By Anna Huntsman/Broadcast version by Mary Kuhlman
Reporting for the Kent State-Ohio News Connection Collaboration.

Over the loud protests of preservation groups, Congress has repealed one tax credit for historic building restoration and changed the terms of another, sparking uncertainty about the future of historic rehabilitation projects in Ohio and across the nation.

Ohio ranked first in the nation for completed federal historic tax credit projects in 2016, with 103 approved across the state. In the GOP effort to simplify the tax code, the first draft of the Tax Cuts and Job Act eliminated federal historic tax credits entirely, despite the significant economic development they encouraged each year.

“We were living kind of a waking nightmare,” said Mariangela Pfister, the deputy state historic preservation officer for Ohio. “As Ohioans, I think we really see the benefit of the historic tax credit.”

Since 1976, individuals could receive 20 percent federal tax credit for restoring buildings listed on the National Register of Historic Places or in a designated historic district. If the building was constructed before 1936 but not on the Register, the individual could apply to receive a 10 percent federal tax credit.

The Tax Cuts and Jobs Act, however, now requires individuals to receive portions of the 20 percent credit over a five-year period, rather than in one lump sum. Congress also removed the 10 percent credit altogether.

The federal historic tax credit is used to help offset the enormous cost of rehabilitating an old building.

“A lot of projects that we’ve worked on would not even be feasible financially if it weren’t for that sort of tax credit being available,” said Eric Pros, project design manager at D.S. Architecture, which recently has helped renovate several buildings in Portage County. “The cheapest thing to do would to be to not reinvest in these old buildings, or the people that do have them would not be able to do as good of a job restoring them.”

Pros helped design two projects that used the federal historic tax credit in Portage County: Ravenna’s Phoenix Block, which was renovated in 2016, and the L.N. Gross Building in Kent, which was finished last year and now houses his company.

“With historic buildings...it was interesting going and seeing the existing conditions and how bad some of those conditions were, and then seeing the details on how to fix it,” Pros said. “Seeing the final result was a really incredible experience.”

Modern upgrades often are necessary to keep the structure up to code, but tax credits can only be used for restoring the historical aspects of the building. Pros said this is another reason federal aid is so crucial in completing the projects.

“The big goal of having these rules is to maintain the character of the building,” he said. “You can clearly respect the new aspects and understand the old as well.”

The Phoenix Block received funding from state grants, historical societies and loans from a local bank. The federal HTC was the second-highest amount of funding for the project -- second only to the state tax credit, which was roughly $100 more. The project was approved for $366,132 in federal tax credit, accounting for nearly 20 percent of the $1,986,682 used to help fund the project.

Under the rules that took effect Jan. 1, this project would have received $72,226 each year for five years, rather than receiving the lump sum at first.

Nationwide, the National Park Service certified 1,039 historic-preservation projects in 2016. The NPS estimates the average investment of these completed projects was $5.8 billion, creating more than 100,000 local jobs.

Advocacy groups including Heritage Ohio sprang into action when word spread that the credit was on the chopping block last fall. Executive Director Joyce Barrett helped lead this statewide effort.

“We knew it was coming; (then) we had to get to work,” Barrett said. “We reached out to our friends across the state.”

As the tax bill was rewritten multiple times from one legislative body to the next, advocates called Ohio lawmakers, wrote editorials in newspapers, lobbied Congress members and accumulated thousands of signatures on a Change.org petition. Barrett said they met on a conference call every Monday to touch base and figure out the next plan of action for the new week.

“(Barrett) was able to join these forces together in this...‘Ohio movement’ to support the federal historic tax credit,” said Pfister.

Congress members sought to overhaul the U.S. tax code to provide tax cuts to Americans and simplify its rules. Pfister added that the 10 percent HTC was not used as often, which could explain why it was repealed under the new bill.

If both the 20 percent and 10 percent federal historic tax credits had been eliminated, Ohio projects could still attempt to get credit through the state’s program, which is managed by the Ohio Development Services Agency. Ohio’s state tax credit is independent from the federal program and undergoes a separate review process. In addition, individuals receive a higher tax credit - 25 percent - through the state than the federal program. A person can receive both federal and state tax credit for renovating a structure.

Some states, however, do not have their own tax credit program, which is why Barrett said keeping the federal credit was crucial.

“Thirty-six states have state historic tax credits,” Barrett added. “What if the federal went away? Would there be enough for the state?”

What happens now?

To receive credit according to the old rules, you must have had possession of the property by Dec. 31, 2017, and work must commence within 180 days after the tax law was passed. No further information has been released on what the transition rules entail.

Tom Boccia, a Cleveland-based tax accountant, specializes in the historic tax credits and has worked alongside numerous Northeast Ohio projects. He said the changes to the tax credit could affect investors’ and developers’ interest in pursuing new historic rehabilitation projects.

“[The change] just means that the investor can’t get that credit all up front,” Boccia said, “so they’re not going to invest the same dollars to get credit over five years versus one year.”

