The ownership group of one South Main Street building, and the hopeful owners of another, would like to tap into a share of $60 million in Ohio historic tax credits — which can make their restoration projects more feasible.

Historic tax credits, according to the Ohio Development Services Agency, are responsible for creating thousands of jobs and restoring hundreds of buildings in 34 Ohio communities since 2007. More than $327 million in tax credits have been awarded to 156 projects across the state, including nearly $5.9 million for five projects in Hamilton — the only Butler County community to have received the state tax credits.

These buildings in downtown Hamilton were rehabilitated by Coon Restoration and Sealants led by Steve Coon, who is part of the group that wants to acquire the old Rose Furniture building in downtown Middletown.

Historic Rose Furniture LLC and the owners of the Sorg Opera House want to bring that same time of revitalization to downtown Middletown using the historic tax credits.

“Not only are these buildings being saved across Ohio, and that’s a great accomplishment and that means a lot to those communities, but smaller communities are starting to take notice of this,” said Ohio Development Services Agency spokeswoman Stephanie Gostomski. “I think anytime a historic building is rehabbed rather than being torn down, it just improves the livelihood of the city, especially if it’s your hometown. It’s easy to tear it down, but with this route — which is more difficult and costs more money and time — the benefits far outreach anything else.”

Ohio is one of 34 states that have a historic tax credit program, which could increase to 39 states as five state General Assemblies have introduced legislation. The Ohio Development Services Agency approved historic tax credit funding for 63 projects in 2012, which leveraged $780 million in project investments for rehabilitating — and essentially saving — 67 historic buildings. And those projects last year led to more than 7,100 permanent jobs.

“It literally throws millions of dollars back into the project,” said Coon. “That’s the only way we’re able to do that, to save these buildings.”

The old Mercantile building in downtown Hamilton was on the verge of being razed. The one-time eyesore — which brought together three buildings — has been returned to productive use with 29 loft apartments and three office spaces. Coon said this project, along with the Artspace Hamilton Lofts and the former Hamilton JournalNews building projects that are in-progress, has reinvigorated the downtown.

He believes he can help do the same for the city of Middletown.

“Middletown has a great inventory of historic structures. They have a very, very nice inventory so that definitely got our attention,” said Coon. “We’ll do our due diligence, but I wouldn’t have done it if I didn’t think we wouldn’t get them. There’s some risk involved, but we try to hedge our bets with picking the right buildings with the right communities.”

The Sorg Opera Revitalization Group, the ownership group of the Sorg Opera House that is across the street from the Rose building, could receive the first historic tax credits in Middletown.

“We are looking at funding options and (the historic tax credits) is one of those options,” said Chuck Miller, president of SORG. “We’re pursuing the strategy and have engaged the appropriate parties (to help with due diligence).”

Miller wouldn’t talk further at this time about the due diligence his group is performing.

Middletown Economic Development Director Denise Hamet said historic tax credits “can make the difference if it’s a viable project or not.”

“It helps lower the risk of the project by lowering the cost of the project,” she said. “Typically when you use any sort of grant or credit, if you can establish a track record for using that successfully, that can make a difference if your score is on the borderline or the same as another (project) in another city.”

Approved projects receive a 25 percent tax credit up to a maximum of $5 million, according to the Ohio Development Services Agency.

“Our historic buildings and our historic structures in town is what helps differentiate our community from any other communities, especially some of the newer suburban communities,” Hamet said. “It helps us create a niche. And it gives us a competitive advantage.”

The application for historic tax credits can be filed in March or September, and all applications are evaluated “with an objective scoring system measuring each project’s economic impact, community benefit and return on investment to state and local governments,” according to the 2012 annual report of the program. Gostomski said they only have $60 million to give out annually — approximately $30 million is awarded twice a year — and they received requests for twice that amount for Round 10 this year.

If Coon’s group does receive the building, it’s more than likely he’ll also seek federal historic tax credits. Two of Coon’s five Hamilton redevelopment projects have received the federal credits. With both federal and state historic tax credits, 45 percent of a project could be supported by the historic tax credits.

Coon said federal and state tax credits are eventually paid back all of the money that’s allocated to the projects through taxes.

But historic tax credits are part of the tax reform conversation in Congress, and could be eliminated. That worries the National Trust for Historic Preservation in Washington, D.C.

Tom Cassidy, vice president of government relations and public policy at the National Trust, said the federal historic tax credits when signed into law by President Ronald Reagan in 1981 “is the most significant federal investment in historic preservation.”

“The National Trust is concerned that as Congress turns its attention to reforming the tax code that the job-creating and community-revitalizing impact may be overlooked,” he said.

From 2001 to 2012, nearly 700 projects have received more than $301.8 million in federal historic tax credits that resulted in 17,124 permanent jobs and generated more than $1 billion in household income, Cassidy said. Nationwide, federal historic tax credits have created 2.35 million jobs, he said.

These tax credits can give a new life to a struggling downtown. As an example, Cleveland would be a shell of a city it is now that’s home to the Rock ‘n Roll Hall of Fame and professional sports franchises in the NFL, NBA and MLB.

“Cleveland is now a place where young people are moving back to,” he said.

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Program Overview

The Ohio Historic Preservation Tax Credit Program provides a tax credit to owners and long-term lessees of historic buildings to complete rehabilitation projects. The Ohio General Assembly enacted the Program on Dec. 13, 2006, in substitute House Bill 149 and amended it on June 12, 2008, under the Ohio Bipartisan Job Stimulus Plan. The program was renewed on June 30, 2011, in House Bill 153. Ohio is one of approximately 30 states nationwide to offer a historic preservation tax credit program.

Once projects are completed, the program will provide a tax credit equivalent to 25 percent of the expenses that went toward rehabilitiation. This can include costs related to improvements made to the building structure, interior and systems, as well as design and engineering services.

A building is eligible if it is individually listed on the National Register of Historic Places; contributes to a National Register Historic District, National Park Service Certified Historic District or Certified Local Government historic district; or is listed as a local landmark by a Certified Local Government. Rehabilitation work must meet the U.S. Secretary of the Interior’s Standards for Rehabilitation of Historic Properties.

Source: Ohio Development Services Agency