By Susan Kathryn Hefti
Special to The Clyde Fitch Report
The American beaver, also known as Castor canadensis, is one of the most industrious animals on the planet. In fact, the innate building and development practices of this furry mammal have proven so prolific that the beaver’s extensive portfolio could even make master builder Robert Moses look like a slacker.
But the beaver’s civic celebrity here — in addition to being the official animal of New York State, the furry fellow waves proudly from both the official New York City flag and its seal — is attributable to much more than just its Type A personality. For it was the beaver’s prized pelt that almost exclusively powered Gotham’s early economic development.
After the insatiable demand of the fur trade had driven these wily herbivores to the brink of extinction in Europe, the 17th century discovery of a relatively untapped resource — the robust beaver population in North America — set the wheels in motion for the Dutch trading post known as New Amsterdam. So essential was the beaver to its fledgling economy that when city leaders selected the design for New Amsterdam’s first coats-of-arms in 1630, Castor canadensis was featured in a leading role.
Hands down, the beaver was the single most important commodity that put our city on the map. And 400 years later, much of the world still associates the beaver’s industrious nature and the opportunities it creates for itself with the city that never sleeps.
But surveying our current urban landscape — which has taken the notion of a long winter’s nap to new levels — begs the question as to whether we are really doing all we can to maximize New York City’s economic recovery and stimulate job growth throughout all five boroughs. Now, granted, the beaver did set the bar pretty high for Gotham. But there can be little doubt we’ve barely scratched the surface of the resources that can help get our city back up and running again.
On Jan. 1, Albany set the stage for a meaningful economic recovery when its newly fortified version of the New York State Historic Preservation Tax Credit finally went into effect. The law, which will sunset on Dec. 31, 2014, provides enhanced tax credits for restoration work done on historic commercial properties (e.g., apartment buildings) and historic residential properties (owner-occupied structures) with an eye to stimulating the state’s flagging economy.
The way the program works is that for commercial properties, the state’s historic tax credit must be used in conjunction with the Federal Historic Preservation Tax Incentives program. Once an owner qualifies for that program (the Feds provide a 20% tax credit for restoration work), he or she is automatically qualified for the state’s program (which now provides an additional 20% tax credit, up from the previous 6%).
But eligibility for the state tax credit comes with a significant caveat: a qualifying historic commercial property must be located in a “distressed” area — where residents are at or below 100% of the state’s median family income — as defined by census tracking. Clearing those hurdles, commercial property owners can receive a 20% credit of restoration expenses up to $5 million (a leap from the previous $100,000 cap).
Residential properties must also be located in “distressed” areas in order to qualify for the state historic tax credit (a 20% credit for up to $50,000 in restoration costs, doubling the previous cap of $25,000). In addition to being owner-occupied, to qualify for the credit, the structure must also be individually listed on — or contribute to a historic district listed on — the State or National Register of Historic Places.
Lauding the measure, Governor David A. Paterson said:
“The rehabilitation tax credit program provides incentives to developers, municipalities, businesses and residents to make investments in distressed areas by rehabilitating historic properties that are listed on the State and National Registers of Historic Places.”
The Governor had signed the legislation this past July, but only after certain — more progressive — provisions had already been stripped from the bill. For example, in the earlier bill, eligibility was not tied directly to income as it is now.
And so, while the measure does expand the state’s tax credit program, it is what was snipped from the bill that has some calling for Albany to go back to the drawing board and, this time, come out with a historic tax credit that acts more like the beaver and less like the bear.
After initially calling it “a step in the right direction,” Simeon Bankoff, executive director of the Historic Districts Council, went on to share his concerns about the limitations of the newly expanded tax credit during a recent phone interview. Bankoff worried aloud that because eligibility for the historic tax credit has been directly tied to income, it may not have the same robust economic impact generated by other states that have enacted such incentives.
In order to truly stimulate the economy, Bankoff told me, the New York State Legislature should revisit the eligibility criteria and “divorce it from the income requirement.” If the state tax credit for work done on historic restoration were available to all New Yorkers, and not just those in distressed areas, Bankoff said, the program would be far more widely utilized — providing a vigorous jump start for New York City’s economy.
And while he’s more than relieved to finally see the bill take effect, even Daniel Mackay, director of public policy for the Preservation League of New York State (PLNYS), who worked assiduously for years to get the tax credit through the Legislature, explained to me that with tax revenues dipping along the same trajectory as the economy, advocates of the measure “had to make some trade-offs.” Nonetheless, Mackay said having the state’s newly expanded tax credit to go into effect during the downturn is actually perfect timing because the program creates an incentive to invest locally.
Yet it is specifically because the historic tax credit “has the ability to drive community reinvestment” and create jobs, Mackay quickly added, that the PLNYS is wasting no time in gearing up for the next big push. Like the HDC’s Bankoff, Mackay would also like to see some of the provisions that had been eliminated from the original bill quickly enacted. Describing the potential impact of a historic tax credit, Mackay said, “instead of being shovel-ready, it’s rehab-ready.”
