As George Hartzog was fond of saying, money is policy. Congress might embrace some great cause, but unless it authorized and appropriated sufficient funds to progress toward achieving it, its policy would not carry beyond the statute books. The funding provisions in the National Historic Preservation Act were key, therefore, to implementing the lofty declarations in its preamble.
The act specified two parties as recipients of matching grants-in-aid: the states and the National Trust for Historic Preservation. It authorized two kinds of grants to the states: grants for surveys and plans and grants for property acquisition and development projects. The federal funds could not exceed 50 percent of the respective costs involved and could not be applied to ongoing property maintenance and administration. The Secretary of the Interior was to apportion grants among the states based on his determination of their needs. Grants to the National Trust, also required to be matched equally, were authorized "for the purpose of carrying out the responsibilities of the National Trust." At the Secretary's discretion, they could support maintenance and administration of Trust properties. The act authorized appropriations of not more than $2,000,000 in fiscal 1967 and not more than $10,000,000 in each of the three fiscal years following.
The favored status given the National Trust in the act reflected its key role behind the legislationa role stimulated by the prospect of federal funding for its own activities. This involvement meant that the Trust was ready and waiting for the first appropriation before the states knew what was afoot, generally speaking. When it came$300,000 in fiscal 1968the Trust got it all.
On May 24, 1967, Hartzog wrote all state liaison officers seeking "letters of intent" as to how much they would be requesting for surveys and planning in fiscal 1969. By the following March 40 states had responded with requests totaling $1,754,263, an average of $43,857 per state. The sum proved wildly optimistic. President Lyndon B. Johnson's 1969 budget proposed $680,000 for grants only about a third of the previous year's request. The House voted to repeat the 1968 appropriation; the Senate cut it to zero. In conference they compromised on a token $100,000. The National Trust got $17,500 of this negligible outlay; the $82,500 balance had to be spread among all the states.
The fiscal 1970 appropriation, the last under the original authorization, was a relatively respectable $969,000. This was still less than 10 percent of the amount authorized for the year, however, and the Trust got $300,000 of itnearly a third. The Department of Housing and Urban Development was providing more support for community historic preservation in these years than the National Park Service.
The extremely modest support to the state programs prompted action on two fronts. A group of southern SLOs, joined by Bill Murtagh, met in May and June 1969 to discuss common concerns and form the Southern States Liaison Officers Council. Milo Howard of Alabama, chairman of the body, then invited all SLOs to convene at the annual meeting of the American Association for State and Local History in St. Paul that August. There was born the National Conference of State Historic Preservation Officers (so called beginning in 1973). The Service actively encouraged and welcomed this organization as a lobby for increased grants funding and as a means of facilitating communication with and among the state program leaders.
Within the Service, Hartzog saw his new program as threatened with extinction orequally badremoval to HUD or elsewhere without appropriations to sustain it at something closer to the authorized levels. In 1970 Congress extended the funding authority for another three years, authorizing $7,000,000 in fiscal 1971, $10,000,000 in 1972, and $15,000,000 in 1973, after Hartzog demonstrated his commitment by shifting some $5,000,000 from road construction to the grants program in his 1971 budget request.  The grants appropriations rose to $5,980,000 in both 1971 and 1972 and $7,505,000 in 1973, exceeding the administration's budget request by $1.3 million in the latter year.
Congress reauthorized funding again in 1973, allowing $15.6 million, $20 million, and $24.4 million in fiscal 1974, 1975, and 1976. Appropriations of $11,505,000, $20 million, and $20 million followed, in each case matching the administration's request.  The increasing appropriations reflected Hartzog's successful strategy (fruitful beyond his departure at the end of 1972) and the growing constituency for the program among its actual and potential beneficiaries as the money reached significant levels.
Survey and planning grants went largely for staff salaries, travel, and other personal services required to identify historic properties and nominate them to the National Register. The acquisition and development project, or "bricks-and-mortar," grants held greater potential for constituency building and could be used to fund work on properties owned by state and local governments as well as private parties. The problem with these appealing grants was that, under the law, they had to accord with comprehensive statewide preservation plans approved by the Secretary of the Interior (in reality, OAHP). And the Service grants manual issued in 1968, reflecting the legislative history, prescribed the statewide survey results as the first volume of the state plan. If taken seriously, this meant that a state could receive no project grants until it had identified and nominated virtually all its eligible properties.
