer  separated programs. Owners get the advantage of receiving the 25% State tax credit and the 20% Federal credit – a powerful incentive to re-use our historic resources. 
  •  OHPTC rewards only successfully completed projects. Unlike other programs, the tax credit certification comes only after the approved design is documented to have been completed. Uncompleted or poorly completed projects do not receive the benefit.
  •  Renovation of historic buildings creates more jobs than equivalent new construction, and it is “greener.”Economist Donovan Rypkema points out that new construction is about 50% labor and 50% materials, whereas restoration and renovation can be as much as 75% labor – that is, for every dollar spent you get twice as much local employment, and use about half the resources.

Many Ohio businesses have benefited from this creative incentive program, and it has been an effective tool in our state’s efforts to beat back the recent recession. During this period, developers and owners who found themselves unable to pursue “normal” development paths to financing suddenly “discovered” OHPTC! My small firm has completed seven historic tax credit projects since 2008, ranging in scale from a small scale courthouse square project in Newark to the adaptive use of the 45 story LeVeque Tower in Columbus, and from a burned out building that was vacant for ten years in Chillicothe to the adaptive use of the Old Ohio School for the Deaf as a private high school for underprivileged kids. It is fair to say that none of these projects would have been possible without OHPTC.

Mr. Chairman and members of the Commission, we commend your efforts to examine all portions of Ohio’s tax structure to examine better ways of doing things. OHPTC is a highly successful, extremely effective, efficiently-run, revenue positive program of the State of Ohio. It creates high-paying jobs – more than new building construction – in communities, big and small, all over our state. 

It is not broken . . . please retain this very important economic development tool.

Mr. Loversidge is an award-winning historic preservation architect, a Fellow of the American Institute of Architects, recipient of the AIA Ohio Gold Medal, and an Ohio Commodore. He has served as Ohio’s Architect of the Capitol since 1989.