Historic Tax Credit Returns to the Legislature With Widespread Support – in Theory

The Pizitz Building in downtown Birmingham was renovated using historic preservation tax credits.

The newly renovated Pizitz Building sits on 19th Street North in downtown Birmingham, its pristine, wedding cake white façade belying its 94 years.

It’s the latest among dozens of historic downtown Birmingham buildings that have been renovated in recent years. But many more of them haven’t been. They stand nearby, vacant or sparsely populated, with fading signs and sagging woodwork.

Three such buildings in Birmingham – a total of seven from around the state – are on a list at the Alabama Historic Commission, waiting to see whether the Legislature will renew a tax credit program that helped make renovation possible for developers of Pizitz and about 20 other buildings in the city.

The historic preservation tax credit was allowed to expire last year because of concerns about the cost of the program to the state. But bills to overhaul and reinstate the tax credit program have pulled much more support this year – at least in theory.

The tax credit, which was not extended last year because of fears about the cost to the state, this year has 87 co-sponsors in the 105-member House of Representatives and 29 co-sponsors in the 35-member Senate. Even Sen. Del Marsh, president pro tem in the Senate and the primary hurdle that blocked extension of the tax credit last year, has signed on as a co-sponsor on the bill this year.

Several members of Jefferson County’s legislative delegation – Republicans and Democrats – list renewal of the tax credit among their top priorities for the session.

“It’s huge for Birmingham,’’ said Sen. Jabo Waggoner, R-Vestavia Hills, who introduced the bill in the Senate this year. He said the tax credit has been used in several Birmingham projects, but there are more buildings that need to be renovated.

In fact, Birmingham has benefited from the program more than any other city. Twenty of the 51 projects carried out across the state have been in the city, including the Florentine Building and the Lyric Theatre.

This year’s bill as introduced would make some changes to the program. But a version of the bill approved by a Senate committee last week amended the bill substantially and in ways that at least one senator said could be a death knell for the future of the program.

The bill as introduced would grant tax credits of up to $5 million per project to developers who are renovating historic buildings. Up to $20 million in tax credits could be issued each year, with the money coming from sales tax revenues in the Education Trust Fund.

One big change from the previous program is that projects to be granted the tax credits would be determined by a new Historic Tax Credit Evaluating Committee. Previously the tax credits were granted on a first come, first served basis.

The committee would be made up of: the director of the Governor’s Office of Minority Affairs, the executive director of the Alabama Historic Commission, the finance director, the director of the Alabama Department of Economic and Community Affairs, the secretary of commerce, two members of the House and two members of the Senate.

The sponsor of the House bill, Rep. Victor Gaston, R-Mobile, said earlier this week that he was studying a substitute version of the bill approved by the Senate committee and did not yet know whether he would incorporate them.

It’s the House version of the bill that carries the most weight because bills that increase or decrease revenue for the state must originate in the House. But changes made in the Senate version of the bill send a message about what senators would like to see when the bill comes to them for a vote.

Dividing Credits Across the State

Among the biggest of those changes, the substitute would divide the $20 million in tax credits allowed each year evenly among the state’s seven congressional districts. After the first three months of the year, any tax credits not reserved in a congressional district would be available for projects in other parts of the state.

It also would allow tax credits to be used only on buildings 75 years or older. Now, buildings 50 years old may qualify.

“The substitute bill limits the amount of projects we can do and it puts a bureaucracy in place to pick winners and losers,” said Sen. Slade Blackwell, R-Mountain Brook, who was the lone vote against the substitute in committee.

He said the Pizitz renovation most likely would not have gone through under rules outlined in the Senate’s substitute. Dividing the credits among the congressional districts would give each district less than $3 million in credits a year, he pointed out. He said the Pizitz building renovation was a much larger project and needed the $5 million for which it qualified under the old program.

He also said that requiring structures to be 75 years old or older would rule out tax credits to preserve buildings that are historic because of their significance during the Civil Rights Movement.

“The substitute is turning lemonade back into lemons,” Blackwell said. “We already have a great deal, let’s don’t make it worse.”


Waiting List

Seven projects remain on a waiting list in case the tax credit is renewed. They are:

  • The E. Haskins Williams House in Birmingham
  • The Birmingham Memorial Company Buildings
  • The Ben Jacobs Furniture Company Building in Birmingham
  • The Dodge Building in Mobile
  • The Giles House in Huntsville
  • Temple Lodge in Mobile
  • Thomas-Willett-Robison House