Boccia said this has real economic cost to a developer, and could prevent future projects from completion.

“That delta between what they were getting before and what they’re getting now, it’s got to come from somewhere,” he said. “That could cause projects to not go forward.”

This collaboration is produced in association with Media in the Public Interest and funded in part by the George Gund Foundation.




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Today, groups working with lower-income families in Connecticut are raising awareness about the state's "benefits cliff" with a day of action.

The benefits cliff is when a person might get a raise, have a kid with a part-time job, or some other income increase which then makes them ineligible for certain benefits. The changes can have severe impacts on communities and disproportionately affect families with children.

Stephen Monroe Tomczak, professor of social work at Southern Connecticut State University, said it is part of a larger workforce problem.

"People, particularly people of low income, are in a sense disincentivized to participate in the labor force and denied adequate jobs and income when they try to do that," Tomczak explained.

Several General Assembly budget bills could have dealt with the issue but most failed, which inspired today's action, a mock funeral procession to the governor's office to eulogize the bills, including the refundable Child Tax Credit, a housing voucher funding boost bill, and a bill eliminating the asset limit on the HUSKY C medical insurance program.

Social service advocates know the bills will resurface in next year's budget process.

Rose Ferraro, program lead of health justice policy advocacy for the Universal Health Care Foundation of Connecticut, said people are taking alternate steps like going to food banks or avoiding medical care to cover lost benefits.

"Folks will lose their rental assistance and then, they will sort of have to make some tough decisions," Ferraro noted. "'Do I put food on my table or do I make sure to pay rent?' And, so it becomes a sort of untenable position."

Ferraro added interwoven state and federal funding makes it hard to reach the core of the issues leading to benefits cliffs. One eulogized bill would have established a benefits cliff pilot program. For two years, it would have provided subsistence for people who've reached the benefits cliff.

New York towns are reaping many benefits since the Inflation Reduction Act was passed.

Along with funds for larger clean energy projects, the state was awarded $158 million for the IRA's Home Energy Rebates program.

Smaller towns and villages use these grants to implement their climate action plans.

Brighton Town Councilmember Robin Wilt said an IRA grant they applied for will help upgrade the town's HVAC system.

"We will be implementing geothermal and then use a solar array to make the system close to net zero, not quite," said Wilt. "I think we'll get 55% of our energy back with the solar panels."

The bureaucratic process to access the funding was challenging, but some groups are working with the Department of Energy to improve it.

Wilt said feedback on the clean energy projects has been positive. Future projects using IRA funding include increasing walkability and sustainable redevelopment.

Critics have said the IRA includes multiple provisions to increase fossil fuel production.

Towns nationwide are using IRA grants to bolster clean energy projects.

Joel Hicks is a council member for the Borough of Carlisle, Pennsylvania.

They've just applied for a grant to work on energy efficiency and solar projects with Harrisburg. He said this will have positive impacts beyond establishing clean energy.

"We were really excited at this potential," said Hicks, "because we saw that the cost savings we would have for putting in substantial solar projects on our public property would actually fund many of our other public municipal goals."

These include purchasing an electric vehicle fleet and having more efficient solid waste programs.

One thing Hicks said he wants to see in future is state and local governments helping small towns and municipalities with putting together their IRA grant proposals.

A new report analyzes Pennsylvania's existing voucher programs, that divert public funds to private schools.

This comes on the heels of Gov. Josh Shapiro's plan to create a new voucher program for K-12 students.

Diana Polson - senior policy analyst with the Keystone Research Center - said last year's Commonwealth Court decision ruled that Pennsylvania's system of funding public education is unconstitutional, therefore the state doesn't have a dollar to waste on expanding existing private-school voucher programs or creating a new one.

"The basic-education funding commission estimated the state must pay $5.1 billion over the next seven years to make sure our public schools are funded equitably and adequately," said Polson. "Meanwhile, our report finds that existing private-school voucher programs are siphoning millions from taxpayers with little to show for it."

Supporters argue that vouchers let children leave under-performing public schools and get a better education at private schools.

Polson said Pennsylvania's voucher programs have no "meaningful educational or financial accountability," so they really have no way of knowing if these programs operate as intended or are beneficial to low-income or moderate-income students.

Polson said the report reveals that the programs have grown, and just this year they will cost the state nearly $500 million.

However, these voucher programs exclude students in rural areas, because there are few if any participating private schools in these regions.

Local public schools remain the primary option for most rural families.

"We also found that private schools receiving these funds are allowed to - and do - routinely discriminate against students for reasons including disabilities, sexual orientation, religious beliefs and more," said Polson. "These programs are also exclusive. They subsidize the state's most elite and expensive private schools as well as affluent families."

Polson said the report reveals that the Independent Fiscal Office estimated that the average EITC program scholarship was $2,314, while the Opportunity Scholarship Tax Credit was slightly less at around $2,000.

The cost of attending one of the top 25 private schools in Pennsylvania is around $41,000 per year. This means these schools are still out of reach for many low- and moderate-income families.