AIA Ohio News
AIA Ohio Testifies on behalf of Historic Preservation Tax Credit
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.
Downtown Redevelopment Bill On Way to Governor (Sub. HB 233)
The House of Representatives sent the Downtown Redevelopment Bill (Sub. HB 233), to Governor Kasich for his signature following concurrence in Senate amendments.
Sponsored by Rep., Kurt Schuring the bill is designed to assist in redeveloping strategic areas within Ohio’s downtowns. The bill uses as its core a historic preservation project that qualifies under the Ohio Historic Preservation Tax Credit. By way of background, the Historic Preservation Tax Credit went into effect in 2007 and has been widely successful throughout Ohio in restoring historic buildings. Many of those restoration projects have been in downtowns. Sub. H.B. 233 is intended to compliment those projects by offering new economic development tools that will have a synergistic effect on a designated area within a downtown and will provide a critical mass of activity that can support a place where people can live, work, and play.
The legislation allows a municipality to establish a Downtown Redevelopment District in ten-acre increments. The district must have a historic preservation project in it in order for the district to be formed. Up to 70% of the additional property taxes from the appreciated value of the historic preservation project can be diverted to pay for promotion of activity within the Downtown Redevelopment District and revolving loans to other businesses in the district, infrastructure improvements, and debt service on construction loans. These dollars will be used to support other economic activity in the district and will serve as a building block to the revitalization of the downtown as a whole.
The legislation also allows for the establishment of an Innovation District to be established with in the Downtown Redevelopment District. The Innovation District will use a 100 gigabyte broadband connection to facilitate IT research and development in the form of business incubators and accelerators. These types of districts have been on the rise in recent years, attracting leading-edge businesses and the talented workers that go with it. The districts will foster a paradoxical alliance of combining old buildings with new high-tech job opportunities that create a sense of place that is very attractive to young people.
Registration Board's CE Bill On Way to Governor
The Senate passed the Ohio Architect Board's Continuing Education Bill, HB 243 April 20.The bill grants the Ohio Architects Board the power to revise the types of activities that qualify for continuing education credits.
Although the Board has no plans for immediate changes to these activities, it believes that HB 243 is needed to clarify the issue in light of the Legislative Service Commission’s contention that the Landscape Architects Board, which operates under identical statutory authority, didn’t have the ability to change the types of activities that qualify for CE.
Capital Bill Passes Senate
The Ohio Senate uanimously passed the state's $2.6 billion Capital Bill (SB310) on April 20.
$2.6 billion Capital Budget Bill (SB 310)
Ohio’s $2.6 billion Capital Budget Bill (SB 310) was introduced and had its first hearing before the Senate Finance Committee on April 12. It’s expected to clear the legislative process in roughly two weeks. Testifying before the Committee was Office of Budget and Management (OBM) Director Tim Keen.
Among the major categories of funding in the capital proposal are the following:
- $650 million for local school construction, including repairs, renovations and maintenance for primary and secondary facilities.
According to Keen, besides dollars for the Ohio School Facilities Commission to continue funding 49 districts with projects underway and 40 new school districts over the capital biennium, the bill also includes language that will allow projects to be segmented on a building-by-building basis and "to proceed with as few as one building per year or one segment at a time."
According to Keen, this portion of the proposal is composed of $500 million in GRF-backed debt appropriations, $100 million in GRF cash transfers and $50 million in available lottery profit dollars.
- $536.9 million for Ohio's higher education system. According to Keen, a total of $428 million will go to Ohio's 37 public colleges and universities, including $193.6 million for maintenance and renovation, $95.9 million for "world-class" program facility improvement projects, $59.9 million for workforce development and career opportunities, and $78.8 million to modernize and improve the overall academic experience of students. Other higher education appropriations benefit Ohio's statewide university system, such as $13.4 million to support the Ohio Library and Information Network (OhioLINK), $8 million to support the acquisition of workforce based training and equipment and $6 million to support the Ohio Supercomputer Center. Also included in this total are community projects that are going to higher education.
- $500 million to local infrastructure projects through the Public Works Commission. These projects encompass roads, bridges, water-supply systems, storm sewers and wastewater systems. It includes $75 million of the $100 million in the bill to support the Clean Ohio program, which funds preservation of green space, farmland, open spaces and expanded recreational opportunities. Other Clean Ohio funds are in the departments of agriculture and natural resources.
- $323.1 million for the maintenance and preservation of Ohio's dams, parks, trails, waterways and wildlife.
According to Keen, the bill "fully funds dam rehabilitation activities at Buckeye Lake and Lake White, the Portage Lakes East Reservoir and smaller dam rehabilitation projects and continued dam assessments." Another $44.9 million is targeted to improvements at state parks and "day-use facilities," while $44.2 million is for marina and wildlife renovations, improvements and equipment purchases.
- Approximately $150 million for the Department of Rehabilitation and Correction "to support major facility renovations as well as general improvements at the 27 state-owned adult correctional institutions."
- A total of $100 million for the Department of Transportation to address maintenance facilities.
In addition, spread throughout the departments is $160 million for community projects. On this latter category, Faber commented that legislators had received upwards of $1.5 billion in funding requests, saying that in large measure, they are "allocating disappointment." However, he explained that they did try to "rebalance" the geographic spread of the funds with "more going to rural Ohio" in this proposal.
Keen pointed out that most of the community projects "also include commitments of local resources."
During his afternoon testimony, Keen told the committee that of the $2.62 billion, $2.18 billion is supported by General Revenue Fund (GRF)-backed debt obligations, $77 million higher than the amount of GRF-backed capital appropriations approved for the current capital biennium. "Thus, SB310 is fiscally prudent and affordable and will support the credit rating agencies' ranking of Ohio's debt burden as 'moderate' and will support our 'AA+' credit rating and 'stable' credit outlook."
The remaining $438 million is supported by non-GRF-backed bonds and cash funds.
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AIA Ohio’s Legislative affairs program provides information and leadership through advocacy and monitoring of legislation and regulations at the state level. By collaborating with allied professionals, industry representatives, code officials, and state and local representatives, AIA Ohio strives to build strategic alliances to address issues of public health, safety and welfate, design excellence and in advancing the quality of life through the built environment.
As advocates of innovative approaches to legislation, AIA Ohio advances state regulations that benefit the practice of architecture and promotes good design that positively affects the quality of life of for all citizens of Ohio. Through our efforts, AIA Ohio works to educate the public and legislators on a wide facet of issues relating to architecture including:
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Working through our highly qualified staff and experienced membership, AIA Ohio proposes regulations, positions architects as leaders, and tracks and responds to legislation that benefits both architects and users of the built environment alike. Additionally, through our Political Action Committee, we strive to support legislation, and allies in the legislature, that advances the needs of our members.
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