Developers still await Pa. rules for preservation tax credit

Posted: December 06, 2013

HARRISBURG Philadelphia developer Nolen Properties has plowed millions of dollars into restoring two historic but long-neglected properties in Mount Airy.

Today the firm is almost done converting one, the historic Nugent Home, built for retired Baptist ministers, into affordable housing for senior citizens - a project budgeted at $17 million.

The company had hoped to take advantage of a new state historic preservation tax credit to get a small measure of financial relief, maybe as much as $500,000. But it does not look as if Nolen - or any other developer - will be seeing that credit any time soon.

Six months after the long-awaited program was supposed to launch, state officials have not even released guidelines for potential applicants.

"We follow it every day," said Rick Sudall, Nolen's managing partner for historic renovation. "I'm on the edge of my seat."

The delay has frustrated developers, preservationists, and legislators, including Rep. Robert Freeman (D., Northampton), who fought for 16 years to get the tax credit passed.

"It should be a no-brainer," said Freeman.

He said the delay undermines "legislative intent" and fears the administration is "sitting" on the money in case it needs it to offset the poor budget projections for next year.

A spokesman for Gov. Corbett denied that. Jay Pagni said the guidelines for applicants to the program were being finalized.

"I don't have a timeline," Pagni said Wednesday. "The guidelines will be completed when they can be. It's a function of making sure the guidelines are appropriately reviewed."

The Department of Community and Economic Development would administer the program and the Historical and Museum Commission would review historic rehabilitation plans for projects. Both have signed off on the guidelines.

The legislation establishing a 25 percent tax credit for historic preservation projects was approved and signed into law by Corbett in July 2012.

The measure was to give Pennsylvania, which has one of the largest numbers of historic buildings in the nation, an added tool for restoring them.

The cap for the first year on the total state allocation was $3 million, with a maximum credit of $500,000 per project. The amount was modest by the standards of many of the 30 other states with tax credits. By comparison, Virginia's tax credit, which has been in place since 1997, has spurred private investment of over $316 million in the restoration and reuse of more than 264 landmark buildings.

The first year's appropriation was supposed to be spent by February 2014. It's unclear what happens if that deadline isn't met.

When paired with existing federal tax credits for historic buildings, the dual tax relief programs have been a powerful incentive for spurring redevelopment in blighted areas and saving historic structures across the country.

Without the credit, some preservationists are worried that at-risk buildings could be threatened with demolition.

"We are really concerned because these credits can mean the difference between a project being feasible or not," said Mindy Crawford, executive director of Preservation Pennsylvania, a statewide historic preservation advocacy group that supported the legislation.

It's also unclear how many applicants are poised to seek the money or the effect its delay could have on projects. But preservationists and others said they know of several developers around the state waiting for the program to start.

For builders like Nolen, the delay could mean missing out on an anticipated tax break on a costly project.

The firm also restored the Presser Apartments, next to the Nugent, converting the former home for retired music teachers into affordable housing for seniors.

Sudall said the company also wants to rehabilitate a former Philadelphia Catholic school built in the 1920s for apartments. But Nolen is holding off until it determines if it meets the requirements to qualify for federal and state tax credits.

"There's a gap, you are always scrounging for money," Sudall said.


aworden@phillynews.com

717-783-2584 @inkyamy

www.inquirer.com/phillydawg

www.inquirer.com/commonwealthconfidential

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