[House Hearing, 109 Congress]
[From the U.S. Government Publishing Office]
HISTORIC PRESERVATION AND COMMUNITY DEVELOPMENT: WHY CITIES AND TOWNS
SHOULD LOOK TO THE PAST AS A KEY TO THEIR FUTURE
=======================================================================
HEARING
before the
SUBCOMMITTEE ON FEDERALISM
AND THE CENSUS
of the
COMMITTEE ON
GOVERNMENT REFORM
HOUSE OF REPRESENTATIVES
ONE HUNDRED NINTH CONGRESS
SECOND SESSION
__________
SEPTEMBER 20, 2006
__________
Serial No. 109-262
__________
Printed for the use of the Committee on Government Reform
Available via the World Wide Web: http://www.gpoaccess.gov/congress/
index.html
http://www.house.gov/reform
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COMMITTEE ON GOVERNMENT REFORM
TOM DAVIS, Virginia, Chairman
CHRISTOPHER SHAYS, Connecticut HENRY A. WAXMAN, California
DAN BURTON, Indiana TOM LANTOS, California
ILEANA ROS-LEHTINEN, Florida MAJOR R. OWENS, New York
JOHN M. McHUGH, New York EDOLPHUS TOWNS, New York
JOHN L. MICA, Florida PAUL E. KANJORSKI, Pennsylvania
GIL GUTKNECHT, Minnesota CAROLYN B. MALONEY, New York
MARK E. SOUDER, Indiana ELIJAH E. CUMMINGS, Maryland
STEVEN C. LaTOURETTE, Ohio DENNIS J. KUCINICH, Ohio
TODD RUSSELL PLATTS, Pennsylvania DANNY K. DAVIS, Illinois
CHRIS CANNON, Utah WM. LACY CLAY, Missouri
JOHN J. DUNCAN, Jr., Tennessee DIANE E. WATSON, California
CANDICE S. MILLER, Michigan STEPHEN F. LYNCH, Massachusetts
MICHAEL R. TURNER, Ohio CHRIS VAN HOLLEN, Maryland
DARRELL E. ISSA, California LINDA T. SANCHEZ, California
JON C. PORTER, Nevada C.A. DUTCH RUPPERSBERGER, Maryland
KENNY MARCHANT, Texas BRIAN HIGGINS, New York
LYNN A. WESTMORELAND, Georgia ELEANOR HOLMES NORTON, District of
PATRICK T. McHENRY, North Carolina Columbia
CHARLES W. DENT, Pennsylvania ------
VIRGINIA FOXX, North Carolina BERNARD SANDERS, Vermont
JEAN SCHMIDT, Ohio (Independent)
BRIAN P. BILBRAY, California
David Marin, Staff Director
Lawrence Halloran, Deputy Staff Director
Benjamin Chance, Chief Clerk
Phil Barnett, Minority Chief of Staff/Chief Counsel
Subcommittee on Federalism and the Census
MICHAEL R. TURNER, Ohio, Chairman
CHARLES W. DENT, Pennsylvania WM. LACY CLAY, Missouri
CHRISTOPHER SHAYS, Connecticut PAUL E. KANJORSKI, Pennsylvania
VIRGINIA FOXX, North Carolina CAROLYN B. MALONEY, New York
BRIAN P. BILBRAY, California
Ex Officio
TOM DAVIS, Virginia HENRY A. WAXMAN, California
John Cuaderes, Staff Director
Ursula Wojciechowski, Professional Staff Member
Juliana French, Clerk
Adam Bordes, Minority Professional Staff Member
C O N T E N T S
----------
Page
Hearing held on September 20, 2006............................... 1
Statement of:
Fowler, John, executive director, Advisory Council on
Historic Preservation; Janet Snyder Matthews, associate
director for cultural resources, National Park Service;
Richard Moe, president, National Trust for Historic
Preservation; and John Leith-Tetrault, president, National
Trust Community Investment Corp............................ 3
Fowler, John............................................. 3
Matthews, Janet Snyder................................... 15
Moe, Richard............................................. 39
Leith-Tetrault, John..................................... 51
Neal, Idotha Bootsie, executive director, Wright Dunbar,
Inc.; Kathleen Crowther, executive director, Cleveland
Restoration Society and chairman, Statewide and Local
Partner Program, National Trust; J. Myrick Howard,
president, Preservation North Carolina; Edward Sanderson,
director, Rhode Island Historical Preservation and Heritage
Commission; and Ken Baumgartner, president, the Corky
McMillin Companies......................................... 87
Baumgartner, Ken......................................... 182
Crowther, Kathleen....................................... 94
Howard, J. Myrick........................................ 125
Neal, Idotha Bootsie..................................... 87
Sanderson, Edward........................................ 166
Letters, statements, etc., submitted for the record by:
Baumgartner, Ken, president, the Corky McMillin Companies,
prepared statement of...................................... 184
Clay, Hon. Wm. Lacy, a Representative in Congress from the
State of Missouri, prepared statement of................... 213
Crowther, Kathleen, executive director, Cleveland Restoration
Society and chairman, Statewide and Local Partner Program,
National Trust, prepared statement of...................... 97
Howard, J. Myrick, president, Preservation North Carolina,
prepared statement of...................................... 127
Leith-Tetrault, John, president, National Trust Community
Investment Corp., prepared statement of.................... 53
Matthews, Janet Snyder, associate director for cultural
resources, National Park Service, prepared statement of.... 17
Moe, Richard, president, National Trust for Historic
Preservation, prepared statement of........................ 41
Nau, John L., III, chairman, Advisory Council on Historic
Preservation, prepared statement of........................ 6
Neal, Idotha Bootsie, executive director, Wright Dunbar,
Inc., prepared statement of................................ 90
Sanderson, Edward, director, Rhode Island Historical
Preservation and Heritage Commission, prepared statement of 168
HISTORIC PRESERVATION AND COMMUNITY DEVELOPMENT: WHY CITIES AND TOWNS
SHOULD LOOK TO THE PAST AS A KEY TO THEIR FUTURE
----------
WEDNESDAY, SEPTEMBER 20, 2006
House of Representatives,
Subcommittee on Federalism and the Census,
Committee on Government Reform,
Washington, DC.
The subcommittee met, pursuant to notice, at 10 a.m., in
room 2154, Rayburn House Office Building, Hon. Michael Turner
(chairman of the subcommittee) presiding.
Present: Representatives Turner, Bilbray, and Foxx.
Staff present: John Cuaderes, staff director; Ursula
Wojciechowski, professional staff member; and Juliana French,
clerk.
Mr. Turner. Good morning. A quorum being present, this
hearing of the Subcommittee on Federalism and the Census will
come to order.
Welcome to the Subcommittee on Federalism and Census
hearing entitled, ``Historic Preservation and Community
Development: Why Cities and Towns Should Look to the Past as a
Key to Their Future.'' This is the subcommittee's second
hearing on historic preservation. Last November, the
subcommittee held its first hearing on this subject. That
hearing sought to examine the impact Hurricane Katrina had on
historically significant structures in Alabama, Mississippi,
and Louisiana.
Today, we will review how the Federal, State, and local
governments are supporting historic preservation's efforts
across the country. This subcommittee will examine what
resources are available to preservation organizations and how
they are used.
Evidence suggests that preservation programs including tax
credits and revolving funds have done more than restore
dilapidated structures and prevent demolition of old buildings.
Historic preservation has been increasingly recognized as a
powerful tool for neighborhood revitalization and economic
development. Preservation projects are catalysts for restoring
life to old neighborhoods and factories, for creating new
affordable and upscale housing, and for providing the amenities
and living space that encourage new residents to return to
older communities.
My own experience in Dayton is just one example of how
historic buildings coupled with the right Federal tools can
provide an economic development resource. For example, while I
served as mayor of Dayton, we started a successful neighborhood
revitalization project called Rehabarama. This private-public
partnership targeted one of Dayton's historic districts to
acquire, via a non-profit, abandoned or severely dilapidated
historic homes. These structures were completely rehabilitated
using national historic preservation standards and the local
design ordinance, and then these refurbished homes were
decorated and opened for the public to see and eventually sold
on the open market.
The Rehabarama concept brought many benefits to Dayton. It
changed neighborhoods for the better as it took dilapidated and
undesirable housing into ones that were sought after by the
buying public. Existing residents appreciated the elimination
of old and abandoned properties which depress neighborhood
housing values. In fact, the advent of the Rehabarama program
has proven to be an impetus for existing homeowners to improve
their own properties in anticipation of visitors. Rehabarama
and the surrounding activity provided much needed work for the
constructive and remodeling industry. Everyone benefits: the
long term residents, new homeowners, and area businesses.
Besides the physical improvements, positive promotion for
the city of Dayton, and economic spinoff, Rehabarama provided
an opportunity to form important partnerships which have gone
on to spur other successful housing ventures. One Rehabarama
sponsor was the Homebuilders Association. Rehabarama allowed
the Homebuilders Association members to become familiar with
the city of Dayton as a site for doing business. This new
relationship led to the Citirama Program, an offshoot of
Rehabarama. Citirama combines the restoration of historic homes
with historically sensitive new construction on nearby vacant
lots. Our first Citirama project was located in the Wright-
Dunbar Village, an area rich in history but poor in investment.
Like Rehabarama, we were able to change neighborhoods but this
time with new construction alongside of historic homes that had
been purchased by the city and rehabilitated.
I would like to emphasize that both Rehabarama and Citirama
used a number of Federal programs including CDBG and Federal
Historic Tax Credits.
Historic preservation is about much more than saving a
building. It is about revitalizing cities and towns.
I am eager to hear from our panelists what approaches have
worked, which have not, and where there are opportunities for
improvement.
On our first panel, we welcome remarks from John Fowler,
executive director of the President's Advisory Council on
Historic Preservation, and Ms. Janet Snyder Matthews, associate
director for cultural resources at the National Park Service.
We will then hear from Mr. Richard Moe, president of the
National Trust for Historic Preservation, and Mr. John Leith-
Tetrault, president of the National Trust Community Investment
Corp.
On our second panel, we will hear from Ms. Idotha Bootsie
Neal, executive director at Wright Dunbar, Inc., and Ms.
Kathleen Crowther, executive director of the Cleveland
Restoration Society and chairman of the Statewide and Local
Partner Program of the National Trust. Then, Mr. Myrick Howard,
president of Preservation North Carolina, and Mr. Edward
``Ted'' Sanderson, director of the Rhode Island Historic
Preservation and Heritage Commission, will provide their
testimonies. Last, the subcommittee will hear from Mr. Ken
Baumgartner, president of the Corky McMillin Companies.
This committee has as its policy that each of the witnesses
are sworn in. So, before we begin, we will ask each of the
witnesses to stand and be part of the oath.
[Witnesses sworn.]
Mr. Turner. Please let the record show that all of the
witnesses have responded in the affirmative.
Now each of the witnesses has kindly prepared written
testimony which will be included in the record of this hearing.
The witnesses will notice that there is a timer with a
light on the witness table. The green light indicates that you
should begin your prepared remarks, and the red light indicates
that your time has expired.
With that, I would like to recognize Mr. Fowler.
STATEMENTS OF JOHN FOWLER, EXECUTIVE DIRECTOR, ADVISORY COUNCIL
ON HISTORIC PRESERVATION; JANET SNYDER MATTHEWS, ASSOCIATE
DIRECTOR FOR CULTURAL RESOURCES, NATIONAL PARK SERVICE; RICHARD
MOE, PRESIDENT, NATIONAL TRUST FOR HISTORIC PRESERVATION; AND
JOHN LEITH-TETRAULT, PRESIDENT, NATIONAL TRUST COMMUNITY
INVESTMENT CORP.
STATEMENT OF JOHN FOWLER
Mr. Fowler. Thank you, Mr. Chairman.
Chairman Nau sends his sincere regrets that he was unable
to come to D.C. for this hearing today. He certainly
appreciates the interest of the subcommittee in this subject,
and he is particularly grateful for your personal commitment as
the leader of the House Historic Preservation Caucus.
