Governor Gavin Newsom signed Senate Bill 451 into law just last month. This important bill creates a statewide historic rehabilitation tax credit, providing a new financial incentive for the rehabilitation of historic buildings – and the possibility of turning them into housing.
Earlier in 2019 Senate President pro tempore Toni G. Atkins introduced SB 451, a bill to create a California historic rehabilitation tax credit. This legislation builds on work done in 2014 with the California Preservation Foundation (CPF) and the American Institute of Architects, California Council (AIACC), to promote tax credits for the rehabilitation of historic buildings. The Los Angeles Conservancy worked to help support this legislation and critical incentive for preservation.
State historic tax credits are a dollar for dollar reduction in tax liability and help make difficult projects financially viable. With these incentives, states not only increase revenue by broadening their tax base, but they also transform areas of disinvestment and put long-vacant or under-utilized buildings back into production. See CPF’s Case Statement on why SB 451 and a California tax credit makes sense.
With California, thirty-seven states now have similar programs.
SB 451 creates a much-needed statewide tool to help incentivize the rehabilitation of historic buildings, many that can be reused to meet critical housing needs. Historic buildings are frequently rehabilitated for housing, and states use tax credits to encourage this reuse. For example, from 2002-16 the Federal Historic Preservation Tax incentive program has made possible 169 projects (totaling $2.8 billion) in California, where a third have improved or helped create new housing. SB 451 will greatly expand this reach.
Two examples of Los Angeles-area projects that utilized the Federal Historic Preservation Tax incentive program to ensure financial viability, and could have been further benefited by a California program:
- In 2013 the 1889 Boyle Hotel became a 51 unit affordable housing project with three ground floor commercial tenant spaces. The project created 31 housing units in the historic building and an additional 20 units in the attached new construction. Project completed by East Los Angeles Community Corporation (ELACC).
- In 2003 the 1949 Mobil Oil/General Petroleum Building, later renamed the Pegasus Apartments after the Mobile Oil symbol, was adaptively reused and converted into 322 housing units. Project completed by the Kor Group.