Maine Historic Preservation Tax Credits

Supporting Historic Preservation and Economic Development in Greater Portland

660 Congress Street, Portland

660 Congress Street, Portland

LD1810: An Act to expand the historic rehabilitation tax credit

House Majority Leader Maureen Terry has submitted LD 1810 on behalf of Greater Portland Landmarks and Maine Preservation. It will update the reporting requirements, improve the small credit to make it more user-friendly and accessible for income-producing property owners, and expand the program to ensure homeowners have the same opportunity.

Specifically, LD 1810 will:

  • Expand the existing small credit by increasing the base credit from 25% to 30% and raising the qualified rehabilitation expenditure cap from $250,000 to $1,000,000

  • Create a 25% tax credit for historic owner-occupied residences and ancillary structures with a minimum homeowner expense of $5,000 and maximum $250,000. Energy efficiency and resiliency upgrades are included in the qualified expenditures. An additional 5% could be obtained:

    • by property owners at or below 120% of Area Median Income,

    • for properties that include an affordable dwelling unit provided to a renter at or below 100% of Area Median Income, or

    • for properties that have been vacant for more than five years.

On Tuesday, May 9 at 1pm, the Taxation Committee of the Maine State Legislature will hold a hearing on LD 1810.

How Can You Help?

Submit a letter of support. Urge the Committee to adopt LD 1810. You can reference details of the program and persuasive research below, such as the incredible economic benefits that result from rehabilitation projects and the pointed recommendations of the Office of Program Evaluation and Government Accountability.

Speak at the public hearing via Zoom. Individuals are allotted three minutes each, so consider in advance what you might like to say. Start off with a clear statement of support for LD 1810, such as "I support LD 1810 and the expansion of Historic Rehabilitation Tax Credits to safeguard and financially incentivize the responsible stewardship of Maine's historic resources by homeowners."

Attend the public hearing in-person. Stand with Maine Preservation, Greater Portland Landmarks, and other allied organizations at the State House as the Taxation Committee discusses this bill. Even if you choose not to testify (please submit a letter in writing in advance!), your presence can speak volumes and shows bill sponsors that their constituents support this groundbreaking initiative!
 
The hearing will take place at the State House, Room 127, in Augusta.

BACKGROUND

From 2009 to 2019, 106 projects were certified and placed in service in Maine using the Historic Rehabilitation Tax Credit for income-producing properties. Combined, these approved projects:

  • Generated $525 million in construction investment;

  • Rehabilitated 3.6 million square feet of commercial and residential space;

  • Created or preserved 1,911 housing units, of which nearly 1,300 were affordable;

  • Generated 200-700 full-time-equivalent (FTE) jobs through construction spending annually; and

  • Created nearly 700 new full-time, year-round jobs in local businesses.

In 2021, the Office of Program Evaluation and Government Accountability analyzed Maine's Historic Rehabilitation Tax Credit and found that the program's structure and administration are sound and efficient, and that the positive outcomes exceed the stated historic preservation goals while promoting affordable housing, job creation and economic growth. They also suggested that policymakers:

  • “consider whether biennial reporting for the HRTC is meeting the Legislature’s needs and is efficient.” (p. 31)

  • “work with MHPC and stakeholders to clarify the small project credit’s purpose so that its effectiveness can be measured in the future.” (p.32)

  • “consider whether expanding eligibility for the HTRC aligns with State policy priorities while weighing the costs and benefits of expanding eligibility.” (p. 33)

The report goes on, “OPEGA notes that allowing historic homes, barns and other non-income producing buildings to access tax credits for historic rehabilitation could support Maine’s expressed goals around developing “quality of place” and community revitalization. Making a credit available for Maine’s stock of historic houses could also support the State’s goal to increase affordable housing and decrease pressure on Maine’s housing market….” (p. 34).

LD201 signed into law

On Wednesday, April 27, 2022 Governor Mills signed LD 201, extending the sunset of Maine’s Historic Rehabilitation Tax Credit to 2030. A huge thank you to to our partners at Maine Preservation, MEREDA, The Genesis Fund, GrowSmart Maine, the Maine Downtown Center and all of YOU for ensuring the passage of this critical bill!