Chairman Nau's statement makes a persuasive case for the
value of historic preservation for strengthening America's
communities. He cites the economic impact of historic property
rehab through job production and support of local business. He
notes rehabilitation encourages neighborhood investment, and he
notes the establishment of historic districts stabilizes
neighborhoods and leads to higher property values.
His statement also stresses the importance of heritage
tourism. Heritage tourism is a $200 billion industry
nationwide. Heritage tourists spend more and stay longer, and
they comprise the most rapidly growing sector of the tourism
industry. As a result, heritage tourism makes a substantial
contribution to sustainable historic preservation.
The Advisory Council on Historic Preservation has two
responsibilities relevant to our topic today. As manager of the
Federal Historic Preservation Planning Process, Section 106, it
affects many of the decisions that are made at the community
level. As advisor to the President and Congress, it has
initiated a preservation program that is having substantial
impact across the country. Under Section 106, annually, over
100,000 Federal and federally assisted projects potentially
affecting historic properties are reviewed by State Historic
Preservation Officers under procedures set up by the ACHP. Many
of these shape the fabric of our Nation's communities: HUD-
funded housing rehab, economic development grants from the
Commerce Department, Department of Agricultural Rural
Development Loans and Grants, and so on. Through careful
consideration of historic preservation impacts under Section
106, Federal assistance becomes a catalyst for enhancing,
rather than destroying, community fabric.
Our second role as Presidential Advisor has produced the
Preserve America Initiative, the first governmentwide historic
preservation initiative which is led by the First Lady Laura
Bush. Details of the Preserve America Initiative are in Mr.
Nau's statement. What I would like to do is highlight some
particularly relevant aspects of the initiative as they relate
to the subject of this hearing.
First is the concept of Preserve America Communities. This
process provides recognition of communities that preserve and
use their heritage assets to promote community vitality and
economic development through heritage tourism. There are
currently 400 Preserve America Communities in 48 States across
the country. They range from Charleston, SC, and Dayton, OH, to
Chinatown in Honolulu and Rabbit Hash, KY, with a population of
14.
The second component that I think is relevant to the topic
today is the Preserve America Grants. This is a new grants
program that was authorized by the Congress in fiscal year 2006
and is administered by the National Park Service in
consultation with the ACHP. $5 million were available this year
and were handed out to a total of 68 recipients in 32 States.
These grants are designed to promote innovative strategies for
advancing heritage tourism in local communities. The round two
grant winners were just announced yesterday, I am pleased to
report.
The third aspect of the program that I would like to
mention is our work with Federal Agencies to make Federal
assistance more readily available to support Preserve America
goals and Preserve America Communities. We have done this by
working with agencies to get special consideration and
preference points for Preserve America Communities. An example
is the Department of Agriculture Rural Development
Administration Community Facilities Loan and Grants Program
which gives points for Preserve America Communities.
Preserve America focuses on encouraging and supporting
historic preservation at the local level, and it continues to
be a growing program that we are very excited about.
In closing, I would like to note that this year marks the
40th Anniversary of the National Historic Preservation Act. On
October 18th through 20th, the First Lady will host the
Preserve America Summit in New Orleans. 400 preservation
leaders and stakeholders will celebrate the achievements of the
National Historic Preservation Act and consider ways to make
the National program even more successful in the future.
We appreciate the support of you, Mr. Chairman, and the
Subcommittee for the Preserve America Initiative and for
furthering historic preservation as a key community
revitalization strategy.
Thank you.
[The prepared statement of Mr. Nau follows:]
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Mr. Turner. Dr. Matthews.
STATEMENT OF JANET SNYDER MATTHEWS
Ms. Matthews. Thank you, Mr. Chairman. Thank you for the
opportunity to present information on tax incentives and grants
administered by the National Park Service; Historic
Preservation and Community Development: Why Cities and Towns
Should Look to the Past as a Key to Their Future.
Forty years ago, Congress, through the National Historic
Preservation Act, provided historic preservation grants. They
recommended legislation and legislated it to authorize grants
to State and local governments to carry out inventory and
survey programs in coordination with the Park Service. They
established the Historic Preservation Fund, a matching grant
program. In 2005 and 2006, Congress appropriated over $70
million. Requiring a non-Federal cost share for each grant, HPF
grants serve as catalysts, seed money. At least 10 percent of
each State allocation is subgranted to certified local
governments.
In 1999, Congress and the executive branch created the Save
America's Treasures Grant Program. Historic properties and
museum collection grants are awarded using funds appropriated
by Congress. Private partners including the National Trust work
to raise non-Federal funds to match the Federal grants.
Projects are diverse. They include the city bus on which Rosa
Parks refused to give up her seat as well as the World Heritage
Site of Pueblo ruins in Mesa Verde, Colorado.
The Preserve America Grants component, begun in 2006, ends
off a White House 2003 initiative championed by First Lady
Laura Bush. Designations and awards in support of communities
recognize, designate, and protect local cultural resources.
This reflects decades of local ordinances, listings, and
grassroots work to revitalize community for economic
revitalization.
In 2006, Congress appropriated $4.9 million for the HPF for
Preserve America. Dayton, OH is going to complete an economic
analysis of historical tourism and develop and implement a
heritage tourism marketing strategy under one of those grants.
This Spring, Congress appropriated $43 million for the HPF
to Alabama, Louisiana, and Mississippi for the stabilization,
rehab, and repair of properties listed in or eligible for the
National Register. The subject of that disaster relief was your
2\1/2\ hour hearing last November for which I think every
single panelist and every person in this room is extremely
grateful, Mr. Chairman. In New Orleans, grant funds under that
relief for the first time will be appropriated for owners of at
least 200 historic personal residences, rebuilding a city that
encompasses 20 National Register historic districts.
NAGPRA, the Native American Graves Protection and
Repatriation Grants to museums, Indian tribes, Alaska Native
Villages and corporations, Native Hawaiian organizations assist
in the reburial of the Native Americans and the cultural items
that were buried with them.
The American Battlefield Protection Grants that Congress
appropriates protect and preserve battlefield lands by means
other than direct Federal intervention and acquisition. Since
1998, Congress appropriated $28.9 million from the LWCF to
assist State and local governments in acquiring Civil War
battlefields outside the legislative boundaries of National
Park units.
Ten years after the National Historic Preservation Act, the
Tax Reform Act of 1976 provided tax incentives, creating our
very first Federal income tax incentives for preservation. For
the first time, owners of historic buildings were allowed to
claim accelerated depreciation rehab of historic buildings. In
partnership with the Internal Revenue Service, the National
Park Service administers this important and growing program.
Through the Revenue Act of 1978, Congress provided the
first income tax credit for rehab. The Economic Recovery Tax
Act of 1981 increased the tax credit from 10 to 25 percent. The
Tax Reform Act of 1986 lowered the credit from 25 to 20. Last
year, over 1,100 projects were approved. One of those will be
here today. Since 1977, over 33,000 projects represent more
than $36 billion in private investment to revitalize
communities.
Dozens of States have created State incentives including
State income tax credits.
In our Nation's Capital, Congress passed the Union Station
Redevelopment Act, creating a public-private partnership to
preserve the building. Private developers used new tax
incentives to rehab the building for mixed use. It still is a
train station today.
Mr. Chairman, we brought copies of a review of the tax
incentive program that was approved last Friday by the National
Park System Advisory Board which recommends to the Secretary of
the Interior and the National Park Service Director their
findings on looking at what the National Trust, the National
Conference of State Historic Preservation Officers, and the
Historic Preservation Development Council recommended in 2002
and 2003. We undertook, in 2005, a review of this and have come
up with recommendations and an implementation schedule, and we
have copies of this here for you today, brand new, hot off the
press.
Thank you, sir.
[The prepared statement of Ms. Matthews follows:]
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Mr. Turner. Thank you for this. I look forward to reviewing
it and seeing what you found.
STATEMENT OF RICHARD MOE
Mr. Moe. Thank you, Mr. Chairman. As you know, the National
Trust was chartered by Congress some 57 years ago, and ever
since then, we have been working with the Congress and with our
partners around the country to try to save America's heritage.
At the outset, Mr. Chairman, I want to thank you for
holding this hearing on a very important issue, and I am so
pleased that you mentioned your experience in Dayton because
that is precisely the kind of informed experience that will
help us to sharpen our public policies. I want to say also that
the last hearing you held on historic preservation had a
profound impact and was very significant in persuading the
Congress to enact legislation enriching the tax credit for the
impacted area in the Gulf Coast and for providing $40 million
in grant funds to historic resources. So I thank you for your
leadership there and in so many ways.
The Trust has long recognized the links between historic
preservation, community revitalization, and housing: 32 percent
of the households below the poverty line and 34 percent of
renters whose household income is less than $20,000 per year
live in older and historic homes. That is a very significant
statistic. Of the Nation's over 12,000 historic districts which
comprise a million contributing structures, 60 percent of those
overlap census tracts in which the poverty rate is 20 percent
or greater. So there is a tremendous need for incentives to
create housing and to stabilize neighborhoods in these areas.
As Jan Matthews has mentioned, one of the principal Federal
incentives for rehabbing older and historic buildings is the
Historic Rehabilitation Tax Credit. It is the Federal
Government's largest historic preservation program and probably
its most important. Although it has been widely used as an
effective tool for bringing vacant and abandoned buildings back
onto the tax rolls and, in some cases, providing safe, decent,
and affordable places to live, it must be improved so that it
can truly realize its fullest potential. So far, it has been a
catalyst for commercial reuse and reinvestment in historic
resources. It has helped to build 170,000 housing units; 60,000
of which are affordable.
The rehab credit should be easier to use, especially in
projects that twin the incentive with the Low Income Housing
Tax Credit or, in other words, for smaller Main Street-oriented
projects. Last year, Section 47 produced more than 15,000 units
of housing across the country and nearly 40 percent of those
fell into the affordable category, but it can do a lot more.
The Trust has worked with several teams of experts and has
concluded that certain structural features in the rehab credit
are actually impeding their expanded views, especially as tools
for affordable housing. It has been almost two decades since
Congress has revisited Section 47 of the Code, and we think it
is time that it does so again.
Our work has led to the introduction of the Trust's No. 1
legislative priority, H.R. 3159 which is the Community
Restoration and Revitalization Act introduced by Congressman
Phil English and William Jefferson. Mr. Chairman, I am very
grateful for your original co-sponsorship of this bill. It now
has 67 co-sponsors, and we are expecting Senate introduction
very shortly. It is endorsed by such organizations as
Preservation Action, the National Council of State Historic
Preservation Officers, the American Institute of Architects,
and the Affordable Housing Tax Credit Coalition. It would make,
in short, five substantial changes to the rehab credit so that
it can be more effectively used in community revitalization and
particularly in housing and in smaller so-called Main Street
type deals.
I hope that every Member of this body will co-sponsor this
legislation. My colleague, John Leith-Tetrault will very
shortly let you know about some of the specifics in the bill.
This bill is just a first step in making the rehab credit
work as effectively as possible. I hope that Congress will
foster and expand tax incentives like this. Protecting tax
credits is particularly important at a time when the rehab
credit and other credits that work in conjunction with it to
improve neighborhoods, such as the New Markets Tax Credit and
the Low Income Housing Tax Credit, may be vulnerable to changes
in the tax code and the tight budget climate up here.
It is important to note that the greatest need in America's
oldest and historic neighborhoods remains an equivalent to the
Section 47 historic rehab credit for owner occupied homes. You
are going to be hearing more about this later this morning, I
believe, but it would be a very important and logical extension
of the existing tax credit.
Let me mention just a few other Federal incentives and
programs that are of particular interest. Mention has been made
of the State tax credits. In recent years, it has been a high
priority of the National Trust to build the capacity of State
preservation organizations and through them to increase the
number of States that have State tax credits. There are now
some 27 or 28 such States, and we think that legislation in the
Congress could encourage that number even more.
