Preservation's Number One!

House Bill No. 1, that is. On January 18, 2001, for the third time, legislation providing a State income tax credit for the cost of restoring historic properties was introduced in the Delaware House of Representatives.

The Delaware Historic Preservation Tax Credit Act, tirelessly pursued by primary sponsor Rep. Joseph DiPinto, applies to owners of properties either on or eligible for listing on the National Register or those properties within a National Register historic district. The bill allows a state tax credit for 20 percent of the cost of restoring a certified historic property that is income-producing. These properties are also eligible for the 20 percent Federal Historic Preservation Investment Tax Credit. Owner-occupied residential properties are not eligible for the current Federal tax credit, but will qualify for a 30 percent state tax credit. Low-income housing projects in qualified historic structures are eligible for an even higher credit-- 30 percent for income-producing properties and 40 percent for owner-occupied residential properties.

Mirroring the federal tax credit for historic income-producing properties, the Act allows persons to transfer the credits to another person, entity or lending institution, which can then use these credits to offset income or franchise taxes. Although at least 16 other states precede Delaware with some form of tax credit incentive for historic properties, Delaware was the first state to include this transfer component in its legislation, paving the way for nonprofits to benefit from the credit while protecting historic properties. This aspect is particularly beneficial to creating low and moderate income housing in historic districts as the credits can be transferred to a lending institution in exchange for a reduction in the principal amount of the mortgage or to reduce the interest rate.

HB 1 was promptly considered by the Joint Finance Committee and the Revenue and Taxation Committees in the House of Representatives, passed unanimously by the House and sent on to the Senate. The Senate unanimously passed the bill after applying an amendment that imposes a $20,000 cap on owner-occupied residential properties and an overall cap of $3,000,000 per year. If the annual cap is reached, properties submitting a request for treatment under the State Tax Credit Act will be approved and queued by date of approval by the State Historic Preservation Office for the following year. The amended bill was returned for re-consideration and unanimously passed the House on January 25th.

On Friday, February 2, Governor Ruth Ann Minner signed the legislation into law, calling it "the gift of life for Delaware's historic resources." Primary sponsor, Rep. Joe DiPinto, expressed his delight with the bill's passage and specially thanked Senate co-sponsor Thurman Adams and Senate Majority Leader Tom Sharp for their support of the measure. PDI also extends its thanks to the network of preservation advocates across the state who worked for several years to see the passage of this important legislation, particularly members of the PDI Public Policy Committee, and those friends of preservation who expressed their support to state legislators. The Wilmington Renaissance Corporation, in particular, played a significant role in the creation of this powerful new tool in the arsenal of protecting historic resources, and the National Trust for Historic Preservation offered invaluable technical assistance and support along the way.

As summed up in the bill's synopsis, the tax credit will not only provide direct financial benefits to historic property owners, but "will encourage revitalization of both urban and rural communities throughout the state, generate jobs, both during the construction phase and in the spin-off effects of increased earning and consumption, attract new private investment to historic areas, enhance property values, promote tourism, and help reduce sprawl by encouraging redevelopment of existing communities."