Hawaii is a very fragile place. Too often, we have seen our historic structures, communities and sacred places become victims of thoughtless development.

In pure economic terms, historic structures cannot compete with modern development in terms of "return on investment." But these special places are part of who we are, and tax incentives can help save them for our future.

Without these incentives, much of what makes Hawaii special can be lost.

Since 1983, historic structures in all four of Hawaii’s counties have been preserved as a result of thoughtful ordinances exempting historic residences from real property tax. These exemptions provide an economic incentive to homeowners to preserve historic buildings. The ordinances recognize that historic preservation provides a public benefit, but in many cases, the cost of that benefit is carried by private property owners.

Since no government — city, state or federal — will ever have enough money to acquire, restore and manage every single historic property in its jurisdiction, tax incentives provide an affordable and effective way to support hundreds of individual decisions to be good stewards of our collective historic and cultural legacy.

Hawaii’s residential property tax exemption was first proposed to the Hawaii State Association of Counties in 1980. The association concluded that historic buildings enriched the quality of life and that only an economic incentive would be effective in preserving them. Because the 1978 constitutional amendment required that tax exemptions be uniform statewide, it took the approval of three of the four counties before the measure could take effect. By the end of 1982, all four counties had approved these measures.

In order to ensure that the public benefit is protected, the ordinances included conditions:

» The property must be a designated historic site on the state register of historic places;

» The property is restricted to residential use;

» The owner must comply with all historic preservation standards for its renovation, rehabilitation or other requirements; and

» The property must be visually accessible to the public.

On Oahu, the county’s real property division also adopted rules that required that a sign or plaque be placed on the property and that "the public shall be allowed visual visitations at least 12 days a year if the property is not visually accessible by a public way."

In analyzing the economic impact of tax breaks for historic preservation, national studies have found that the fiscal return was greater than the government’s forgone taxes, often returning three to five times more revenue in new taxes and significant new investment. Tax credits are also successful in creating new jobs, increasing loan demand and deposits in local financial institutions, enhancing property values and generating sales.

In addition to these direct fiscal impacts, incentives also support environmental sustainability, smart growth, affordable housing, heritage tourism, neighborhood revitalization and, in Hawaii, our sense of place, culture and identity.

Tax incentives can help preserve a wide range of sites and structures. Few would dispute the significance of some of the sites that have been preserved, such as Iolani Palace or Puukohola Heiau. But less famous sites are also critically important in defining who we are, and they tell wonderful human stories.

Tax incentives for historic preservation are an efficient, effective and proven way to help property owners make choices that honor our heritage. And sometimes that makes all the difference.