The National Park Service does a tremendous job at
administering the Federal Historic Tax Credit, but there is
much more that could be done to expand the universe of
projects. Dr. Matthews has mentioned the report that has come
out that is very important.
Finally, the Historic Preservation Fund which is the fund
that is so critically important to the State Historic
Preservation Offices, it is chronically underfunded, and we
think that not only should it be increased for the States but
also for Save America's Treasures and Preserve America.
I could go on, Mr. Chairman, but my time is up. Thank you
very much.
[The prepared statement of Mr. Moe follows:]
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Mr. Turner. Thank you.
I want to recognize that we have been joined by Mr. Bilbray
from California and then turn to Mr. Leith-Tetrault for his
testimony.
STATEMENT OF JOHN LEITH-TETRAULT
Mr. Leith-Tetrault. Thank you, Chairman Turner. I
appreciate this opportunity to testify today. My testimony will
focus on the Federal Rehab Tax Credit or what I will call
during this testimony, the RTC, and some of the technical
amendments that Mr. Moe has mentioned that would increase the
effectiveness of these Federal incentives for historic and
older building rehab.
NTCIC or the National Trust Community Investment Corp. is a
for-profit subsidiary of the National Trust that furthers the
mission of the Trust by investing private capital in historic
and older buildings that quality for the RTCs. Any profits
earned by NTCIC are upstreamed to the National Trust to support
its charitable mission.
NTCIC, over the past 5 years, has invested $158 million to
help rehabilitate 37 projects with aggregate development costs
of $694 million. NTCIC is also an industry leader in the
twinning of the RTCs and the New Markets Tax Credit with its
awards of $180 million in new markets allocations since 2003.
Bank of America has been our primary investor and a terrific
partner with us in this effort from the beginning.
As Jan Matthews mentioned, the RTCs really got started with
the Reagan administration's 1981 economic stimulus package.
These statutes were amended significantly by the Deficit
Reduction Act of 1984 which limited the use of the RTCs by non-
profit sponsors. As she had mentioned, the 25 percent credit
was amended in 1986 to become a 20 percent historic credit and
the two non-historic building credits were collapsed into one
10 percent rehab credit for buildings built before 1936.
Finally, the Gulf Opportunity Act increased the Federal rehab
credits to 26 percent and 13 percent for the 3-year period
after Katrina for the go-zone.
Data for 2005 indicates that $5 billion in Historic Tax
Credit activity was spread over 1,100 projects at a cost to the
U.S. Treasury of about $740 million in Federal credits, a
leverage ratio of 6.67 to 1. The program is growing very
quickly, and qualified rehab expenditures have increased over
300 percent since 1999. One of the reasons for that is that, as
others have mentioned, States have adopted piggyback status
direct tax credits over the past 18 years. Second, what is
fueling the increases in the use of the rehab tax credit is the
rollout of the New Markets Tax Credit Program. NTCIC research
indicates that 68 percent of all rehab tax credit projects are
located in low income new markets eligible census tracts. And
so, the twinning of these credits has become a very popular
tool for adapting historic properties to meet the needs of low
income communities.
Utilization of the RTC varies greatly by State. In 2005,
Park Service statistics indicate that Ohio and North Carolina,
Virginia, Massachusetts, Pennsylvania, and Missouri were the
top six users of the Federal credit, and interestingly, four of
those top six have very strong State historic tax credits.
NTCIC has led the industry in developing research
methodologies for measuring the impact of historic tax credits.
Working with Rutgers University, we have developed the
Preservation Economic Impact Model which, in 2005, estimates
that the RTCs generated over 46,000 construction jobs, 59,000
permanent jobs, and about $364 million in State and local
taxes.
NTCIC and the National Trust conducted a national study in
2001 to look at the barriers to greater use of the Federal
rehab tax credits. The study concluded that the keys to broader
use were, first, simplify the process and lower transaction
costs, increase the tax incentive for smaller projects, provide
incentives for low income area targeting, and last, increase
credit targeting to downtown growth generators particularly
housing, entertainment, and cultural facilities.
With these goals in mind, H.R. 3159 was reintroduced in
2005. The bill promotes the use of the RTCs on smaller projects
by providing for a 40 percent credit on the first $1 million in
qualified rehab expenditures. The bill also makes the 10
percent rehab credit more broadly accessible to small
businesses by indexing the eligibility date for buildings. The
bill provides RTC projects with the same 130 percent basis
boost currently afforded to low income housing tax credit
properties in HUD-designated difficult to develop areas. It
promotes downtown affordable and market rate housing. It
promotes affordable housing by eliminating the basis adjustment
that is currently required when combining the RTCs with the Low
Income Housing Tax Credit. H.R. 3159's condo provision allows
for early provision of RTC rental projects to condominiums,
promoting a deeper home ownership base in cities and small
towns.
Last, theaters and other cultural facilities are critical
to sustaining 24 hour cities. However, the disqualified lease
rules, as enacted by Congress in 1984, make these RTC
transactions harder and more expensive, particularly if non-
profits are the sponsors. H.R. 3159 would eliminate three of
the four disqualified lease rules, making these projects such
as downtown theaters much more transaction-efficient and easier
to do.
Again, I want to thank you, Congressman Turner, and the
subcommittee, for the opportunity to testify, and I welcome
your questions.
[The prepared statement of Mr. Leith-Tetrault follows:]
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Mr. Turner. Well, I want to thank all of you for your time
being here today and also for the time it took to prepare.
One of the things that I think is important in having a
hearing like this is to communicate the effectiveness of
programs that are out there, instill some enthusiasm in those
who are currently not using the programs by allowing them to
see some things that have worked in communities and the tools
that are available, and then also have a critical look at ways
that we can improve what we have so that we can be more
effective. All of you in your testimony have done a great job
in that.
I am going to give you one softball question first before
we get down to the nitty-gritties because I really do think in
addition to improving the projects that we have and the
programs that we have, one of the tasks that we have is
communicating to people the availability of these programs and
the effectiveness of these programs so that they can be used.
Many times, even if you look at New Market Tax Credits or
Historic Tax Credits, the awareness level of the availability
of these tools that can be an impetus for new projects or for
projects that are underway that could be more successful if
these tools were employed, is a factor.
Could we first do a round of each of you telling us what
you think needs to be done for us to more effectively
communicate out to communities and to developers and those who
could utilize these programs so they can make an impact in our
communities?
John, we will start with you.
Mr. Fowler. Well, if that is a softball, I am not sure I am
ready for the hardballs then. This is not exactly the ACHP's
realm of interest. I mean we use, obviously, the internet as
our primary vehicle for getting information about our
activities, about the preservation program, out to the
communities and to users.
One of the things that has come up in the issue panels that
are working on issues going to the Preserve America Summit in
October is exactly the question that you pose, though, and that
is how can we make the information about programs that are
managed by the Federal Government more accessible to users. One
of the things that has been suggested to be considered is to
improve sort of a national preservation clearinghouse. There is
currently the preservation portal that is managed by the
National Park Service, which is an excellent resource for
accessing information about the Federal program, but I think
there is a lot of sentiment that we could build from that and
use that vehicle to have one-stop shopping, if you will, for
Federal assistance and Federal programs that can be used by
stakeholders.
So I think that would be our suggestion, and I would be
happy to keep the committee apprised of the development of that
idea as the Summit goes forward because that was an important
point that came up in our discussions.
Ms. Matthews. Mr. Chairman, I think I will go straight to
this National Park System Advisory Board adoption of last
Friday, which is hot off the press.
We are looking at four tasks. One is interpretation of the
Secretary of the Interior's standards and making more user-
friendly the requisites for windows, interior treatments, new
additions, related new construction--you alluded to some of
that in your Dayton project--and the modern day requirements,
and new environmentally certified technology. The standards are
what the standards are, but the Trust, the National Conference
for State Historic Preservation Officers, and the Historic
Preservation Development Council among our private partners and
public partners asked for us to have a look at those, how we
can make those requirements under the Secretary of Interior's
standards more understandable up front when a project begins.
That is one.
Our second one is Web-based guidance on interpreting the
standards that consultants can turn to, improving the
application process; and then task three, reevaluating and
revising our policy concerning functionally related complexes;
and then an oversight task force that will see that the things
we have been urged by our public and private partners to do
will be implemented by the National Park Service by December
2007. It is an ambitious schedule. It has been a lot of hard
work on the part of the Advisory Board Committee. We had
investors. We had private consultants. We had members of the
ACHP. We had a National Park Service rep, a National Conference
for State Historic Preservation Officers rep, and professionals
in the field. So we tackled a tough task at their request. We
moved forward with it. We intend to implement it very
seriously. That is one thing we can do.
We also asked about, I think, how programs like the Native
American Graves Protection and Repatriation Act work and how we
can improve those. I can tell you that those are moving
forward. There are sacred ceremonies when humans are
repatriated with the agreement of all the tribal descendants
involved. Usually, they are not very public. The one that
occurred in Mesa Verde, April 20th, had no publicity
whatsoever. It required the consent and the involvement of over
11 years of consultation among 23 Pueblos, Apaches, the Navaho
and Hopis and others to reach a time at which on a day selected
people were buried, 1,500 humans and 4,500 funerary objects
that came off the shelves of repositories affected by Federal
activity across the country. These are powerful, quiet, sacred
things, and they are moving forward.
Last, I would mention that we are working very hard to be
directly involved from day one with a private developer such as
the McMillin Co. in Mr. Bilbray's district, to work with him
from day one, hand in hand with SHPO. So we did not have a
moving target. In the case of Mr. Bilbray's district, we are
working with an excellent State Historic Preservation Officer,
Mr. Donaldson, hand in hand on the Secretary of Interior's
standards and how they apply to that several hundred acres
Naval Training Center, and that huge project was undertaken. We
have sent our own staff people twice for site visits to that
very complex undertaking.
The goal is to work well with the private sector so that
these projects go forward and revitalize communities and have
an economic impact.
Thank you.
Mr. Moe. Mr. Chairman, I have a little different take on
this. I am not sure that the primary issue here is not the fact
that the tax credit availability is not that well appreciated.
I think one of the reasons why we have seen such success in
urban revitalization in recent decades is the fact that we do
have developers, accountants, other practitioners who really do
understand how to access the tax credit.
As you recall, even though you weren't here at the time,
the 1986 Tax Act largely eviscerated the tax credit as it
existed then. A lot of people thought it was really all but
dead. But thanks to the ingenuity and creativity of a lot of
developers and others, we have learned how to access it.
Activity under the credit has soared, and we see the evidence
of it in virtually every city in America.
We very actively market the credits. As John Leith-Tetrault
will tell you in a moment, we actually syndicate the credits.
So we have a special incentive to market them.
I don't think the problem is so much that developers aren't
aware of how to access the credit. The problems are the ones
that we have already talked about: the lack of clarity
sometimes in the application of the Secretary's standards, the
ease of access, the issues that have been addressed in this
report that Dr. Matthews referenced.
The other problem is trying to make the credit more
available for less costly projects. For example, it is very
hard to justify the transaction cost in applying the credit for
projects under $2 million. Through Congressman English's bill,
that will be made much easier by deepening some of the values
of the credit and so forth. So I would put the emphasis there.
Obviously, the Park Service and the State Historic
Preservation Offices are both underfunded, and they could use
greater funding, not only in terms of administering the credit
but in terms of making its benefits better known.
Mr. Leith-Tetrault. I would echo some of the comments of
Jan Matthews and Dick Moe. I think passage of H.R. 3159 is
critical. That bill identifies what developers have told us are
some of the issues with using Section 47.
I think the overall impression, and you will be hearing
from some developers later on another panel. The general
impression of the Historic Tax Credit is it is difficult to
use, and when you look at it and recognize that it has not had
a technical amendment made through advocacy and the historic
preservation movement since the 1980's, there is built up a
whole list of issues and concerns that take up how they
generate a lot of transaction costs. The benefit, too much of
the benefit of the credit is going to pay lawyers and
accountants to get accounting and legal opinions and not enough
going to bricks and mortar. So the technical fixes that are in
H.R. 3159 are critical. Once we have that bill passed, we need
to then take that bill on the road and help everyone understand
what are some of the fixes, what are some of the ways that the
credit is now easier to use.
