Bill in WI Legislature Would Strip Local Historic Preservation Ordinances

Historic district - Greendale (federal greenbelt town)

Historic district - Greendale (federal greenbelt town)

A bill (AB-568), currently in the legislature’s Committee on Housing and Real Estate, would strip the power of Wisconsin towns to protect their own historic places by making compliance with local historic preservation ordinances optional for property owners.  Local preservation ordinances often include some protections for historic properties through a town’s power of zoning, as opposed to the National Register of Historic Places program at the federal level, which provides no protection. Municipal zoning powers that include preservation laws have been affirmed by several decisions of the US Supreme Court.

The bill adds an “owner consent” provision to state law. Under the bill, Wisconsin municipalities may not designate a property as a historic landmark without the consent of the owner. Also under this bill, Wisconsin municipalities may not require or prohibit any action by an owner of a property related to preservation of the historic or aesthetic value of the property without the consent of the owner. Property owners would have to opt in to the regulatory provisions of local ordinances, and owners of already-designated properties would be able to ignore adopted standards designed to maintain the historic character of these properties. It would affect owners of individually designated properties as well as those in historic districts.



Commercial building - Kenosha

Commercial building - Kenosha

The bill’s impact on Wisconsin’s Certified Local Government program, authorized by the National Historic Preservation Act, is being evaluated. The CLG program brings federal money to Wisconsin towns to survey, identify and nominate properties to the National Register of Historic Places, which makes them eligible for state and federal Historic Tax Credit programs to encourage private investment.

The practical impact of the “owner consent” provision would be that Wisconsin towns and cities would not be able enforce their local preservation ordinances. Standards designed to maintain the character of historic properties and districts would be unenforceable. Municipal planning staff would find themselves working to delist historic places, take down historical markers, and rewrite their preservation ordinances. Tourism brochures and websites would need to be revised as historic places drop off the lists. Wisconsin’s heritage sites and buildings would no longer have regulatory protections.

Well-regulated historic landmarks and districts have advantages to Wisconsin towns and cities. They tend to have more stable, and often higher, property values, they contribute to a community’s character and identity, and in many towns they are a key attraction for heritage tourism.  If property owners in Wisconsin’s local historic districts are able to opt out of local zoning regulation, the benefits of those districts would dissolve as owners opted out. The character of historic districts would be subject to passing, individual tastes, rather than a cohesive set of standards. Demolitions of historic buildings would likely increase statewide as owners opt to ignore inconvenient local regulation.

Jules Iverson Park - Stevens Point

Jules Iverson Park - Stevens Point

The provisions in this bill threaten the foundational purpose of historic preservation ordinances in Wisconsin communities like Cedarburg, Stevens Point, Mineral Point, Sister Bay, and Superior.  They undermine the ability of Wisconsin communities to identify those places that are important to them, and to protect their integrity for future generations. Historic places in Wisconsin – their condition and their very existence - would be subject to the mercy of passing owners, no matter how brief their stewardship.

Wisconsin Legislature retains Historic Tax Credit program

Construction crews take a break during the rehabilitation of Longfellow School in Madison to residential apartments. The project used Wisconsin's new 20% historic tax credit in 2014 to increase Madison's property tax base, create jobs, and increase …

Construction crews take a break during the rehabilitation of Longfellow School in Madison to residential apartments. The project used Wisconsin's new 20% historic tax credit in 2014 to increase Madison's property tax base, create jobs, and increase housing options, and retain an important and irreplaceable piece of the city's history.  

Wisconsin's dramatically successful Historic Tax Credit program will continue unchanged. The state Historic Tax Credit program is available to owners of historic properties designated under the federal National Register of Historic Places program. It offers a direct credit to the owner's state income tax obligation in the amount of 20% of expenditures on restoration or rehabilitation work that meets federal historic preservation standards. It can be coupled with a federal program that also offers a credit of 20% of expenditures for a total of 40% credit for qualified expenditures. The federal credit was initiated in 1981 as an incentive to leverage private investment in older commercial building stock. Wisconsin initiated a companion program in 1990 offering a 5% credit, then boosted the state credit to 20% in 2014.  The programs are powerful financing tools for developers taking on risky historic rehabilitation projects that can include unforeseen costs, and unique permitting regulations. Though risky, these projects often extend the lives of beloved and well-crafted buildings that have some special connection to their communities’ heritage.

