Support for Commercial to Residential Property Conversion
Adopted at the 89th Annual Meeting in 2021
WHEREAS, during the pandemic, cities have experienced widespread business closures; and
WHEREAS, as a consequence of the pandemic, established business practices and patterns of work have changed significantly, with employees at many firms transitioning to virtual work or to hybrid virtual and in-person work arrangements that are likely to extend far into the foreseeable future; and
WHEREAS, according to a 2021 survey of 350 CEOs, COOs and Human Resources and Finance leaders by the LaSalle Network - a national staffing, recruiting and culture firm - 77 percent of these business leaders believe that in twelve months their employees will still be working under a hybrid model, with a portion working in-office and a portion working from home; and
WHEREAS, as a result of these changing work patterns and business practices, many cities will experience significant commercial vacancies as commercial and office tenants make corresponding shifts to eliminate or reduce their physical footprint; and
WHEREAS, addressing the profound economic impact of the pandemic will require mayors and their cities to utilize compelling incentives to attract and promote new economic investment, whether by new or existing businesses to grow jobs and activate vacant spaces, or through conversions of existing commercial spaces for residential or mixed use; and
WHEREAS, the National Conference of State Historic Preservation Officers reports that the current 20 percent Federal Rehabilitation income tax credit (i.e. Historic Tax Credit), first established in 1976, has aided in the preservation of more than 45,000 buildings and generated more than $102 billion in estimated rehabilitation investment, including $5.7 billion in rehabilitation work and 172,416 low and moderate income housing units in 2019 alone; and
WHEREAS, the conversion of many commercial spaces to residential or mixed use in cities across the United States will likely require a varying combination of private and public investments and incentives, including tax incentives;
NOW, THEREFORE BE RESOLVED, that The United States Conference of Mayors urges Congress to adopt the Revitalizing Downtowns Act, as introduced by U.S. Senators Debbie Stabenow (MI), Gary Peters (MI), and U.S. Representatives Jimmy Gomez (CA-34), Dan Kildee (MI-05), and John B. Larson (CT-01), to create the Qualified Office Conversion Tax Credit, a 20 percent tax credit for expenses to incentivize the conversion of unused office buildings into residential, commercial and mixed-used properties.