I would applaud the Park Service's efforts on its Advisory
Committee on the standards. All of us in preservation have been
hearing, for years, complaints from developers about
inflexibility. Preservation is what it is, but I think that the
conclusions and recommendations of that committee will go a
long way to answering some of those concerns.
One of the things we don't do well in preservation, I
think, is reach out to other constituencies. We had several
testimonies this morning indicating that with the Historic Tax
Credit, Congress has always recognized the important of using
historic buildings to promote other causes--affordable housing
being one; economic development in low income communities being
another--so that the New Markets Tax Credit can be twinned with
the Historic Tax Credit. The Low Income Housing Tax Credit can
be twinned. But as preservationists, we need to recognize that
deep nexus with community development and begin marketing our
credit more effectively to affordable housing advocates and
community development advocates.
That is the world I come from. I can tell you when I went
to community development conferences years ago, you never saw
people from the preservation community coming to talk about the
rehab tax credit, and likewise at preservation conferences, you
rarely see conversations about other credits that can be
twinned. So we need to do a better job at that.
One thing we have started doing recently is we are, through
NTCIC, trying to mobilize the Trust's State and local partners,
State and local preservation organizations. So we are on the
ground and know where these projects are being planned, and we
are actually offering a referral fee to those, to our
constituency to bring us projects in an effort to get the
preservation community locally more in touch with the
development community so that these projects can be identified
and there can be marketing one on one with those developers.
I would say last that one of the things we are beginning to
do more effectively is go to the local markets and hold
breakfasts and lunches with groups of developers. We have a Web
site. We have marketing materials at the national level, but
there is nothing that replaces a discussion with a dozen or so
developers around the table at breakfast to talk about this
credit and show some slides about what its impact has been and
then staying over a day and talking with developers
individually about what they can do to access the credit, and
we are going to begin doing more of that.
Mr. Turner. Before I get to Mr. Bilbray, I do have one more
question, and then we will do a second round of questions.
I want to tell you about an experience that I had yesterday
and ask for your anecdotal thoughts on this. Many times when we
talk about historic preservation, we talk about the fabric of a
community, utilizing the historic nature of either what had
occurred at a place in the community or an architecturally
significant building and utilizing that to attract capital to
turn around the building or a specific community or
neighborhood. We talk about the leveraging of dollars that has
happened, and we talk about communicating to the next
generation of the significance of what occurred. But the shift
of pride that happens, that community impact, is something that
usually, in the discussion of what we have accomplished, is
evident but lost in the discussion.
I want to tell you about an experience that I had yesterday
that brought it home to me and that it is something that
applies everywhere.
Yesterday, I welcomed Chairman Charles Taylor into my
community, subcommittee Chair of Appropriations-Interior, and
that includes areas of historic preservation, and we went into
two spots in my district. First, we went to the Wright-Dunbar
area; and we went to the home of the Wright Brothers, which is
Hawthorn Hill, and showed him those historic sites, again, that
go to a historic happening, and we also went to a bridge in
Lynchburg, Ohio, in my district which is a very rural area and
it is a covered bridge that was originally built in 1870. It
spanned two counties which made it significant to two different
communities, two counties that are in my district. The
communities had come together almost in a barn-raising fashion
to restore this bridge. They still have a ways to go on the
undercarriage and the foundation of the bridge, but the upper
structure, they were able to restore.
As we were walking through the bridge with the county
commissioners and the individuals that had, again in a
community barn-raising style fashion, restored this covered
bridge, they showed us the places where the bridge had been
subject to vandalism before its restoration. They talked about
fires. This is where the first fire occurred; this is where the
second fire occurred. But yet, the bridge survived and was able
to be restored.
So, inevitably, the question came: Well, what are your
fears about vandalism now that you put forth all this effort
and you have this beautiful covered bridge that has been
restored?
They said: We really haven't had any. There is this new
respect for the bridge and what has been accomplished, and we
haven't really had to put a great deal of effort to cause this
bridge to be protected. People come here. They have a sense of
reverence for what has occurred in the past, and now the bridge
has not been subject to vandalism.
Each of you, as you have looked through both communities
and projects, you know that sense of pride and change that has
occurred.
Dick, why don't we start with you? Then others can chime in
with their thoughts of how this doesn't just result in
leveraging ratios and bricks and mortars buildings being
restored, that there is an impact that occurs on the spirit of
the community.
Mr. Moe. Well, you are exactly right, Mr. Chairman. The
kind of pride that people have felt in your district over that
bridge or over the Wright-Dunbar neighborhood is what people
feel everywhere when a preservation project has been undertaken
and undertaken right. It is not just bricks and mortar. It is
not just the economic benefits, but it is the community pride.
What is at the end of this at the end of the day is a sense of
community, and that is why I believe a sense of community can
be deepened and enriched by an appreciation of the history that
occurred there, as represented in the built environment. It
doesn't have to be all historic. It can be historic mixed with
new construction, and it takes different forms in different
places.
But, as John Kenneth Galbraith said some years ago, no one
has ever retroactively disliked a preservation project, which I
think is accurate because you see a hulk of an old building or
a burned out old bridge and you say, how can this be brought
back, but once it is brought back through the vision and
commitment of people who really care about this, everybody
takes pride in it.
I think that one of the under-appreciated facts of historic
preservation is that, particularly in inner city older
neighborhoods, when preservation works, it instills community
pride and respect for the community and respect for your fellow
human being.
Mr. Turner. Would anyone else like to share their comments?
John.
Mr. Fowler. I would echo what Dick said just very briefly,
in that the ACHP's experience in the Section 106 process is
that we often see that happening where resources are non-
appreciated at the beginning of the process, if you will. When
an agency is coming in and planning to do something in a
community and through the requirement that there be a
consideration of the historic value, there becomes a broader
understanding within the community and there becomes a rallying
point in support. We just see this repeatedly by simply having
a stop, look, and listen kind of process that gives people an
opportunity to say this is important to me and to express that
more broadly to their community.
Mr. Leith-Tetrault. I would agree, and I would also look at
it from an investment vantage point and a financial vantage
point as well. Historic buildings, because they tend to be
large, very visual, the results are beautiful. They tend to
occur in low income areas where you have deterioration of other
buildings to contrast that rehab. These buildings build
confidence in a neighborhood's future. They give banks,
individual investors, adjacent property owners the confidence
that they too can take that leap and invest.
We recently took a look at the economic spinoff impact of a
project we participated in, in the Midwest, and it was one
building sort of in the middle of a group of historic
properties. We noticed after we had made the investment that a
number of other properties were being rehabbed.
So we walked around the neighborhood and spoke to each of
the owners of the 10 buildings--10 additional buildings were
being renovated--and we said: Why are you doing this?
They said: Well, this building in the middle was so
critical. I couldn't have hoped to lease my building if I had
to walk my perspective tenants by that eyesore, but now that it
is gone, I feel like I can take the risk.
The building, the subject building, was 200,000 square
feet. When we tallied up the spinoff impact, we were seeing the
additional historic renovation of 2 million square feet. So
it's a matter of neighborhood pride, but it is also confidence
that further investment can occur and it is a safe thing to do.
Ms. Matthews. I guess I would add to that the shift of
pride is also the shift of discovery, and therefore, the shift
of ownership because the reconstructors, hands-on, of that
bridge took ownership of it. It became theirs. It became the
citizens' of both counties absolute pride in something they had
done. Therefore, the vandalism stopped. There is this thrill of
discovery.
Who would have ever known until we did research that the
Wright Brothers published Dunbar's first poems; that they went
to high school together; that before they did bicycles, before
they did an airplane, they had a printing shop; and that they
were best friends with Dunbar who ended up running an elevator
here in the Capital because he couldn't sell his poetry? These
stories reach out to people.
The most powerful thing about the National Historic
Preservation Act and the National Historic Sites Act, the 70
years of one, the 40-year anniversary of the other, is that it
reaches clear down to the grassroots of those reconstructors of
that bridge that bridges the gap on the line across the river
that is the dividing line of two counties. That is the power
between what Congress enacted in the Preservation Act and
Historic Sites Act, that it reaches down to the grassroots in a
very powerful explosion, shift of pride, shift of ownership
through shifting discovery that we require through
documentation for eligibility of significance.
Mr. Turner. Thank you.
Mr. Bilbray.
Mr. Bilbray. Thank you.
First of all, Doctor, I want to clarify and make sure there
is no undue pressure on you coming from my camp, but the
Liberty Station project is not in my district.
Ms. Matthews. Oh, sorry.
Mr. Bilbray. It was in my district for 16 years, but if
anybody who tried to sell that is putting undue pressure on
you, I want to clarify, though.
Ms. Matthews. No; actually, that was my own mistake in
looking up your district.
Mr. Bilbray. No problem; I do want to let you know that the
chapel at that project is the site of the marriage of
Congresswoman McMorris just recently, and it was the site of my
baptism. So I don't want undue pressure put on you on that
level.
Ms. Matthews. Baptism? No pressure?
Mr. Bilbray. I know a lot of my colleagues will be shocked
to find out I am not a heathen, but we will talk about that
later.
Let me just say, I guess, after almost 20 years of being in
the government management side and the executive branch in
local government for a long time, I am very interested in not
just the correction that H.R. 3159 does in the statute, but
really--it would probably be in a doctor's court--the essential
gap between the theory of legislation and the reality of
practical application by the people on the front line.
Let me first preface this, Mr. Chairman, by saying I have
always found it very disconcerting how much our society focus
puts so much value on natural history and really relegates to a
back corner, man-made history in a lot of ways. Culturally, we
do not, no matter how much we talk about it. In the last 30
years since 1970, 40 years, we have almost made natural
history, raised it up to a deity and forgotten that manmade
history is essential to us too of who we are as a people and as
individuals.
That aside, Doctor, if we passed the best law in the world
and we do not have the people on the ground with the right
attitude and the right approach, we are going to be back here,
saying again how can we do it legislatively. I will give you an
example. I have seen the difference between a planning
department and a building department and the total different
attitude and relationship between the client and a Government
Agency. I have seen bureaucrats who will help people get to go,
get to success, and those who basically feel their goal is to
stop mistakes but not to help to move the ball along or get
into it.
How do you see that we can, as a Federal Government and
specifically in your Department, be more of the building
inspector mentality of actually being part of the team to be
successful into it, rather than what we traditionally see so
much, especially in the Federal Government, of the gatekeeper
but not necessarily the perpetrator or participant in the
process of preservation?
Ms. Matthews. Well, I can't comment on H.R. 3159 because
the Department and the Park Service have no position on that
currently.
But I can say that this subcommittee's hearing of last
November that lasted 2\1/2\ hours, actually the language
throughout this subcommittee's hearing was apparent in the
disaster relief of $43 million, and I can say that in the Park
Service, in Interior, we have taken very seriously every
suggestion we have had to improve programs, both NAGPRA and
this investment tax credit program. We have taken very
seriously and actively a role to see that we deliver what you
all intend through your legislative authorizations and your
appropriations. There is probably no greater responsibility in
Government at every level than the people who deliver the
services because they are very hard won at your level.
Mr. Bilbray. Don't get me wrong. The reason why I bring it
up is I have been where you are and trying to get the people
working for me to get in the right mind set to move that way. I
mean I literally had an environmental health department working
one side with the business community and I had an air pollution
district working with the other side, and the difference in
attitudes was just extraordinary to where finally to get the
ball rolling, I told the air district if they couldn't figure
out how to work with the community in 6 months, they were going
to be put under the environmental health department. It was
astonishing how quickly they transformed their attitudes.
[Laughter.]