THE ISSUE

The 2008 Maine Historic Preservation Tax Credit program was expanded to promote investment in rehabilitating historic structures for commercial purposes by offering a 25% refundable credit for qualified rehabilitation expenses. A maximum credit of $5,000,000 is available per project placed into service in the year in which a credit is claimed. For projects that include affordable housing, there is an additional 5% tax credit. The credit also provides for small projects of $50,000 to $250,000 in qualified rehabilitation expenses. The credit was available only for expenditures incurred between January 1, 2008 and December 31, 2013. In 2011, the tax credit program was extended, thanks in part to work by Landmarks. In January 2020, the Maine Legislature agreed to extend the Maine State Rehabilitation Tax Credit from a completion date sunset of 2023 to 2025. The move was supported by a coalition of stakeholders including Greater Portland Landmarks.

our position

Landmarks has been working as part of the Maine Alliance for Smart Growth to extend Maine's state historic rehabilitation tax credit. This current bill, LD 201, An Act To Reduce Greenhouse Gas Emissions and Promote Weatherization in the Buildings Sector by Extending the Sunset Date for the Historic Property Rehabilitation Tax Credit, will extend the program to 2040, ensuring a healthy pipeline and predictable environment to support historic preservation and affordable housing projects.

Following testimony and discussion in early April 2021, the committee voted unanimously in favor of an amended version of the bill that will extend the sunset date for the Maine Historic Rehabilitation Tax Credit (MHRTC) from 2025 to 2030. In late April the Maine Senate voted with unanimous support in favor of the bill to extend the tax credit program.

As amended, LD 201 would extend the sunset date for the Maine Historic Rehabilitation Tax Credit (MHRTC) from 2025 to 2030. The MHRTC incentivizes business and real estate owners as well as property developers to rehabilitate and reuse income-producing historic buildings in Maine. The credit encourages investment in downtown areas to spur revitalization, and to create affordable housing. The MHRTC helps encourage redevelopment of housing located within walking distance of downtown stores and services, which reduces the need for new construction and the dependence on motorized transportation. 

Landmarks and its preservation and real estate allies will continue to advocate in support of the extending the tax credit legislation as it moves to consideration in the House.

Income tax incentives for the rehabilitation of historic structures are important tools for historic preservation and economic development.

Historic Preservation Benefits

  • The MHRTC incentivizes business and real estate owners and developers to rehabilitate and reuse income-producing historic buildings in Maine. The credit encourages investment in downtown areas to spur revitalization, and to create affordable housing.

  • In short, the credit allows a building owner or developer to receive a state tax credit of 25%, or 34% for affordable housing, of the cost of historic improvements for the rehabilitation and reuse of a building that is a “certified historic structure.” The credit is limited to no more than $5 million per project year for 4 years.

  • The MHRTC was adopted in 2008. Since then, 106 historic buildings have been rehabilitated and there are another 59 in various stages of approval, with 16 in the early stages of construction.

Economic Benefits

  • Generated $525 million in construction investment;

  • Rehabilitated 3.6 million square feet of commercial and residential space;

  • Created or preserved 1,911 housing units, of which nearly 1,300 were affordable; and

  • Generated 200-700 full time equivalent (FTE) jobs through construction spending alone annually for the past decade;

  • Additionally, nearly 700 new full-time, year-round jobs have been generated by businesses occupying commercial spaces and in building maintenance, generating $13 million per year in ongoing income to families living in these communities;

  • These renovations have added over $166 million to local property tax rolls in host communities, including $17 million in new property tax payments since 2010; and

  • The HTC program has become a major local revenue-sharing program in its own right. Another $19 million in new income and sales tax revenues are estimated to have come into state coffers since 2008. To date, the program has generated $3 million more in state and local tax revenues than it has cost in tax credits. The program passed into net positive fiscal territory in 2016 and is expected to continue to provide net benefits in the future.

Climate Action Benefits

  • Maine Won’t Wait, the climate action plan released by the Maine Climate Council in December 2020. The plan outlines a bold vision for reducing Maine’s greenhouse gas emissions to 80% below 1990 levels by 2050. The plan also seeks to make Maine carbon neutral by 2045.

  • The MHRTC ensures that Maine’s historic properties, which house carbon in their bones, are both protected for future generations and contribute to smart building practices by reducing the need for virgin construction.

  • By extending the credit to 2040, we are seeking to enable the historic preservation community to put projects in the pipeline that will help meet these ambitious goals, while allowing the Legislature to reconsider the import and benefit of the credit as approaches to climate action are revisited.

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