AB1999: A Missed Opportunity
/Governor Jerry Brown missed a great opportunity to stimulate an important part of California’s economy last month.
AB1999, a state tax credit bill for preservation projects, was vetoed by his office on the grounds that the federal rehabilitation tax credit was enough. Short-sighted? We think so. THIRTY-FIVE other states in the country have their own credits for preservation projects. California is way behind the curve ball on this issue. Good, long-term planning? Absolutely not. If we don’t make rehabilitation of our historic buildings and cities a top priority now, how do we demonstrate sustainability to future generations? Can California afford the credit? Of course we can. We’re the fifth largest economy in the world. In fact, there might be an $8.9 million fast train in our future. . . .
FEDERAL TAX CREDITS HELPED RESTORE SAN FRANCISCO’S FERRY BUILDING
The federal rehabilitation tax credit created $1.5 billion dollars in investment over the last 10 years in California alone. The Economic Development and State Historic Credit Act, or AB1999, would have provided an additional 20% tax credit for qualified historic rehabilitation projects. Carried by Toni Atkins of San Diego, the state credit would have been in addition to the federal credit for some projects.
The difference between the California and federal credits is that the federal credit applies only to income-producing properties. In order to promote affordable housing projects, the California Bill proposed tax credits for income AND non-income producing projects.
According to Alison Finlay, President of the Oakland Heritage Alliance, the California Tax Credit was not redundant at all. It would have made historic projects more feasible because they are difficult to finance. The fiscally-responsible Bill was vetted and supported by the Finance Committee. Given the shear size of California’s historic building inventory, it was also an environmentally-sound Act. The State needs to promote rehabilitation projects, even more so because the loss of redevelopment monies left local governments with no means to offset blight. This Bill could have provided relief and done much to restore civic pride and local economies.
The State Credit Act would have spurred the economy by not only providing new employment and construction opportunities, it would have increased property values, generated more sales tax, stimulated heritage tourism, reduced building decay, and created more affordable housing.
Rehabilitation development is the smartest form of growth there is - it cost pennies next to new construction and has a much smaller carbon footprint. Maybe California does need a fast train, but it needs to rethink its public policy regarding construction even more. According to the U.S. Energy Information Statistics Center, 48% of America’s greenhouse gas emissions come from the construction and operation of new buildings. That’s almost twice the amount of emissions that come from cars, trucks, and airplanes combined. While the industry and transportation sectors each consume about 26% of our energy, the construction sector uses 48%. It doesn’t take a scientist to figure out that the greenest building is one that’s already built.
AB1999 was a small step in the right direction. California needs better policy and an Economic Development and Historic Tax Credit would have helped. The Governor needs to be reminded that we not only need good public transportation, we also need smart construction. In fact, rehabilitation is much smarter than fast trains: the buildings are already built. Please tell Toni Atkins to resubmit AB1999 again next year - it’s a Bill whose time has come.
Postscript:
Governor Gavin Newsom signed SB451, the State Historic Tax Credit bill, into law on October 9, 2019. Senate President pro Tempore Toni Atkins authored the bill with sponsorship from the California Preservation Foundation and the AIA California Council.