And just like the little beaver that could, confidence that historic tax credits can help get the economy rolling again is palpable when talking with the National Trust for Historic Preservation (NTHP) in Washington, D.C. In a phone interview, Pat Lally, the NTHP’s director of Congressional affairs, said that unemployment is more significantly eased as a result of historic restoration projects than “when you demolish a building and build anew.” Because historic restoration tends to be “more highly skilled and more labor intensive,” Lally said, it produces more jobs. And when it comes to historic tax credits, Lally added, whether federal, state or local, “it’s all about jobs, jobs, jobs, jobs.”
Active in historic restoration for many years, Raymond Pepi, president of Building Conservation Associates, a private preservation consulting firm, knows a thing or two about the impact of historic tax credits. Reached on his cell phone, Pepi said he has seen firsthand how these programs can heat up plans that have been sitting on ice. And by getting a restoration project off the ground, historic tax credits, he said, are like “an economic engine” creating jobs right here in Gotham.
Currently restoring the New York Hall of Science in Flushing Meadows Park, Pepi added that historic tax credits also promote sustainable development by encouraging developers to maximize “resources that already exist — instead of chopping down a new tree, you are using the ones that were already chopped down.” Pepi also noted: “preservationists have been in the sustainable development business for a long time…before it was ever popular.”
Ken Fisher, an attorney specializing in land use and government relations with the law firm of Cozen O’Connor, agrees that “the restoration of historic building stock is a part of sustainable development.” Fisher told me that because “the construction industry is a leading indicator of how difficult it’s going to be to recover” from the current economic downturn, incentives that help stimulate local investment are now an imperative.
It’s that imperative, coupled with the gap in historic properties captured by the state tax credit (again, as eligibility for the credit is limited by income), which is leading some to look elsewhere. One way to make the tax credit available to all New Yorkers would be for the New York City Council to legislate such an incentive. The HDC’s Bankoff said he’d be all for a local historic tax credit. Since “the government has decided that it’s a public good to preserve historic structures,” he said, “the government should put its money where its mouth is.”
While serving as a Council member from Brooklyn in the 1990s, Fisher introduced just such a bill, hoping to create a local historic tax credit available citywide. But the bean counters balked and the bill never saw the light of day. Fisher told me the same arguments he advanced decades ago are still relevant and, perhaps, even more so today: With the stalled economy, a local historic tax credit would help loosen up an industry that has suddenly found easy financing to be a thing of the past.
The PLNYS’s Mackay also believes that a local historic tax credit could help energize New York City’s economy. And because, in 1996, the Legislature “passed a law allowing a local taxing authority to abate tax increases on historic properties,” Mackay said such a measure could be fairly straightforward. But since that law requires that qualifying properties must already be locally designated landmarks — and only 3% of New York City’s structures have yet been so designated — he suggested that if a local tax credit could be enacted, perhaps the criteria should be whether the subject property is eligible for the State or National Register of Historic Places.
Responding by email to a related inquiry, the New York State Office of Parks, Recreation and Historic Preservation (SHPO) stated that because of various fires, demolitions and alterations over the last 40 years, SHPO does not have an exact number, but approximates that “30,000 buildings in the five boroughs are listed on the National Register of Historic Places.” In the absence of a citywide building survey, there is no telling how many historic structures might be eligible but not yet listed.
Causing quite a stir, a few years ago an American beaver was spotted in New York City for the very first time in 200 years. Interpreting the sighting as a harbinger that the Bronx River, along whose banks the beaver had already built its lodge, was making a comeback, beaver fans quickly dubbed the busy fellow Jose, after Congressman Jose E. Serrano who has been widely credited with helping to restore the waterway.
Following one of the few good leads to come out of Albany in a long time (albeit not a perfect one), if the New York City Council were to create a local historic tax credit, it wouldn’t take another beaver-sighting to know that such a measure would herald a much-needed boost to the economy and get a whole lot of New Yorkers busy again.
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Susan Kathryn Hefti is a playwright and active member of the Dramatists Guild of America. Her history play, A Defiant Soul, has been performed throughout the New York City school system as a teaching workshop in early American history. Hefti is also the author and curator of the New York City history exhibit “The Flushing Remonstrance: Who Shall Plead For Us?” Shortly after its 2009 opening, this celebrated exhibit was quickly booked at venues nationwide through the summer of 2010. Her new play, American Dames (or…Waiting for Dolley), introduces us to a group of Upper East Side women confronting their relevance in the ever-changing cultural landscape known as 21st century America. Hefti has been active in historic preservation pretty much her whole life.
The Preservation Diaries does not necessarily represent the views of The Clyde Fitch Report.