The Georgia Trust

WHAT IS HB 851?

HB 851 is a Technical Corrections Bill to Amend the Georgia State Income Tax Credit for Rehabilitated Historic Property (OCGA 48-7-29.8). The proposed changes are as follows:

  • Raises the $5,000 per project cap to $100,000 for residential properties and $300,000 for commercial
  • Increases the credit to 25%, from 10% for residential and 20% for commercial

WHY HB 851?

  • State tax credit projects build back communities and often have a catalytic effect on their community. When a community landmark (a mill, downtown storefront, school, etc.) or a few key residences are rehabilitated, the area around it often revitalizes. Macon has seen drastic improvements in public safety, vigorous infill construction, and an increase in work force housing in neighborhoods where rehabilitation projects sparked widespread revitalization. The first five years of Rhode Islands program saw more investment in historic rehabilitation than in the previous 25 years combined.

  • State tax credits are a good investment and attract federal investment. The total economic impact of a state tax credit far exceeds its cost. Recent studies show that $1 in rehabilitation tax credits leverages $11.43 in Michigan or $5.35 in Rhode Island. Commercial projects, which are used in combination with the federal tax credit, bring in substantial federal investment.

  • State tax credit projects create an ongoing economic impact, including a high rate of new job creation. Rehabilitation is more labor intensive than new construction, and studies have shown it to create more jobs than the same investment in manufacturing (Michigan), oil (Oklahoma), coal (West Virginia), and steel (Pennsylvania). Rehabilitation also creates new businesses, increases property and sales tax revenues, and stimulates private investment.

  • State tax credit projects increase affordable housing. Tax credits provide non-profit developers with a tool in assembling the financing necessary to create affordable housing, while they also make for-profit developers consider both market-rate and affordable units in urban neighborhoods.

  • State tax credit projects offer a smart strategy for sustainable growth that recycles scarce natural resources and materials, conserves energy, re-uses the existing infrastructure, reduces the need for new, imported raw materials, and reduces construction waste going to landfills.

  • State tax credit projects increase the opportunity for heritage tourism. When announcing his 2005 Heritage Tourism Initiative, Georgia Governor Sonny Perdue said "Tourism is the second largest industry in Georgia and brought an economic impact of $26 billion to our state in 2004” and called for the development of more historic tourism sites.

  • Georgia is losing private investment in rehabilitation projects to other states. Every state with a state tax credit offers a higher or no per project cap. Every state with a residential state tax credit offers higher rates, and twelve states have higher rates for commercial properties. Each of the Southeastern states that offers a state tax credit has a more attractive program.

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