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Cutting Edge of Renewal

January 27, 1988

There has always been a sneaking suspicion on the part of some that historic-preservation tax breaks were largely a tool for effete intellectuals who usually also were quite affluent. They would find cheap old houses and turn them into fancy new-old houses partly at taxpayer expense. One of the first programs that James G. Watt decimated when he became secretary of the Interior dealt with historic preservation.

But a recent report from J. Jackson Walter, president of the National Trust for Historic Preservation, should help dispel that notion. Historic preservation has been an effective vehicle for the creation of new housing for low- and moderate-income people, particularly in inner cities.

Since 1975 the Savannah Landmark Rehabilitation Project has created 300 housing units in the Victorian Historic District, or about 20% of the total housing supply in the district, Walter said. An additional 200 units are being added. Similar projects have risen from the virtual rubble of inner cities from Philadelphia to Los Angeles, Walter added. Not only are less fortunate Americans provided with adequate housing, but their residence helps give new life and vitality to those neglected urban areas.

Total investment in older buildings was more than $20 billion in 1983, the last year for which figures were available, Walter said. That may not be very impressive when compared with total U.S. housing spending. "But in the name of historic preservation, and quite often with the help of the federal historic rehabilitation tax credits, we are saving the key buildings that give a city shape and character--the ones that bring identity to our cities," Walter said.

This program was threatened during the tax-reform debate of 1986, when Congress considered the elimination of the rehabilitation tax advantage, which Walter said stimulated an estimated $8.8-billion investment in more than 11,700 historic buildings between 1982 and 1985. While Congress finally was convinced that the credit should be retained, the bill did include new rules that significantly restrict the use of the credit in preserving old and historic buildings and creating low-income housing opportunities. The use of the rehabilitation credit dropped 35% last year. Now the National Trust, with the support of groups like the American Institute of Architects, is attempting to have these restrictions removed. They should be, and they can be with no additional cost under the trust's proposal.

Downtown areas need more than just glass and steel office towers occupied only during the day-time, and high-rise apartment buildings that too often are isolated from older areas of the cities. Even in a newer city like Los Angeles, the rehabilitation of historic buildings for residential use can help breathe new life into run-down areas. Absent an effective tax credit, however, those structures are likely to fall to the bulldozer and wrecking ball.

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