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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

(II)

COMMITTEE ON GOVERNMENT REFORM

TOM DAVIS, Virginia, Chairman

CHRISTOPHER SHAYS, Connecticut

DAN BURTON, Indiana

ILEANA ROS-LEHTINEN, Florida

JOHN M. MCHUGH, New York

JOHN L. MICA, Florida

GIL GUTKNECHT, Minnesota

MARK E. SOUDER, Indiana

STEVEN C. LATOURETTE, Ohio

TODD RUSSELL PLATTS, Pennsylvania

CHRIS CANNON, Utah

JOHN J. DUNCAN, JR., Tennessee

CANDICE S. MILLER, Michigan

MICHAEL R. TURNER, Ohio

DARRELL E. ISSA, California

JON C. PORTER, Nevada

KENNY MARCHANT, Texas

LYNN A. WESTMORELAND, Georgia

PATRICK T. MCHENRY, North Carolina

CHARLES W. DENT, Pennsylvania

VIRGINIA FOXX, North Carolina

JEAN SCHMIDT, Ohio

BRIAN P. BILBRAY, California

HENRY A. WAXMAN, California

TOM LANTOS, California

MAJOR R. OWENS, New York

EDOLPHUS TOWNS, New York

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

ELIJAH E. CUMMINGS, Maryland

DENNIS J. KUCINICH, Ohio

DANNY K. DAVIS, Illinois

WM. LACY CLAY, Missouri

DIANE E. WATSON, California

STEPHEN F. LYNCH, Massachusetts

CHRIS VAN HOLLEN, Maryland

LINDA T. SANCHEZ, California

C.A. DUTCH RUPPERSBERGER, Maryland

BRIAN HIGGINS, New York

ELEANOR HOLMES NORTON, District of

Columbia

———

BERNARD SANDERS, Vermont

(Independent)

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

CHRISTOPHER SHAYS, Connecticut

VIRGINIA FOXX, North Carolina

BRIAN P. BILBRAY, California

WM. LACY CLAY, Missouri

PAUL E. KANJORSKI, Pennsylvania

CAROLYN B. MALONEY, New York

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

(III)

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

(1)

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

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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

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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 reVerDate 11-MAY-2000 11:00 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00007 Fmt 6633 Sfmt 6633 C:\DOCS\45242.TXT KATIE PsN: KATIE
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viewed 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 nonFederal 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 21⁄2 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

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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

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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

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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

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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, accountVerDate 11-MAY-2000 11:00 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00078 Fmt 6633 Sfmt 6633 C:\DOCS\45242.TXT KATIE PsN: KATIE
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ants, 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 proVerDate 11-MAY-2000 11:00 Nov 21, 2008 Jkt 000000 PO 00000 Frm 00079 Fmt 6633 Sfmt 6633 C:\DOCS\45242.TXT KATIE PsN: KATIE
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mote 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

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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 barnraising 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 barnraising 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?

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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

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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

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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 21⁄2 hours, actually the language throughout this sub- committee’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

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$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

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ing 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?

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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

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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

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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.

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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.

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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 WrightDunbar 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.

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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 WrightDunbar 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

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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.

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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

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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 neigh- borhood 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

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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

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of the former base and surrounding communities. These vintageera 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 underutilized 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,

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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

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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

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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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