CLEVELAND, OH (WOIO) - The Federal Historic Tax Credit was saved from the chopping block in the new tax plan, but experts told Cleveland 19 it will be weakened.
The credit currently provides a 20 percent tax credit for certified rehabilitation costs in renovating historic projects as soon as the projects are completed.
In the new tax law, the credit remains at 20 percent, but the value will be spread out over five years after the project is completed.
Advocates all say it is much better than what could have happened, since the original version of the tax plan from the House eliminated the credit.
Local experts said this means that the value will likely be worth 10-20 percent less, meaning every dollar received in the tax credit will actually be worth only 80 to 90 cents.
"It's not as good an incentive but at least it's still in place," said Tom Yablonsky, the executive director of Cleveland's Gateway District.
Experts told Cleveland 19 that since the value of the credit will now be spread over five years, companies that restore historic buildings may have to come up with "gap financing" to fund the project over that five-year period, as opposed to getting one credit when the project is complete.
This could mean that the number of projects drops by about the same amount as the value of the tax credit.
"I think probably, this is a guess, but my guess is it will probably have a 10-20 percent drop off. There will be projects that will be too close to the edge, too difficult to figure out how to close that gap," said Jonathan Sandvick.
Sandvick is the president of Sandvick architects, and is also the vice chairman of the Downtown Cleveland Alliance, advocacy committee chairman for the Downtown Cleveland Alliance, a trustee with the Cleveland Restoration Society, the vice chairman of Heritage Ohio and a trustee with the Cleveland Historic Warehouse District.
He was one of several people and groups who lobbied to preserve the HTC, telling Cleveland 19, a critical moment for the effort was getting Republican Senator Rob Portman's support.
In about 40 years, nearly 300 HTC projects have been completed in Cuyahoga County, worth an investment of nearly $2.3 billion. According to the Ohio History Connection, on average each HTC project in the state creates 93 permanent jobs and 78 construction jobs.
Although the value is diminished, Sandvick said if the credit had been eliminated, it would have been devastating for Cleveland and Ohio.
"The majority of the projects, in my opinion in Cleveland, and throughout the state, simply would not happen. It would be catastrophic without that funding available it would be devastating," said Sandvick.