Because no state had the remotest prospect of meeting this requirement, it was not taken seriously. Charles E. Lee, the South Carolina SLO, later recalled a meeting with Ernest Connally on May 23, 1969, at which the OAHP chief exercised his creativity:
The idea that grants funds could be applied to preservation and restoration work on private properties caused some controversy. At the House subcommittee hearing on the proposed legislation in July 1966, Rep. Richard C. White of Texas suggested that the law should preclude a private owner selling his property from retaining any profit attributable to improvements made with grants money. George Hartzog assured him that the Service would promulgate regulations to this effect, requiring that any such profits be reimbursed to the government. A year later, the first draft of the Service's grants manual would have virtually banned assistance to private properties. "No assisted property may be used to conduct a profit making enterprise, or be used as a private residence, or for other private purposes, even though partially or wholly open to the public," it stated. As issued in July 1968, the manual lacked these strictures but required "use and maintenance of the property for historic purposes." 
The act itself specified private organizations and individuals among the beneficiaries of project grants and required only that assisted preservation projects be "for public benefit." Bill Murtagh, Jerry Rogers, and others eager to maximize the impact of the program argued for a liberal interpretation of public benefit that would extend to private properties in any use without recovery of profits thereon. They successfully pressed the concept that public benefit was sufficiently realized by the preservation of historic properties, regardless of any subsequent financial gain to their owners. 
There was general agreement that public benefit implied at least some public access. Exterior work visible from a public way met this condition. Interior and exterior work not visible from a public way posed a problem. Bernard R. Meyer of the Interior Solicitor's Office thought that interior work should be funded only if a property would regularly be open to the public. Murtagh saw this as inconsistent with the "new preservation," aimed at keeping properties in use rather than maintaining them as museums. A compromise was reached: properties improved by work not visible from a public way would have to be opened to the public at least 12 days a year.  This rule appeared in the 1972 edition of the grants manual, which dropped the requirement that assisted properties be used "for historic purposes."
The access provision, where applicable, became part of the legal covenants required of all private grants beneficiaries to protect the public investment in their properties. Attached to the property deeds, the covenants required owners to maintain their properties without substantial alteration for prescribed periods, depending on the amount of the federal contribution. In 1980 the maximum period was reduced from 40 to 20 years. The states were required to monitor compliance.
In practice, private parties did not benefit heavily from grants funding, especially in the early years when the states themselves cornered much of the money. In 1975 Robert Rettig reviewed what he saw as a changing situation: "Many states saw the grants program initially as a way of financing the restoration of state-owned historic sites, but this approach is being supplanted in most states by a more broadly based grants program involving local governments, individuals, and organizations throughout the state." The trend was fostered by the way in which the annual grants appropriation was apportioned among the states. States had to submit apportionment warrants reporting their capacity to match federal funds. Because a state's apportionment was related to its matching capacity, it was motivated to involve a wide range of National Register property owners to boost its warrant total. Having solicited their involvement, it could not easily revert to keeping all the money for its own properties. 
In January 1974 Secretary of the Interior Rogers C. B. Morton advanced "Project Protection" as a balance to "Project Independence," the current thrust to increase domestic energy production and curb dependence on foreign sources. Project Protection would allocate revenues from outer continental shelf oil leases to activities that would aid conservation and fight unemployment. Taking advantage of this planning opportunity, Ernest Connally, assisted by Bill Murtagh and Jerry Rogers, conceived a scheme for spending $400 million per year for 10 years to identify and preserve historic properties. 