So this is all just the challenge that we have in
Government. I think that I really want to focus on your
Department because all the theory in the world and all the
great legislation in the world really relies on your executing
the intention and getting to go. That is, by itself, tougher
than all the challenges the rest of us have, and I want to hope
and pray that you are successful in your efforts.
Ms. Matthews. Well, I read your district wrong, but I read
your bio right, and I can tell you that as an Ohio farm girl
who ended up a Florida SHPO, that I don't think there is any
higher honor than serving the public to administer the programs
that you all authorize and appropriate, and we are doing our
very, very best.
Mr. Bilbray. Thank you. Believe me, I know how tough it is
to try to remind everybody in the government structure, no
matter what level that after all, we are all on the same team
and hopefully working toward the same goals.
Thank you very much.
Ms. Matthews. We really appreciate your time and effort to
express that, and we are.
Mr. Bilbray. I appreciate it.
Mr. Chairman, I yield back.
Mr. Turner. Dick, I want to go next to the topic that you
raised of an historic Homeowner Tax Credit and the importance
that it might have, and you gave us some great statistics here
that I would like to have you embellish some more of the issues
and what the impact would be.
You said that 32 percent of households below the poverty
line and 34 percent of renters whose household income is less
than $20,000 per year live in older and historic homes. Of the
Nation's over 12,000 historic districts, comprising over a
million contributing structures, 60 percent overlap census
tracts in which the poverty rate is 20 percent or greater.
There are some compelling statistics there of not just that
these areas have been declared historic meaning that both the
community and on the National level, there is a recognition of
the value of their preservation but of the second aspect being
one of a need for capital and investment. Many times when
people talk about an Historic Homeowner Tax Credit, people are
worried of wealthy neighborhoods or wealthy areas where the
property values and the individuals living in them both justify
the reinvestment and the availability of the capital to make
that reinvestment. The statistics that you are providing us
show a significant area in which the capital is not there, but
the need for preservation is there. Also, if they have such an
expression of poverty, you tend to have an expectation that
there is also symbols of blight that occur there that perhaps
could be eradicated, using historic preservation as a tool.
If you could speak a little bit more about the impact that
you would see of having a Homeowner Tax Credit and what we may
need to overcome both in policy and in impact to do that.
Mr. Moe. Thank you, Mr. Chairman.
I welcome the chance to talk about this because it is a
concept that the National Trust has long championed. We drafted
a bill some years ago that Congressman Clay Shaw introduced
with broad bipartisan co-sponsorship, a similar bill in the
Senate, and it would have provided a significant tax credit for
homeowners. We think the need is clearly there for the reason
that you mentioned because the overlap between poverty census
tracts and historic districts is obvious and is clear, and
there is a tremendous need in these historic districts for the
kind of incentive that a tax credit would offer.
We think that it probably needs to be carefully targeted to
assure everyone that the resources made available through the
credit are only going to those people who otherwise wouldn't
make this kind of investment, in other words, based on some
kind of need. I think that can be done by defining the kinds of
census tracts where it could apply, or by putting a cap on the
investment or some combination of both, but there are means to
do this so it would be carefully targeted.
We did not get traction on this bill, frankly, when it was
first introduced largely because of the cost and some of the
issues you mentioned. I don't mean to tell either of you how
serious the fiscal climate is up here. So we basically didn't
put that on the back burner, but we decided to pursue
Congressman English's bill instead because it is much lower
cost, it is much more carefully targeted. But we are eager to
revisit the question of an historic Homeowner Tax Credit.
Many of the States that have tax credits cover homes,
historic homes, as well as commercial buildings, and the
lessons there have been instructive. For example, in Maryland,
it has been quite extensively used and in other places.
We estimate that having an historic Homeowner Tax Credit
could draw at least as much investment per year as does the
existing commercial credit which now draws $3 billion in
private investment. We think that it could be up to double that
amount if homes were included, depending upon how you
structured the bill. So this is a very important issue for us,
and we hope that we can get back to it in a serious way before
too long.
Mr. Turner. Who else wants to comment on the issue of
homeowners tax credit?
Let me just provide my little commercial for it. Having
lived in an 1885 Victorian for 11 years, I can tell you that
100-year-old things continue to fall of them, and that the
project of restoration and maintenance is never done in homes
and in communities like that. That assistance certainly, I
think, can be very helpful to individuals who are wishing to
maintain a property that has been reclaimed or restored. The
home that I lived in had been abandoned for over a decade
before an individual had acquired it and had significantly
restored it, and my wife and I finished the restoration but
still found over the next 11 years that it is quite a caretaker
job having an over 100-year-old property.
I want to recognize that we have Ms. Foxx from North
Carolina with us, and then I will turn to Mr. Bilbray for
additional questions.
If you will excuse me for a moment, I will be returning to
the Chair in a few minutes.
Mr. Bilbray. Mr. Chairman, let me just echo to you the fact
that my home was an adobe. My wife said she moved 2,000 miles
from New Orleans to live in a mud house which is kind of unique
in some certain ways. Thank God, the kids weren't able to burn
it down when they were little. The trouble is if one of the
teenagers leave a sprinkler on, you may lose a living room
wall. But there are different challenges on that, and I sure
hope that some of you can come over and persuade my wife that
the Victorian she left New Orleans obviously did not have the
historical significance as an adobe in San Diego County.
I would like to get back into the issue of these historical
uses and the flexibility we can try to find here. It is much
like what we are working with in San Diego where you have
conflicting preservation and government regulations. We are
running into situations in which buildings that historically
were basically office or barracks but are in a coastal zone, in
which now you have a California Constitution that says that
visit-receiving and commercial must take precedence over
residential or office, and basically it is called coastal-
dependent industries. The question there is how much
flexibility can we give within our statutory guidelines to be
able to reflect these different conflicting priorities when
they come down. Let us face it; the California Coastal Act is a
pretty big deal. That is a law that was passed in 1976 or
actually 1970 and has stood pretty strong in a small, little,
intimate group of 32 million people called the State of
California, and it is something we need to consider when we are
going into it.
Does anybody have any discussion about how we work our
guidelines and how we coordinate those or remain flexible so
that they mesh with other guidelines and mandates that our
government agencies or some other government agency may be
placing a priority on?
Mr. Moe. Well, Congressman, I will jump in if I may.
I am in favor of as much flexibility as possible here
because it has been our experience that the most successful
revitalization projects in the country have been those that
sought and employed multiple uses, and that involved integrated
residential with commercial, with retail, and with light
industrial. For example, places like lower downtown in Denver
and almost every community has experienced this to one degree
or another.
There is no silver bullet to revitalizing a downtown or a
community or a waterfront area, but in my view, the single most
important thing you can do is to encourage people to live there
because if you encourage people to live there, first of all,
you are fighting sprawl, you are not eating up more
countryside, you are using existing structures and existing
infrastructure, and you are revitalizing existing communities
to realize their potential. So, if this is on point to your
question, I would favor as much flexibility as possible to
encourage multiple uses.
Mr. Bilbray. Preserving greenfields is the term we use in
environmental community.
Mr. Moe. Yes, right.
Mr. Bilbray. Any other comments?
Mr. Fowler. I can't speak to your situation with the
California Constitution, but I would draw your attention to Mr.
Nau's statement for the record on page four, the paragraph
about community development block grants and affordable
housing. The ACHP administers the Federal Section 106 process
which requires that CDBG funds be reviewed for their impact on
historic properties, and this involves a consultation process
with the State Historic Preservation Officer and the city,
using the CDBG funds.
Over the years, we noticed that there were difficulties
that often arose because of the application of the Secretary's
standards and the need to meet HUD standards for housing
quality and features and so on. So what we have done is worked
with both the Department of the Interior who administers the
Secretary's Standards and the State Historic Preservation
Officers who administer them on the ground and the Department
of Housing and Urban Development and housing providers and so
on to come up with a policy that clarifies what the
expectations are and introduces some flexibility in the
application of standards so that you can come up with
successful affordable housing projects using historic
properties. So I point that out because it is an example of
where government agencies that both have preservation
responsibilities and the administrative responsibility for
providing housing came together with the users on the ground
and said how can we make this system work better.
Now all of that had to be done within the context of what
statutory constraints there were, and frankly, with the
preservation system, the statute is very flexible, but it is an
example of how agencies and users working together can solve
the problem.
Mr. Leith-Tetrault. From the vantage point of investors and
developers, I think you put your finger on an issue that gets
to the question of how do we encourage greater utilization of
these credits. Not being from a government agency, I don't have
the answer, but I just want to echo your concern. A developer
that has to meet ADA requirements on an historic property, meet
community health requirements such as abating lead paint,
achieve energy conservation to lower the operating costs or to
lower the costs of individuals renting those spaces,
environmental remediation and then trying to meet some of the
incentives that are out there for green building approaches,
balancing all that with historic preservation is very
difficult. Your remarks earlier about one agency versus another
and one being proactive and one not, somehow or another, from
the investor vantage point and from the developer vantage
point, we hope there could be better coordination at the
government level so that all these folks who are looking out
for these issues are talking to each other and making some
reasonable compromises.
Mr. Bilbray. John, I am glad you said that because when I
got here in 1995, I looked around just our complex here and
said, my God, if we were operating under a private sector or a
local government was operating the way the Federal Government
operates here, we would all be in prison. I mean it really was.
It was such a culture shock.
But I think the flip side is the fact that it shows to
really try to preserve those critical things from a heritage
point of view, they did overlook a lot of these things that
other people aren't allowed to overlook. Maybe that should be
just a sensitivity lesson for those of us in the Federal
Government of saying that maybe we need to tighten it up a
little bit but also maybe we need to be more flexible in our
standards that we are sending around for everybody else because
we have a dose of reality, let us just say, on this Hill. You
can imagine if we could just get that dose of reality out to
the rest of the Nation.
Thank you very much. I yield to the chairman.
Mr. Turner. As you are all aware, the buzzer has rung
indicating that we have a vote that is going to occur. We
luckily only have one.
There is about 11 minutes on the clock. So what I would
like to accomplish before we take a short recess for me to run
to the Capitol and vote, is to one, give each of you on this
first panel an opportunity for any closing remarks that you
might or a question that we didn't ask that you wanted to make
certain that you got onto the record or anything that has
caused you to want to respond to another question that has been
asked. Second, then we will swear in the second panel, and then
we will take a recess and I will return after the vote.
With that, I will open it to see if there is anyone who is
on the first panel, who has any comment that they wish to make
that they have not had the opportunity for this testimony.
Mr. Moe. I would just like to repeat something I said, Mr.
Chairman, and that is we very much appreciate your leadership
and your focus on these issues which has been enormously
importantly to give visibility and understanding to some
complex issues, but this had not existed before you took this
interest. So, thank you, on behalf of all of us.
Mr. Turner. Thank you very much.
Ms. Matthews. I would just like to add that the Historic
Preservation Act of 1966 which you all passed has changed in
this country and this country alone what is significant
historically. We value neighborhoods, we value your 1885 house
that you lived in for 10 years, and we value the adobe house.
We look at our neighborhoods and our places and your reference
to the pride, the ownership, the grassroots empowerment is
exactly what was designed by Congress in the 1966 act.
Thank you for holding this hearing.
Mr. Turner. Thank you.
Dr. Matthews, I do want to ask you one other thing that was
not. We did quickly skim your bio again, and we did not note
the reference to Ohio.
Ms. Matthews. I don't think it is there.
Mr. Turner. You did mention in your testimony, so I have to
ask. Where might you be from in Ohio?
Ms. Matthews. A 27-acre trout farm between Akron and
Canton.
Mr. Turner. Great, wonderful.
Ms. Matthews. I have cousins in Dayton.
Mr. Turner. I had to ask this. In every hearing, there is
some connection to Dayton, OH, that is beyond just the ones we
have invited. So I am glad to see that you did have some
connections to Ohio.
Ms. Matthews. And Dunbar was part of my dissertation.
Mr. Turner. Oh, wonderful, excellent.
