Ohio preservation tax credits restore historic buildings in Kent

The Ohio preservation tax credit has helped renovate two historical buildings in Kent.

The Ohio tax credit is a program that provides a tax credit to leverage private redevelopment of historic buildings, and is awarded twice a year according to Penny Martin, a public information officer at the Ohio Development Services Agency.

For a building to be considered, it must be on the national register of historic places, part of a historic national district or certified as a local landmark by a local government, Martin said.

“The goal of the program is to save these unique buildings across the state, give them new life and hopefully have them be a catalyst in a city,” Martin said.

Recently, however, The House passed their tax reform bill excluding the federal historic tax credit, which has been around since 1978, said Joyce Barrett, executive director at Ohio Heritage.

There are two historic tax credits. The federal historic tax credit offers 10% for buildings not on the national register which was excluded out of the tax reform.  The Ohio historic preservation tax credit is 25% and taken when you file your Ohio tax return, Barrett said.

The Ohio historic tax credit is not threatened, according to Barrett.

The most recent building in Kent that was awarded with the tax credit was the L.N. Gross building, located at 315 Gougler Ave.

The project has a total cost of $9,111,371 with the tax credit award total being $9,111,371, according to the Ohio Development Agency’s news release

The Franklin Hotel was awarded the tax credit in 2012. The project cost was $5,848,164 and the total tax credit awarded was $955,750 according to the Ohio Development Agency’s news release.

Barrett said developers look at a project, how much goes in to rehab, how much can they make in return, then they decide whether or not to do a project.

“It doesn’t matter if you have $10 million or $15 million in your pocket,” Barrett said. “They do not do a project that loses money.”

 

(Data courtesy of Ohio Heritage)

Rea S. Hederman, Jr, executive vice president at The Buckeye Institute has a different opinion of the tax credit.

“While it is laudable to people to restore historic buildings, the fact is that the preservation tax credit favors some businesses and communities over others, and the communities and businesses it does not favor are forced to make-up the lost tax revenue,” Hederman said.  “What typically happens is larger developers who have good accountants, and are able to exploit the system take advantage of these special interest credits, leaving other, smaller businesses and individuals, to pay higher taxes to make up for the tax credits.”

Hederman argued a fairer way and more transparent approach would be for the federal government to offer loans on specific projects rather than using the tax code to subsidize developers.  In this way construction and historical renovations would be evaluated on the individual merits of the project, instead of reliance on taxpayer subsidies, Hederman said.

“A smarter policy is to end these special interest tax credits and reduce tax rates across the board for all Ohioans,” Hederman said.” If special renovation projects are worthwhile, they should be considered on their own merits and for direct government spending support.”

The L.N. Gross building dates back to 1928 and it was a dress factory. In its day, it employed more women than any other facility in Portage County, said Roger DiPaolo, a historian in residents at the Kent Historical Society and Museum.

L.N. Gross only remained in business for less than a decade. Between depression and labor issues, it closed in the 1930s. From the 1930s onward, there were a number of uses of the building. The most recent owner worked with the City of Kent and with the state of Ohio to get it placed on the national register for historical places, DiPaolo said.

“Part of the tax credits are you have to restore the building on the exterior to how it looked when it was built,” DiPaolo said. “You can change the inside of the building, but it’s how it looks on the outside that matters.”

Any new construction has to look different from the original. In the case of the restoration of the Franklin Hotel building, to make it accessible, they added an elevator in it. You can see the elevator shaft from the rear of the building and it is painted red to show it is not part of the 1920 building, DiPaolo said.

The Franklin Hotel was the tallest building in Kent during the time, standing at 5 stories. It served as a hotel up until 1979. In 1979, Kent condemned it from occupancy because it was an “absolute mess,” DiPaolo said.

“They were renting rooms for 15 dollars a week,” DiPaolo said.  “From 1979 until easily the early 2000s, it looked worse and worse and worse.”

The tax credits saved a landmark and they “turned it into one of the nicest developments in Kent,” DiPaolo said.

“We have a number of buildings that are landmarks, and actually, they are in pretty good condition,” DiPaolo said. “The Kent Hotel is our crowned jewel.”

The next round of Ohio tax credits will be announced in December. There are no applications put in for any buildings in Kent, according to DiPaolo

 

Ohio preservation tax credit restores two historical buildings in Kent. See story at https://t.co/iGCfWVcki3 #JMCRPP

— Kimberly Laferty (@KimberlyLaferty) December 4, 2017