The plan, written by Rogers, had four major elements:
The Nixon and Ford administrations ultimately judged inflation a bigger threat than unemployment, and the big spending for Project Protection did not materialize. The historic preservation planning exercise nevertheless had significant consequences. Rogers later recalled its impact:
OAHP had been reviewing in detail the plans and specifications for every grant-supported project, a practice that brought complaints of nit-picking from some SHPOs and that clearly could not continue as the program grew. Rogers sought to devise a system whereby preservation projects could avoid such scrutiny at the federal level. Federal standards and guidelines for projects, supplemented by technical information, under-girded OAHP's move in this direction. Developed by W. Brown Morton III, Lee Nelson, and Gary Hume, they "took preservation from the province of in-group experts and explained it to ordinary people" in easily understood language, employing a "do and don't" format.  With the standards in place, states with demonstrated professional review capability were eligible for "expanded participation" in the grants program after 1976: no longer did they have to submit project plans and specifications for OAHP approval.
The second element of the Project Protection exercise was reflected in the 1976 legislation amending the 1966 act. This enactment established a Historic Preservation Fund in the United States Treasury, patterned on the Land and Water Conservation Fund, which would receive outer continental shelf oil leasing revenues: $24.4 million in fiscal 1977, $100 million in each of fiscal 1978 and 1979, and $150 million in fiscal 1980 and 1981. It also authorized but did not mandate 70 percent federal contributions for state survey and planning work. 
This earmarking of revenues at unprecedented levels still did not mean that the dollars would be forthcoming in appropriations. At the March 1977 Senate hearings preceding his confirmation as assistant secretary of the Interior in the Carter administration, Robert L. Herbst pledged support for full funding of the grants program in fiscal 1978 at the authorized $100 million level.  In fact, the administration requested only $17.5 million for 1978, the same amount appropriated for 1977 and half of what the outgoing Ford administration had sought. Congress responded by appropriating $45 million.
For 1979 the administration requested $45 million and Congress appropriated $60 million. That proved to be the high water mark. While the last two Carter budgets held constant at $45 million, appropriations declined to $55 million in fiscal 1980 and $26 million in 1981.
The Endangered Historic Resources Fund idea bore fruit in fiscal 1978, when $1,000,000 of $2,005,000 held from that year's appropriation in the Secretary's Discretionary Fund went to the National Trust as a matching grant for its use in aiding threatened national historic land marks. According to Ernest Connally:
The Secretary's Discretionary Fund from which this allocation was made was rooted in the demise of criteria that the states were supposed to use in ranking their project funding requests. For most of the decade the SHPOs had been asked to give priority to (1) endangered national historic landmarks, (2) other endangered properties in urban areas whose loss would seriously affect the environment, (3) endangered properties outside urban areas whose loss would seriously affect the environment, and (4) properties not threatened but in need.
Consistent with its decentralizing approach, OAHP had lately dropped the criteria and allowed the states virtual freedom in project selection. Rep. Sidney R. Yates, chairman of the House subcommittee on Interior appropriations, feared this laxity would lead to government funding of projects at "every old jail in the West."  In a memorandum defending the new course, Jerry Rogers called the old criteria "somewhat outdated" and observed that they "did not allow for consideration of positive benefits that could accrue from restoration of a property not in clear and present danger." He continued:
For fiscal 1978, OAHP developed six "national objectives" and asked the SHPOs to spend at least half their acquisition and development grants on projects meeting one or more of them. They were broad enough to place little constraint on the states' discretion. The first objective was revitalization of National Register districts through public/private cooperation; last came national historic landmark preservation. Here the Secretary's Discretionary Fund came into play, to serve the federal interest in properties of national significance. The balance of the fund not going to the National Trust for endangered landmarks went for "challenge grants" to special projects of demonstration value.
The National Historic Preservation Act Amendments of 1980 included specific authority for the discretionary fund and specified that the Secretary could make direct grants from it for threatened landmarks, demonstration projects, preservation training, and the prevention of displacement from historic districts. Sharply reduced appropriations in succeeding years precluded such grants, however, and the Endangered Properties Fund arrangement with the National Trust was discontinued in 1983.
State revolving funds, the final Project Protection element, were attempted in a few states. Absent the hoped-for dollars, the concept was not pressed heavily.