We just recently had the First Lady into the Wright-Dunbar
National Park area, and it was interesting in talking to her
and in inviting her with John Nau's help. When I was speaking
to her about the Wright Brothers and Paul Laurence Dunbar. I
first went in to explain to her who Paul Laurence Dunbar was,
and she said, I know who Paul Laurence Dunbar was from my
educational background.
So it was good to know. She was very interested during the
entire tour. You have in the First Lady someone who is also
interested in Paul Laurence Dunbar's work.
Ms. Matthews. Great.
Mr. Turner. I want to thank this panel, and we will turn to
the second panel for their being sworn in.
Mr. Turner. On our second panel, we have Ms. Idotha Bootsie
Neal who is President of Wright Dunbar, Inc.; Ms. Kathleen
Crowther, executive director, Cleveland Restoration Society,
chairman of the Statewide and Local Partner Program of the
National Trust for Historic Preservation; Mr. J. Myrick Howard,
president, Preservation North Carolina; Mr. Edward Sanderson,
executive director, Rhode Island Historical Preservation and
Heritage Commission; Mr. Ken Baumgartner, president, the Corky
McMillin Companies.
[Witnesses sworn.]
Mr. Turner. Please let the record show that the witnesses
have responded in the affirmative.
With that, I will then be taking a short recess after which
I will return then for your testimony. Thank you.
[Recess.]
Mr. Turner. The subcommittee will reconvene.
We will begin with Ms. Idotha Bootsie Neal.
STATEMENTS OF IDOTHA BOOTSIE NEAL, EXECUTIVE DIRECTOR, WRIGHT
DUNBAR, INC.; KATHLEEN CROWTHER, EXECUTIVE DIRECTOR, CLEVELAND
RESTORATION SOCIETY AND CHAIRMAN, STATEWIDE AND LOCAL PARTNER
PROGRAM, NATIONAL TRUST; J. MYRICK HOWARD, PRESIDENT,
PRESERVATION NORTH CAROLINA; EDWARD SANDERSON, DIRECTOR, RHODE
ISLAND HISTORICAL PRESERVATION AND HERITAGE COMMISSION; AND KEN
BAUMGARTNER, PRESIDENT, THE CORKY MCMILLIN COMPANIES
STATEMENT OF IDOTHA BOOTSIE NEAL
Ms. Neal. Good morning, Mr. Chairman. It is indeed an honor
and a privilege to testify before the subcommittee today. As
you know, I have prepared my testimony, but I want to deviate
just a little bit.
As I flew in this morning to Reagan Airport and I looked
and I saw all the historical structures from the window, I
thought, how sad if these buildings have not been preserved. I
also had a sense of pride because as the plane was descending,
I realized that right within my neighborhood, my community, the
Wright Brothers taught the world how to fly.
Then I also had another thought. I had an opportunity to
serve with you on the Dayton City Commission, the 8 years that
you served as Mayor, and I realized that these issues of
historic preservation were important to you then, and it really
gives me great honor to know that as our Congressman from the
Third Congressional District, that these issues are still
important. I understand and recognize that these issues are
important to you not because it is a political platform, but it
is a strategy and a tool to really rebuild communities where
people live. And so, for that, I want to say on behalf of my
colleagues, on behalf of the citizens of Dayton, we really do
value and appreciate your leadership and all that you do, and
that I am really proud that you are my Congressman.
It is important as we talk about historic preservation,
there is a neighborhood in Dayton, OH, a Midwestern city, and
there were three geniuses who, in fact, helped to change the
world, Orville and Wilbur Wright and Paul Laurence Dunbar.
Those three individuals, even though they are no longer here,
they are continuing to impact the kind of world that we live in
today.
Just imagine, a few short years ago, where a lot of the
work that took place was threatened, threatened to evaporate
forever. Why? Because where they, in fact, did their work was
the site of the riots of the sixties. For these past 40 years,
we have seen nothing but disinvestment, abandoned and vacant
structures.
But because of your leadership and many others, and I
started making a list while we were on break. We certainly need
to say thank you to the National Park Service. We need to say
thank you to the Dayton Aviation Heritage National Park. We
need to say thank you to the National Trust for Historic
Preservation. We need to say thank you to Heritage Ohio. We
need to say thank you to the city of Dayton, and the list goes
on. That is another important benefit to historic preservation.
It brings together a number of individuals collectively,
working on an important initiative in a collaborative way that
brings pride back to our community.
So with that, Mr. Chairman, I would like to now go to my
written testimony.
The neighborhood where the Wright Brothers invented the
airplane and African-American poet Paul Laurence Dunbar began
his career. This significant historic legacy is helping to
transform, a formerly vacant and blighted urban neighborhood
into one that supports families and businesses. Wright Dunbar,
Inc. is a community partner with the Dayton Aviation Heritage
National Historical Park and the National Aviation Heritage
Area.
The National Park is located in the heart of our
neighborhood, in the heart of Wright-Dunbar Business Village,
and it has become an important catalyst for the redevelopment
of the area and positioning this area as a heritage tourism
destination. Just 10 years ago, nobody would have considered
visiting the Wright-Dunbar area, much less locating their
business or their residence there. As the site of the
devastating race riots in the mid-1960's, the Wright-Dunbar
community suffered significant disinvestment until the 1990's.
Vacant buildings and homes and high crime made it difficult for
some people to see the vision of a walkable vibrant urban
community. However, today, we have experienced a
transformation. Those old homes and the perception of high
crime have begun to give way to rehabilitative historic
buildings, homes, new construction, and the return of
businesses and residents.
Wright Dunbar, Inc. and the city of Dayton realized early
that the private sector was not going to immediately invest in
the redevelopment of this area. This is not unique just to
Dayton, OH, but urban cities across the city are faced with the
same challenges. However, with the support of many of the
historic strategies and tools, we now have a vibrant community.
The abatements and incentives to encourage builders to renovate
and to rebuild homes that fit within the historic district is a
real plus for us. The surrounding neighborhood is doing
something that we think is unique as well. It is attracting a
diverse mix of families, young professionals, and retirees.
On the commercial side, it is important as well, not just
rebuilding the neighborhood and creating a place where people
live, work, and play but there is an economic benefit to the
investment in a historic district as well. We received $2.9
million of Federal funding for the acquisition and
stabilization of non-historic properties. Community development
block grant funding and Federal appropriations have been funds
that have helped to stabilize, secure, and make sure that these
buildings are dry.
However, due to the extreme deterioration of the buildings,
a financial gap still exists before the buildings can be ready
for tenant occupancy. Wright Dunbar is laying the foundation
for a capital campaign that will provide the gap financing
needed to build out the properties, and these are all on the
National Historic Register.
We have some very important tools that the Federal
Government has put in place, and we want to encourage that
those tools continue. The use of Historic and New Market Tax
Credits will be critical in the next phase of the redevelopment
of Wright-Dunbar as we bring together a variety of funding
tools and programs to complete each project. Already, CDBG has
made a big difference in the work that we are doing in Wright-
Dunbar.
Though, urban revitalization does not happen overnight,
Wright Dunbar and our partners have already begun to see some
positive results. Since our funding in 2002, $3.3 million of
private investment in Wright-Dunbar has leveraged over $12.2
million in an area that people would have given you property
just to get it off of their tax rolls 5 years ago. Not only has
Wright-Dunbar seen an investment but the area, over $76
million, helping to bring back the needed services for the
residents that live there, also helping us to attract
businesses back to the commercial quarter.
The transportation funding that we received through our
Miami Valley Regional Planning Commercial is going to slow down
the traffic in our community. People used to drive fast through
Wright-Dunbar just to get out of the area because of fear,
because of the perception of it being a place that wasn't safe.
Now, just this past Friday, we had a special event. When we
first held that event 2 years ago, 24 people attended. I am
happy to say, Mr. Congressman, on Friday night, we had over
3,000 people to come to an area and have fellowship, fun, and
celebrate our legacy and history in Dayton, OH.
We recently received a Preserve America Grant, and we are
excited about that strategy, that tool, as well because it is
going to help us to be able to collect data and information
that we will be able to share the economic benefit of what
historic preservation and heritage tourism can mean for the
Wright-Dunbar community, for the city of Dayton, and for the
State of Ohio.
We are a certified Main Street Project, and we are very
proud of that and the technical assistance that we receive from
the National Historic Preservation and also Heritage Ohio.
Historic preservation truly is a tool. It is a tool that
can be used against blight and vacant buildings in cities
across America. Main Street Communities and urban cities
contain many of the stories that make America the unique and
creative country that it is today. These stories are best told
by maintaining and celebrating our built environment. To do
this effectively, Congressman Turner, we need to continue to
have the strategies like New Market and Historic Tax Credits,
Community Development Block Grants, Federal appropriations,
Preserve America, and with your creativity, whatever else you
come up with, as we protect and preserve historic preservation.
We really appreciate your leadership. Thank you personally
for the opportunity to be here. Thank you for championing the
cause that we know will save America's cities and make a
difference. Under your leadership, we know that the best is yet
to come.
[The prepared statement of Ms. Neal follows:]
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Mr. Turner. Thank you, Bootsie.
What everyone should know here is I served as Mayor with
Bootsie. She served as City Commissioner and now as the
Director for Wright Dunbar, Inc. She is being incredibly
gracious with her compliments but without her dedication,
expertise, and enthusiasm, the community that she now serves as
Director wouldn't be there to serve with the great
accomplishments that are there. It is just wonderful to see
what has happened.
It was great to take the First Lady there and see what you
have done and accomplished. You really are a great national
example for what historic preservation is all about and how
community transformation can occur. So I greatly appreciate
your being here and what you are doing for our community.
Ms. Kathleen Crowther.
STATEMENT OF KATHLEEN CROWTHER
Ms. Crowther. Thank you, Mr. Chairman. Ms. Bootsie Neal,
you are a hard act to follow. Thank you so much for your
leadership in historic preservation. I simply echo the many
compliments you have received today.
In Cleveland, Historic Tax Credits and CDBG funding have
been critical tools to revitalize our struggling neighborhoods
and downtown. Preservation has a catalytic effect resulting in
increased property values, and preservation is the wise use of
our built environment, also sparing those natural resources
that are being gobbled on the urban fringe.
My organization, the Cleveland Restoration Society,
provides a wide range of services in Northeastern Ohio from
traditional preservation advocacy to technical and financial
assistance through our low interest loan program. We are really
a hybrid between historic preservation and community
development.
Across this country, there are literally thousands of
preservation organizations, those that have professional staff
are typically members of the Statewide and Local Partners
Program of the National Trust. These organizations are your
smaller national trusts on the ground, fighting the battle to
preserve landmarks and participating in the real estate market
by purchasing, loaning funds, restoring and selling historic
properties.
In Northeast Ohio, throughout Ohio, and I dare say
throughout the United States of America, many areas, in
Northeast Ohio in particular, we are grappling with the ill
effects of uncontrolled urban sprawl. Developers are building
further and further afield. Buildings and housing units with
many more years of life are being abandoned in this expensive
out migration cycle.
Given this reality, this wasteful reality, we are working
in partnership as best we can with local governments committed
to maintaining aging but still viable and attractive housing
stock. We partner with school districts and religious
institutions struggling with monumental school buildings and
sacred landmarks. We provide low interest loans to individuals
such as Professor Harvey here, who is restoring this Tudor
house in Cleveland's tough Hough Neighborhood; and Scott Plate
who is an actor, who lives in this double house and rents the
other half; and elderly Mrs. Shotwell who, with her sons, spent
$40,000 to polish up their long-time family home.
Often we transform the worst house in the neighborhood into
the best house, sending an important signal that this
neighborhood is on the rebound. None of these projects would
have benefited from the investment tax credits for historical
rehabilitation because they are not commercial properties. The
source of funds that allow us to make low interest loans and to
operate this program is the Community Development Block Grant
Program.
The problems of the City have now reached inner ring
suburban communities such as Shaker Heights. Even with a
nationally recognized school district, Shaker Heights is in a
heated competition with newer communities built further out. So
we assist them as best we can with loans and technical
assistance.