Prior to the 2014, the state's program was used for an average of 11 projects per year. In 2014, there were 31 projects approved for a total of $35.1 million in tax credits, and leveraging $211 million in private investment in local real estate. These projects provided rehabilitated space in historic buildings for businesses and housing, and have increased property tax bases in 24 towns and cities across the state, including Milwaukee, Madison, Schofield, Eau Claire, Oshkosh, Dodgeville, La Crosse, Mayville, Ashland, DePere and Baraboo.

Governor Walker’s proposed 2015-17 budget would have capped the program at $10 million, made the credits competitive based on projections for job-creation, and provided for the recapture of credits if job-creation numbers did meet projections. The changes would have dramatically reduced the use of the program because the $10 million cap could be reached with just 2-3 large projects, and developers would have had a much more difficulty finding investors to purchase the tax credits accumulated by large projects, as is commonly practiced. The changes would have made the program too restrictive and too risky for most developers.

Preservation organizations and real estate developers united to lobby for the Historic Tax Credit (HTC) program. The Wisconsin Trust for Historic Preservation worked with the Historic Preservation Institute (HPI) at the University of Wisconsin-Milwaukee to study the economic impact of the HTC program in 2014. The Institute, in turn, sponsored a study by accounting and advisory firm Baker-Tilly to estimate the economic impact of the 2104 change from a 5% credit to 20%.

The HPI study found:

  • 31 projects used the program in 2014 at 20%

  • $35,071,257 in credits approved by WEDC in 2014

  • $35,071,257 federal tax funds returned to Wisconsin property owners.

  • $211,269,257 in direct private investment and expenditures on tax credit projects in 2014.

  • 4,062 Jobs created - 1,692 construction jobs and 2,370 permanent jobs in 2014.

  • $20,310,000 – Estimated annual state tax revenue from 4,062 jobs created.

  • $187,993,422- Estimated amount paid by employers to 4,062 new employees.

The Baker Tilly study projected:

  • $417.6 million total impact on Wisconsin economy by the end of the first year of operations: $277.7 million in direct spending, and $139.9 million in secondary spending related to HTC supported projects.

  • For the $34,799,764 awarded in Historic Tax Credits since January 1, 2014, the 25 evaluated projects supported by the HTC program are anticipated to create over 2,800 FTE jobs as a result of construction activities and permanent jobs in the state.

  • The program is estimated to see a complete payback of State of Wisconsin tax revenue by Year 7 of stabilized operations, an estimated $14 million being paid back to the state by the end of construction. These funds will be paid directly to the State of Wisconsin prior the beginning of operations and likely before the State of Wisconsin revenues are reduced by the tax credit.

  • Between labor and business purchases, the 25 approved projects are estimated to create up to $480.8 million in construction spending, and $88.7 million in annual operations. After 5 years of operations, the projects are estimated to create up to $951.6 million in community spending.

  • By Year 10 of operations, the evaluated projects are estimated to directly pay more than $46 million in tax revenue to the State of Wisconsin, a 133% return on the original $34.9 million approved. Including estimated indirect and induced tax payments, by Year 10 of operations, the approved projects will have paid an estimated $96.8 million in taxes within Wisconsin.

These two studies suggests that while the program is structured as a tax credit, it has a unique ability to leverage investments from a variety of sources, including the federal historic tax credit program, out-of-state investment companies and in-state development teams. The historic tax credit program is a true economic development program for our state. As an added bonus the program encourages restoration of unique existing  buildings in communities across Wisconsin.