The Baltimore Sun recently published the results of its investigation into chronic problems with the way subsidies have been calculated under a property tax abatement program for historic rehabs.
But apart from the problems, there’s also this question: How effective has the city’s program been at encouraging property owners to undertake historic rehabs they might not otherwise do?
Consider the case of wealthy entrepreneur Charles Nabit.
Before embarking on a top-to-bottom overhaul of his North Baltimore mansion a decade ago, he applied for the credit, which forgives property taxes on the value of improvements for 10 years. Since 2004, he has saved a hefty $238,000 on his property taxes, or close to 60 percent.
Yet Nabit freely admits the tax break didn’t motivate him. Next to an even more valuable state income tax credit, he says, the city savings boiled down to “added gravy.” “I wouldn’t have gone through all of that for the city abatement alone," he said, "just because of the amount of time and energy."
Nabit is hardly the only Baltimore property owner for whom the city’s historic property tax credit has provided a welcome, if unnecessary, financial bonus.
About a third of historic credit recipients told the city on application surveys that they’d still do the rehabs without the abatement, according to The Sun’s analysis of 200 randomly selected surveys that it obtained through the state’s public records law. (There are about 1,200 current recipients.)
Of course, there’s no way to tell whether all owners answered honestly. University of Maryland Baltimore County public policy professor Marv Mandell thinks applicants would feel pressure to tell the city what it wanted to hear, so he suspects an even higher percentage would have done the rehab without city aid. And some might have done a less ambitious rehab or used cheaper materials.
Even with those caveats, the finding could raise questions, given that the historic credit is costing the city about $9 million this year alone in uncollected taxes. Or maybe it’s a fair price to pay if the credit was key to making two-thirds of proposals a reality — especially considering spin-off benefits like contractor jobs and new residents patronizing local businesses.
Officials in the city’s preservation office, which vets projects seeking the credit, say the program has helped encourage more than $500 million in investment over the past 15 years.
The finding that a third of recipients didn’t need the city’s help “seems pretty reasonable and consistent with what we’re seeing and who’s applying and what they’re telling us,” said Kathleen Kotarba, director of the city’s Commission for Historic and Architectural Preservation (CHAP).
Though the agency has asked the question for years, it’s never tallied the answers because of a lack of resources, Kotarba says. And architect Donald Kann, who chairs CHAP’s board of commissioners, suggested in an interview that it doesn’t really matter whether the credit plays a decisive role.
“It seems to be more interesting that these things are happening,” he said of the historic rehabs, “regardless of motivation at some level.”Copyright © 2015, The Baltimore Sun