This family worked with us to transform this house in the
streetcar suburb of Lakewood.
Our projects have significant impact on property values in
the neighborhoods in which they are located. They spur others
around them to follow suit, giving tangible evidence of the
confidence in the neighborhood, but the out migration cycle is
against us. Without a Federal incentive for individual
homeowners like these, we are fighting an up-hill battle and we
are wasting valuable economic resources by not deploying the
full utility of our built environment. The houses constructed
by past generations have been built with materials often simply
unaffordable in today's construction budgets, and we are
wasting a valuable opportunity to better align Federal policies
aimed at providing affordable housing.
Another significant concern we have is for the continued
use of older neighborhood schools. These monuments are being
deaccessioned and demolished in Cleveland and across the County
at an alarming rate. This is the result of reduced populations
and, in some instances, State policies which favor new
construction even if it is more costly. In Cleveland, we have
managed to restore one magnificent school, John Hay High
School, for about the same cost as new construction. So we have
saved the cost of demolition and, thank goodness, the rich
materials of this landmark building are not filling up yet
another landfill.
Sacred landmarks are also being lost at an alarming rate.
With population moving out of central cities, these magnificent
cathedrals of America are deteriorating, being closed, sold to
the highest bidder, or demolished. We work in cooperation with
denominations to get them on the road to good property
stewardship.
Preservation and community development needs to be better
supported by the Federal Government to unleash its full
potential. Passing the English bill will help communities
reclaim more buildings that still have economic utility. By
developing an incentive that supports the individual homeowner,
we would have the potential to turn the cycle of out migration.
I ask our elected leaders to recognize that we are wasting
valuable resources by not addressing urban sprawl from the
Federal level. This wastefulness is creating untold costs in
countless social and economic ways. Congress should create a
high National standard of wise and sustainable use of our
resources by which all Federal investments, in particular,
roads and housing, would be tested. This single action would
address a range of problems as it would reduce State and
Federal dollar outlays through the wise use of the investment
of previous generations.
Thank you.
[The prepared statement of Ms. Crowther follows:]
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Mr. Turner. Mr. Myrick Howard.
STATEMENT OF J. MYRICK HOWARD
Mr. Howard. Thank you, Mr. Chairman. I am Myrick Howard
from Raleigh, North Carolina, and I live in Representative Brad
Miller's District. We appreciate your work with Brad on the
caucus.
I am the President of Preservation North Carolina, a non-
profit statewide organization that has been actively involved
with real estate. We operate a revolving fund and have done so
for the last 30 years, trying to find buyers for endangered
historic properties, finding folks who will rehab these
troubled properties, and we have done this with more than 575
properties around the State. We are a privately funded
organization and don't receive State or Federal funds.
What I would like to focus on primarily today is that in
North Carolina, we have used a combination of Federal and State
tax credits to be an invaluable tool for the revitalization of
neighborhoods, downtowns, and rural properties. We built a tax
credit program in North Carolina around the Federal tax credit.
In 1998, January 1, a new tax credit went into place in North
Carolina, a 20 percent income-producing piggyback tax credit,
and you see what has happened. The year 1997 was fairly typical
coming up to that point, and you see the growth that we have
seen in the number of projects in North Carolina. An important
part of this is that we have added a tax credit for homeowners
as well so that homeowners can renovate their own homes for
their own use. The impact has been really powerful. We have
seen more than $1.3 billion in rehab since 1998.
In this last session of the North Carolina General
Assembly, we were able to add an additional incentive for the
renovation of vacant historic industrial and utility buildings.
That incentive is projected to add $270 million of additional
rehabilitation over the next 5 years. So the chart will go even
higher over the next 5 years.
We do have several specific recommendations as outlined in
the written testimony. We do support the work that is needed on
the existing tax credits through the English bill, H.R. 3159,
to do some refinement and repair of the tax credits.
We do need to have additional support for the
administration of this program. When we are finding long delays
at either the State Historic Preservation Officer or the
National Park Service in their review of tax credit projects,
that really impedes the effectiveness of the program. The
Federal regulations call for a review taking approximately 60
days, but the reality is it is more like 6 months or longer in
some cases.
The third I want to mention is we very strongly feel--and
we have a North Carolina State incentive for homeowners--that
some form of Federal incentive for homeowners to renovate
historic houses could be powerful across this country, bringing
vast savings and infrastructure, bringing jobs, and making our
cities and towns healthier places to live from a tax base
standpoint, school standpoint, crime standpoint, and many other
ways.
What I would like to conclude with is some photographs
because photographs really do tell a lot of the story. Those
are photographs from some work that Preservation North Carolina
has done in two locations, two mills and mill villages that we
have been involved in where we have acquired the property and
resold it with deed restrictions to buyers for renovation.
We have acquired two mill villages that we have resold. As
a Southerner, I enjoyed the Southern Living article about a
mill village being a wonderful place to live. Mill villages
were pretty much the places you didn't want to live when we
started this project, and it has been very exciting to see the
kind of response that we have had. We were given a mill village
that had over 40 vacant and boarded-up structures.
They are now all renovated from little bitty buildings on
to the larger houses that the superintendents lived in. The
streetscapes are now quite extraordinary for a place that was
basically abandoned. We have also had new houses built there
under designs that we came up with, and the mill itself is
still under renovation, but the first two phases are occupied
and exceptional. The peanut mill on the back side of the mill
village has also been renovated.
I think the numbers tell the story. The tax value in this
neighborhood was $863,000 in 1998. The tax value now is $14.6
million, and that number will probably exceed $20 million by
the time the full renovation is complete. Homes have gone from
$37,000, basically abandoned, to $224,000 on average.
We have also done this on another mill village near
Burlington in the central part of the State, a mill that closed
in 1954. You get the sense of the housing that was in that mill
village, abandoned for years and years. Now almost all of the
houses are sold and renovated now. This was one of my
favorites; it fell off the foundation. But a new house wouldn't
fall off its foundation, and you couldn't expect to renovate
it, but these old houses are built well, just amazing. It sat
off that foundation for almost 15 years before we picked it
back up.
The renovation has been just wonderful to see, and so many
small communities and small mill villages are looking at these
projects.
This is a new house that we built, and now we are seeing
the new houses being built in the mill village. It has been an
extraordinary transformation over the last 8 years. The mill
renovation is expected to begin as soon as the brownfields
agreement is completed on the mill.
Here are the numbers as they currently stand. It went from
$244,000 to $8.7 million. The estimated value of the project
completion will be $18 million. These would not have been
possible without the tax credits, Federal and State combined,
and I want to especially mention the homeowner credit because
most of this renovation was done by homeowners for their own
homes.
Thank you very much.
[The prepared statement of Mr. Howard follows:]
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STATEMENT OF EDWARD SANDERSON
Mr. Sanderson. Mr. Chairman, Rhode Island has used the
Federal Historic Preservation Tax Credits for a number of
decades, but in 2001, we found that the Federal tax credits
simply did not offer enough incentive for developers to take on
deteriorated old buildings in inner city neighborhoods. And so,
we passed our own State tax credit at 30 percent that can be
combined with the Federal tax credit.
Since the creation of our tax credit, the number of
historic rehabilitation projects has increased 800 percent, and
the amount of private investment has increased more than ten-
fold. In just 4 years, 235 projects representing private
investment of one and a third billion dollars--that is 4 years,
one and a third billion dollars in little Rhode Island--have
applied and participated in the program. These projects are
creating over $7 billion in economic activity in our State and
almost $700 million in new tax revenue. Property tax revenue,
sales tax revenue, and income tax revenue are being generated
through this program.
All this construction creates new jobs. We estimate 24,000
construction period jobs and 8,000 permanent jobs in new
businesses.
The tax credit also adds to the supply of housing including
more than 600 apartments that are guaranteed for low and
moderate income residents. In fact, we have looked at census
tracts and found that three-quarters of all the historic
preservation projects that our program is generating occur in
census tracts where family income is below the statewide
median.
I brought three examples of projects to show you. If we
could get the first picture up on the screen, it is this
rundown building in downtown Providence. In downtown
Providence, owners have invested $54 million in 5 buildings in
a 3-block area, creating 200 new apartments and bringing new
businesses into street level stores.
We will look at the after; this is the 1873 Peerless
Building, one of the five. It has been rehabbed into 97 new
apartments and 22,000 square feet of new retail space.
We have a Victorian neighborhood on the west side of
Providence known as Elmwood. It contains a wealth of Victorian
architecture like this before and after picture of a house from
the 1890's, but the neighborhood declined and the houses
deteriorated.
The next picture shows that recently 15 houses--15 houses--
near the intersection of Melrose Street and Adelaide Avenue
have been rehabilitated for low and moderate income residents.
The project created 42 rental apartments and five houses as
home ownership starter homes.
Finally, Rhode Island's historic mills and factories
reflect our State's past as a manufacturing innovator, and we
have a lot of these red brick elephants that became obsolete
and vacant. The picture I am showing is the Ashton Mill
constructed in 1867 for the manufacture of cotton textiles, and
the next pictures shows an interior of the completed
renovation. This was a $42 million project that saved an
industrial landmark in our State but also created over 200 new
apartments.
As I have said, the Federal tax incentive just isn't strong
enough to leverage the kind of investment that I have just
described to you, and I would recommend three ways that
Congress could address this issue. First, I would second what
you have already heard about H.R. 3159, important technical
changes.
Second, you heard from the Associate Director of the
National Park Service about a new effort to improve program
delivery and make it more flexible. I had the honor to serve on
the committee that developed this report, and so I certainly
endorse its recommendations.
But the third recommendation I would have is to call your
attention to the fact that there is a basic historic
preservation infrastructure that supports all the preservation
programs. Historic preservation investments like the ones that
I and other witnesses have described require information from
State Historic Preservation Offices to identify potential
investment properties, to nominate those properties to the
National Register of Historic Places, to process the
applications for tax credits and grants and other assistance,
and to provide needed technical assistance, as you were saying
earlier in the hearing, to make sure that we get to a
successful conclusion, not to be gatekeepers but to be
assisters in making the process work. All of these functions in
State Historic Preservation Offices are funded by the Annual
Historic Preservation Fund, and so we need to keep those
appropriations in place in order to have a program
infrastructure.
In my State and in many others, vacant and under-utilized
historic buildings are a standing inventory of potential
capacity for needed housing, jobs, and public use. Historic
rehabilitation programs put these buildings back to work.
[The prepared statement of Mr. Sanderson follows:]
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Mr. Turner. Mr. Baumgartner.
STATEMENT OF KEN BAUMGARTNER
Mr. Baumgartner. Thank you, Mr. Chairman. I appreciate the
opportunity of being in front of you this morning and having
the opportunity to address this committee.
My name is Ken Baumgartner. I am with the Corky McMillin
Companies, and we are a full service real estate company in San
Diego, California. We have been in business in San Diego for
about 45 years and, over those years, we have developed
approximately 25,000 homes, apartments, condominiums, etc. in
the San Diego area.
I would like to just make a personal note first. Mr.
Bilbray made a comment about being baptized at the Naval
Training Center. My dad, my 88 year old dad who recently moved
from New Jersey to California was a seaman recruit in 1940. I
was a seaman in 1969 at the Naval Training Center. So it has a
personal flavor to me to see it restored as well as certainly a
business interest as my position with the company.
As our company was selected by the city of San Diego in
1999 to rebuild the Naval Training Center, the former military
base, I am hopeful that my testimony will provide you some
perspective on how the private sector can partner with local,
State, and Federal Governments to achieve the goals of both
community revitalization and the preservation of historically
valuable properties.
Allow me to begin with some background. In 1993, the Base
Realignment and Closure Commission closed the 550 acre Naval
Training Center located west of downtown San Diego after
serving for more than 60 years as a basic training facility for
military recruits. Built in the 1920's, the Naval Training
Center, now called Liberty Station, was notable for its unique
architectural design of Spanish Colonial buildings.
