Kiernat: The reason for this credit is to spur development related to historic resources and preservation of the resource. Renovation and rehabilitation is often more expensive than demolition, especially of something that was built 100 years ago that was never anticipated to last this long.

GlobeSt.com: Why do you feel it is important to keep these historic tax credits?

Kiernat: Economic development in disadvantaged neighborhoods is really important. Often times the historic tax credit is partnered with the low-income tax credit or the new market tax credit. Those are really important economic development incentives. Developers like to pair these together because they get additional resources for buildings that are in economically disadvantaged areas. Not only does that revitalize the building but it also provides jobs in both construction and in revitalizing an entire area. It really starts to impact an entire area. One place that we have seen this a lot is along Market Street in San Francisco.

John D. Lesak: There is also an interesting example in Glendale for the adaptive reuse of a Masonic Temple by Caruso. They applied for and received the 10% tax credit and paired it with the tax credit, which allowed them to restore characteristics of the building.

Kiernat: Preservation is the first step moving toward sustainability and green building. It is a common moniker now, but the greenest building is the building that already exists. Historic buildings were often designed with the environment in mind, so these historic buildings already have a lot of green features built into them. The historic tax credits really become a wonderful incentive to reuse and renew.

GlobeSt.com: What is the argument in favor of cutting these tax credits?

Kiernat: We are not clear why they would be lost if they have this economic stimulation all around them. I know that some communities and municipalities look at credits as an expenditure, not seeing the bigger picture of development. I am assuming that Congress is looking at this as an expense without looking at the economic benefits of it.

GlobeSt.com: What are the local California consequences of ending the historic tax credit option?

Kiernat: One reason that this is so important in California is that we are one of a few states that don't have an historic tax credit. Owners can apply for the 20% federal credit and then get an additional 10% to 15% on top of that. I think that is one reason why this is so important to local owners.

Lesak: There is a market for the tax credit, and they are seen as an immediate investment tool. Developers will sell them to larger corporations for $0.95 on the dollar to get their capital faster. Corporations like Exon and Bank of America will purchase them.

Kiernat: It has been a valuable credit for larger corporations that have much more in the way of taxable income.

Lesak: We also have a rigorous environmental quality act, and one of the environmental impacts. If a project follows the same set of standards that are used in the tax credit process, it is found to be categorically exempt from that particular regulation. You can bundle getting the financial incentive with getting the environmental approval. That speeds the approval process up and gets the financial incentive.

GlobeSt.com: There haven been several pieces of legislation that haven't gotten off through Congress this year. Is there real concern that this tax reform plan will succeed?

Kiernat: There are people at the highest level of office in this country that have used this tax credit to their benefit and yet is supporting the removal. I think there is real concern among the development crowd.

Lesak: I think there is a lot of concern that even if it doesn't get chopped, it will be modified in a way that they won't be as affective anymore.