Proposed State Legislation: Good and Bad for Preservation
Converted into 51 units of affordable housing in 2013, the 1889 Boyle Hotel in Boyle Heights took advantage of the Federal Historic Preservation Tax incentive program. Photo by Erik Van Breene/L.A. Conservancy.
Two recently proposed state bills would greatly affect preservation in Los Angeles— both positively and negatively.
The Good: SB 451
Earlier this year, Senate President pro tempore Toni G. Atkins introduced Senate Bill (SB) 451, a bill to create a California historic rehabilitation tax credit. This legislation builds on work done in 2014 with the California Preservation Foundation and the American Institute of Architects, California Council (AIACC) to promote tax credits for the rehabilitation of historic buildings. The Conservancy is again working to help support this legislation, which would create a critical incentive for preservation. SB 451 passed both the State Senate and the State Assembly unanimously.
State historic tax credits are a dollar-for-dollar reduction in tax liability and help pencil out difficult projects. With these incentives, states not only increase revenue by broadening their tax base, but also transform areas of disinvestment and put long-vacant or underutilized buildings back into production.
Thirty-five states already have similar programs; now is the time for California to join the list.
If passed, SB 451 would create a much-needed statewide tool to help incentivize the rehabilitation of historic buildings, a move that can also meet critical housing needs.
Many states encourage the use of tax credits to rehabilitate historic buildings into housing. For example, in California, from 2002- 2016 the Federal Historic Preservation Tax incentive program made 169 projects possible (totaling $2.8 billion), a third of which helped create new housing. SB 451 would greatly expand this reach.
A California tax credit would have helped support this and many other worthwhile projects currently searching for funding. In Los Angeles, the 1889 Boyle Hotel in Boyle Heights utilized the Federal Historic Preservation Tax incentive program to ensure financial viability. Through efforts by the East Los Angeles Community Corporation (ELACC), the hotel was converted into 51 units of affordable housing in 2013. Projects like these are difficult to finance, and every incentive is critical. As a proven program that leverages additional resources and more than pays for itself, SB 451 would:
Create a 20% state tax credit for the rehabilitation of historic structures;
Create a 25% tax credit for certain projects such as affordable housing;
Allow the use of the credit by both income-producing and owner-occupied buildings, including single-family residences;
Provide a $50,000,000 annual aggregate cap on the tax credit program;
Establish a review process to ensure that the development projects supported by this tax credit result in a payback to the State through increased state and local tax collections and jobs.
Photo by Adrian Scott Fine/L.A. Conservancy.
The Bad: SB 330
Unfortunately, the other pending state legislation, albeit well-intentioned, would cause irreparable harm to historic places and neighborhoods throughout California.
Whether it is SB 50 (currently on a temporary hiatus), SB 592, or SB 330, multiple lawmakers are introducing legislation with the intention of easing perceived land use barriers to increase density and streamline the production of multi-family housing development statewide.
In many cases, this type of legislation would limit a community’s ability to deny a project or consider other factors. Instead, it overrides local planning and existing community plans in order to facilitate the construction of four-to-five-story—or higher—residential projects in areas currently limited to single-family development.
Density, affordable housing, and preservation are not mutually exclusive. We can and should have all of these, and through careful planning, there is ample room for these in L.A.
Approximately 6% of L.A. has been identified as historic (through designation and by Sur veyLA, L.A.’s comprehensive survey of historic places), leaving 94% available for development and increased density. In other words, only about 60,000 of the total 880,000 parcels in L.A. are historic buildings, leaving 820,000 parcels available for new development, increased density, and much-needed housing.
Other than proximity to transit, these bills offer little consideration for where new housing and density should be built. This blunt, one-size-fits-all approach takes away a community’s ability to plan thoughtfully, or conserve its historic character and resources. If enacted, this legislation will significantly impact L.A.’s finite number of existing historic resources.
This means older and historic neighborhoods could be harmed through demolition and infill construction that is out-of-character and scale to the surrounding neighborhood, effectively eroding the historic character of an entire neighborhood. For instance, SB 50 impacts over 40% of L.A., and in certain neighborhoods, that percentage is much higher (57% of Boyle Heights and 60% of Silver Lake).
SB 330, called the “The Housing Crisis Act of 2019,” provides for streamlining and increased housing production, which we support. However, in order to be considered as part of a project’s approval process, the legislation incorrectly assumes historic places are already landmarked and protected and therefore widely known. In reality, most historic resources are not formally designated or landmarked. In its quest to expedite the permitting process, historic places would be in jeopardy and not considered as part of the accelerated approval process.
A common thread for each of these bills is a complex method for limiting a community’s ability to plan and approve projects that shape their communities. While laudable in its intent, speeding up housing production would have adverse impacts if not done thoughtfully.
The Conservancy—in partnership with the California Preservation Foundation and others—works with legislators to find a balance that includes safeguards for preservation.
Last week, both SB 451 and SB 330 passed the full Assembly. They are awaiting final action by the Governor.
To stay up-to-date on the status of these bills and to get involved, sign up for Action Alerts at laconservancy.org/subscribe.