Is Georgia’s Historic Preservation Tax Credit Contrived for Certain Locales?

Ah, Georgia’s historic preservation tax credit.

It’s a way to encourage restoration of older buildings to make them comfortable for modern-day residences and businesses while still conforming to each building’s original architectural particularities. Homeowners can receive up to $100,000, and $300,000, $5 million, or $10 million is available for commercial properties, depending on the expense of the overall project and so long as the credit is no more than 25% of the overall costs of rehabilitation.

However, there is some Trouble (with a capital T) in River City, folks.

And by River City, I mean Brunswick.

Over the weekend, The Brunswick News ran a story about Robin Durant, a developer who has recently restored six previously-dilapidated houses in the town so that they could be rented as the Howe Street Cottages. According to the article, Durant spent $650,000 renovating the buildings, and he applied for a historic preservation tax credit to help cover some of the costs of the restoration, only proceeding with the renovations after receiving preliminary certification for his project. So far, so good.

Here’s where it goes sour.

According to Zach Harris of Choate & Company, Durant’s lawyer, Durant requested that a representative from DNR come onsite to review the progress of the project, and this request was either ignored or denied. On the other hand, in the article in The Brunswick News, William Hover, Deputy State Historic Preservation Officer, discussed working closely with other projects in the state – one located in Atlanta, the other in Savannah – to define “historical defining character features” for their tax credit applications.

After reading the article and a subsequent op-ed from the paper, I can assure you that Robin Durant isn’t a historic preservationist by trade or by hobby. He needed some guidance about “historical character defining features” for his project, which was ultimately denied. The article included quotes from DNR’s letter to him including the reasoning for the denying final certification:

Durant’s “completed work includes the removal of all historic flooring and replacement of flooring that does not match the historic material in profile.” …The addition of features like decorative doors and crown molding rendered the properties ineligible for the tax credits because “there was no historic evidence that these features existed historically.”

Durant is furious given that he had reached out to DNR about visiting the Howe Street Cottages and was ignored. However, he seems to believe that historic tax credits should exist to encourage economic development and not be concerned with the removal of historic features of the properties.

No.

A historic preservation tax credit is for preserving a historic structure. That’s why personal residences can qualify as well as businesses. If one wants an economic development tax credit, one should apply for one of the many our state offers and not expect us to rewrite the historic preservation tax credit in their image. There is only one historic preservation tax credit available (okay, two if you count the preferential property tax assessment), whereas there are ten economic development tax credits. Further, the DNR provides a one page document of its Standards for Rehabilitation, which is specific about not removing historic elements and rehabbing deteriorated features rather than replacing them. One should adhere to those standards as required for the tax credit and refer any questions about specifics to a professional. This is why – and I cannot stress this enough – one needs to contact a preservationist for large, expensive projects. If one finds the DNR unresponsive, one can reach out to any of the three historic preservation masters programs in the state to see if they can recommend graduates to advise the project. (They will.)

However wrong I know Durant to be about the intended purpose of the historic preservation tax credit, I don’t think DNR handled his application well. At all.

Durant has claimed in an appeal filed by Harris that the DNR gives preferential treatment to projects located in urban areas. This is undeniably true. Georgia State University conducted a survey of where historic preservation tax credits were awarded between 2008 and 2017. 86% of the awards and 95% of the program’s expenditures went to projects in 10 of Georgia’s 159 counties – Fulton, Chatham, Bibb, Muscogee, Floyd, Greene, Richmond, Ware, DeKalb, and Lowndes. Fulton alone ate up 68% of the amount of expenditures allotted to the “top ten” counties over the period studied. That could point to a structural problem with the credits, where it significantly favors urban projects, even though the requirements for the tax credit are straightforward: The property must be eligible for listing on the National Register for Historic Places, the work must conform to the standards I linked earlier, and the project must be completed within two years. Yet, it stands to reason that urban areas would have more individuals financially capable of rehabbing old structures, and there’s more incentive to do so when space is at a premium. Those factors could have created an unintended inherent bias.

But 68% of expenditures from the last decade in only Fulton County? That seems like overkill.

Hover’s quotes in the paper could give us insight as to how this inherent bias is being compounded by staff interest. Of course, he meant to explain why The Grey’s application was awarded and Durant’s was not, but it ends up underscoring the fact that DNR’s attention helped ensure a successful final certification for The Grey, whereas Howe Street Cottages was not afforded that same level of input from DNR staff.

There are historic properties all over this state that should be benefitting from these tax credits, and until I read the findings from Georgia State, I was blissfully unaware that the credits were so centralized. I think few Georgia Trust members would realize it, given that we visit smaller towns with significant rehabilitation projects every year. I’m sure most members assume, like I did, that the tax credits are benefitting most of the projects we visit. This can’t be the case, though, given the numbers in Georgia State’s report. I’m admittedly stunned.

I don’t think anyone at DNR set out to favor one project over others intentionally. However, anyone who requests a site visit should be afforded one after initial certification to ensure that there is a successful final certification, thus preventing even a hint of favoritism. This will only reflect well on DNR. Also, not everyone who will apply for this tax credit is a preservationist, particularly those rehabbing their home. Perhaps DNR should consider conducting outreach to let more people know about the video they have explaining the tax credits? And conduct a few workshops outside of Atlanta on this topic. That could keep them from frittering away the goodwill that should exist for these credits from the folks under the Gold Dome.