Once the base closed in 1997, the city of San Diego, which
was deeded the base, embarked on a lengthy process with the
Navy, numerous government agencies, community groups, members
of the public to determine what should be built on the
property. The result was a reuse plan that called for
approximately 500 military housing units which have been built,
not by us but have been built and occupied, it was the first
thing that was built. A public park, a 48-acre public park, a
non-profit art and cultural district, several schools, two
charter schools are open right now, new housing, commercial and
retail district, a restored nine hole golf course that was part
of the Naval Training Center for eternity, and a hotel sector
with about 1,000 units.
Integral to the success of the plan is the reuse of
buildings of historic value on the property. The historic core
includes 50 buildings listed on the National Register of
Historic Places, comprising over 600,000 square feet of space.
According the plan, approximately 300,000 square feet of space
is to be dedicated to use as an arts and cultural district that
will be administered by a non-profit foundation. Over 300,000
square feet of retail and commercial use will be developed for
retail and commercial use.
Once converted for reuse, the historic core of the project
will truly serve as an economic engine and will drive the
revitalization of the former base and surrounding communities.
These vintage-era buildings will provide new office space,
retail stores, restaurants, cultural events, entertainment, and
jobs, all within walking distance of many new homes including
the homes of hundreds of military families.
Our greatest challenge in fulfilling this potential of the
redevelopment project is to find a cost-effective way of
adapting functionally obsolete military buildings into
marketable properties that will accommodate the very specific
uses allowed by the myriad of restrictions governing the
property. An example would be rehabilitating small office
spaces in old military buildings that are now zoned and planned
for visitor retail.
While maintaining the historical features, plan flexibility
is needed for this retail reuse. It is important to note that
we are not only restricted with what we can do with the
buildings by Federal historic regulations but also by State and
local historic preservation, project precise plans, city zoning
codes, daily traffic limitations, because our project is
located near the airport and within the coastal zone, runway
protection zones and State of California local coastal
programs.
So we try to balance all these opportunities with different
regulations and create a project that we think will be viable.
Without programs such as the Federal Historic Tax Credit
Program, renovating these buildings would not be financially
viable, leaving us with few options but to leave them in a
vastly under-utilized condition or in a state of disrepair.
Overemphasis on historical preservation could negate the
interests and threaten the loss of historic rehabilitation. We
encourage an adaptive reuse where there is a balance between
the economic viability of the reuse and the historic
preservation.
Mr. Chairman, in closing, it is our view that the Federal
Historic Tax Credit Program can be a significant catalyst in
achieving the goals of community revitalization and historic
preservation.
I just wanted to make a comment after hearing Dr. Matthews'
testimony. Her office has been extremely cooperative in working
with us through a myriad of regulations that we have never been
faced with before in terms of processing applications, and we
have learned an awful lot from the process and are eager to
continue with it and see some wonderful opportunities to kind
of jointly work with this Historic Tax Credit Program and
achieve the goals that we are trying to achieve out in San
Diego.
So, again, I thank you, and I would certainly invite you or
anyone on your staff to San Diego, preferably in January or
February to view the Training Center. Thank you again for the
opportunity to testify.
[The prepared statement of Mr. Baumgartner follows:]
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Mr. Turner. A great opportunity for a field hearing.
I am going to start with Kathleen. Kathleen, I want to
acknowledge, in asking you this question, that this hearing is
because Kathleen came to us and was talking to us about
historic preservation. We were familiar with the Cleveland
Restoration Society and what they had accomplished, their
leadership up in Northeast Ohio, and the complex transactions
that they have done, and their knowledge of the Federal
programs, and really how they should be modified and made more
user-friendly, and the needs for additional resources.
When you came to us, Kathleen, obviously, one of the things
we talked about was H.R. 3159, the need to modify the Historic
Tax Credit Program and make it more user-friendly, but since it
is from your leadership that you came to us and said we need to
highlight this whole area a whole lot more, I thought I would
turn to you first and say: Are there things that you want to
make certain get highlighted from this hearing and things that
we might have missed that you want to add at this point?
Ms. Crowther. Well, thank you, Mr. Congressman.
I think that a lot of work has been completed by the Park
Service and the National Trust for the Revitalization Bill and
the tax credit program. So I think that it would benefit all of
us to act speedily on those measures.
And then second, I would like to emphasize the value of
Community Development Block Grant funds in American cities that
are facing significant issues of poverty and out migration of
the middle class. We have been able to knuckle down and get the
use of those CDBG funds, but they are not easy to use really,
frankly, for historic preservation organizations.
So streamlining some of the rules and regulations with
regards to the use of them, in particular, the lead paint
abatement difficulties which John Leith-Tetrault referred to
would help local organizations on the ground. But most
importantly, it is preservation of those funds and increase
those funds because they are deployed for a wide range of
things.
My concern really, I think it is the concern of many people
in historic preservation is this urban sprawl issue which is
sucking the life out of cities and is creating soft markets
where you just have to keep layering incentive after incentive
after incentive in order to balance it and create the desire
for the private sector to invest. In thinking over my own
testimony, I felt that it was important to really lay that out.
Urban sprawl, the wastefulness that is created is going to hurt
our global competitiveness. I think Thomas Friedman in his book
that is a New York Times bestseller, The World is Flat, said
that in part. So I think in this age of limited resources, we
need to be thinking how we spend those resources from the
Federal level so that we preserve our farmland and our
wilderness and we get the full economic value out of the built
environment that we have, and much of that is historic.
Mr. Turner. Bootsie, in your area in Wright-Dunbar and in
looking at your testimony, you have stacked in the
successfulness of the project that you have--both from when you
served as a City Commissioner and advocate for this project
when there wasn't one all the way to where you are now the
Director of Wright Dunbar, Inc.--a number of the vehicles that
were discussed today. You have within that territory a National
Park. You have a home component that includes historic home
rehabilitation. You have a commercial district where you are
looking at the rehabilitation of those properties and also
attracting then businesses and jobs.
In some of your testimony, you mentioned stacking
transportation funding, Community Development Block Grants, the
Main Street Community, the Preserve America Programs and Grants
that you have received. Congratulations also on your success
that you mentioned with Urban Nights. I did hear what a
wonderful experience that was. Of the Urban Night events that
happened throughout the community, it was Wright-Dunbar that
was the attractive site that people went to and that people
were amazed at the amount of renovation and restoration that
has occurred and that was a major attraction to pull people in
the area.
One of the things that we struggle with is how do all these
programs stack and work together. What advice would you have
for us in both gaps in funding that you see and ways that these
programs can be improved, and what tools are you missing?
Ms. Neal. It is real important that Community Block Grant
funds are made available continuously to the urban communities
to address blight and flight, and that is one tool that is
critically important.
The other part of that is our biggest challenge is the
financial gap to get the buildings from being structurally
stabilized, dry and safe to actually being put back into reuse.
We have done a great job, and we have had the resources to
stabilize the building, but from a private investor's
perspective, the gap is still too large to, in fact, occupy the
building. So that is the challenge that we have. We have
beautiful facade improvements, but however we need to get the
buildings occupied; so having additional resources.
Also for the Wright-Dunbar area in particular, the Dayton
Aviation Heritage National Park was funded at one level and has
not yet today received that amount of appropriations that the
legislation indicated when it was first started. So it would be
great if the National Park would just be funded at the level
that it was originally awarded. That would be important to us
as well.
There is a new centennial challenge called the National
Park Centennial Challenge that is just emerging. When I was
preparing to come to Washington, I talked with our partners
because it takes partnership to be successful. So the National
Park, the Dayton Aviation Heritage National Park asked that I
would ask for consideration for the National Park Centennial
Challenge as we get prepared for the centennial celebration of
the National Park System in 10 years.
And so, with those tools, the Historic Tax Credit, plus
your creativity is going to be really important as we move
forward because historic preservation can be the catalyst to
rebuild urban America.
Mr. Turner. Kathleen brought up an important issue that I
would like to give others an opportunity on which to comment,
and that is when we implement tools of historic preservation,
we are saving a structure that perhaps had not been occupied,
that then results in its use and then the counter effects to
dissuade someone from going out into a greenfield and having
urban sprawl. Could you please speak for a moment on your
experience and what you see as we look to our areas that
already have infrastructure, that already have investment, and
preserve those and how they also then help preserve our
communities by not having new development and new construction
that might waste what we see as abandoned opportunity with our
historic properties that are under-utilized?
Mr. Sanderson. Mr. Chairman, if I could jump in on that,
coming from a small State, we care a lot about every open green
acre that we have in Rhode Island. Our Office of Statewide
Planning estimates that a new housing unit consumes about two
acres of land on a statewide average. Our Historic Tax Credit
Program has created more than 5,000 dwelling units in existing
buildings in existing cities with existing infrastructure. So I
like to tell people that this program is not only saving
historic places; it is making Rhode Island a bigger place
because if you multiply those 5,000 units by two acres a piece,
we have just added 10,000 acres to our State. I think it is a
good point.
Existing infrastructure, utilities; and transportation is
something that is often overlooked. In my testimony, I noted
that 75 percent of the investment is occurring in census tracts
below the statewide median of income. The idea that economic
development, that community development should be based on
ownership of one or two personal automobiles for every resident
in order to get to and from their place of work, to their
school, to do their shopping, I think is a luxury that many
communities can't afford. We need to rehabilitate our
communities in a way that mass transportation is possible for
those that want to use it as well as to save infrastructure.
Mr. Turner. Does anyone else wish to comment on that topic?
Mr. Baumgartner. We have largely been a suburban developer,
and I must admit we are responsible for a lot of the sprawl
that is in San Diego, but it has provided a lot of housing for
a lot of people that have benefited substantially over the
years. As houses have gone up in value, it has been a great
source of income, and it has been a wonderful place for people
to raise their families.
I think the situation in San Diego is really working with
combined local governments to provide transportation and
infrastructure back into the areas that we are trying to
redevelop. Many of the areas have been lower density single
family areas, and when you basically introduced higher
densities into those areas which is needed for a lot of the
rehabilitation programs to work--again, this is one perspective
that maybe is a little different than other places--we really
had to deal with providing the additional infrastructure that
local government is looking to provide in those increased
areas, i.e., more parks, more schools, more public facilities
to accommodate the higher densities. So that has been a
challenge, and I know the city of San Diego has been working
for some time on the concept of city of Villages where we are
looking at some of the Smart Growth principles and applying it
to various parts around the town.
So I think the tax credits on a much more global scale is
one that our company is definitely looking at as we look at
looking in more than looking out. As we kind of look at our
future in San Diego, we are going to be building more higher
density and looking at more rehab programs and ability to kind
of try to be a part of the rehabilitation and the continued
growth and still be active as a builder in San Diego.
Mr. Turner. I want to thank each of you for the time that
you have taken to prepare and also the time that you have taken
to be here.
We do have some additional written questions that have
arisen as a result of your written testimony that are more
technical in nature that, with your permission, we are going to
submit to you and leave the record open for a 2-week period to
afford receipt of your response if you are willing to
participate. Also, for the first panel, we will be doing the
same. They really go beyond just the subject matter of which we
have discussed here but are a result of the written testimony
you have submitted.
Before we conclude, I want to give each of you the
opportunity if you have any closing remarks or any items that
you would like to place on this record as part of your
testimony before we close. Does anyone wish to add anything to
their testimony?
If not, I want to thank you all very much again. This is
certainly an important issue. You have been able to see manners
in which we have changed communities. I think that the topics
that you have in front of you of how Federal programs can be
utilized to change communities and to provide capital are
probably the most important ones that we can discuss in the
success that you have accomplished.
We know that you have changed lives. You have changed
communities. But how can we do it better? How can we be your
partner is the topic that we want to continue our discussion
in, and you certainly are going to be an incredible resource
for us looking at your success and how we can be more
successful in the communities.
So I want to thank you.
[Whereupon, at 12:25 p.m., the subcommittee was adjourned.]
[The prepared statement of Hon. Wm. Lacy Clay and
additional information submitted for the hearing record
follow:]
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