Project grants became subject to other special emphases and prohibitions at various times. In 1977 the assistant secretary of the Interior for program, budget, and administration questioned the propriety of grants money going to state capitols and other state and local government buildings.  The Interior appropriations acts for fiscal 1979 and 1980 reflected this concern by denying funds to state and local government buildings used for government purposes. The 1979 act also earmarked $5,000,000 of that year's appropriation for the preservation of ships and other historic maritime resources.
SHPOs voiced displeasure with these legislative directions. While some objected to the restriction on funding government buildings, more expressed concern about the special provision for maritime preservation. This earmarking reduced the amount available for general apportionment, favored an aspect of preservation unimportant in many states, and departed from the concept that the states should set the priorities. 
After signing a bill establishing San Antonio Missions National Historical Park in November 1978, President Carter stated his opposition to "the use of Federal funds to rehabilitate or restore structures that remain active parish churches." He was referring to park development at the San Antonio missions, but his statement precipitated a review of grants to religious properties under the National Historic Preservation Act. As of mid-1979, 181 such properties had received $3,789,757 in grants. The Solicitor's Office opined that this support was probably constitutional, but with reservations. The grants guidelines were amended to stipulate that benefiting churches had to be on the National Register for reasons other than religious significance (already required by the Register criteria) and that grants could support work only in areas accessible to the general public. A new rule in 1984 prohibited any assistance to active churches, but by that time the issue was academic. 
It became so because acquisition and development project grants ceased altogether in fiscal 1982. Their termination was influenced by several factors, including deficit reduction pressures and the use of tax incentives as an alternate means of supporting preservation.
A 1979 staff report of the House Appropriations Committee observed that as the National Register had grown, the amount of money allocated per project had shrunk. Noting the increased workload of the SHPOs in reviewing federal undertakings under Section 106 and projects proposed for tax benefits, it suggested that grants funding might better be devoted to the survey and planning functions that supported the state staffs. These basic functions were less likely to proceed without grants than were bricks-and-mortar projects. 
The National Historic Preservation Act Amendments of 1980 retained the authorization for project grants and included provisions to facilitate their administration. The 1966 act had been interpreted to require at least a 50 percent match from nonfederal sources for each project. Now a state could aggregate its projects, enabling some to receive funding with a lesser contribution. The legal recognition granted the state programs in the 1980 Amendments also enabled the Park Service to make programmatic or consolidated grants to the states without the need for applications detailing every project. At the same time, the new legislation displayed favoritism to surveys by mandating 70 percent federal sharing in their costs.
The 1980 Amendments continued the annual addition of $150 million to the Historic Preservation Fund from fiscal 1982 through 1987, but appropriations stayed close to the 1981 level of $26 million, about $5 million of which went annually to the National Trust. Project grants were no longer deemed viable at this funding level with the great number of properties now eligible for them. Congress therefore halted this aspect of the program beginning with the 1982 appropriation, after some 7,700 individual grants had been awarded. 
Among the recommendations of the Special Committee on Historic Preservation in With Heritage So Rich was "income tax deductibility to private owners of registered historic properties for preservation and restoration expenditures within appropriate limitations."  This idea of fostering preservation though the Internal Revenue Code found no place in the 1966 act or its amendments (where it would not have belonged in any case), but it would have a profound effect on the national preservation program beginning with tax legislation enacted a decade later.
Following the Special Committee's report, the tax benefit concept next arose in 1970 within the Council on Environmental Quality task force whose recommendations led to Executive Order 11593 (see page 37). President Nixon's 1971 environmental message stemming from these recommendations proposed more favorable tax treatment for commercial rehabilitation of historic properties, enabling their owners to derive the same advantages from rehabilitation as the tax code allowed for new construction. In 1973 Sen. J. Glenn Beall, Jr., of Maryland introduced legislation to install such a provision in the tax code. With the effective lobbying of Preservation Action, formed in 1974, Congress included Beall's provision in the Tax Reform Act of 1976. 
The preservation incentives in this act were expanded and altered in subsequent tax legislation, notably the Economic Recovery Tax Act of 1981, which offered a 25 percent investment tax credit for the substantial rehabilitation of historic commercial, industrial, and rental residential buildings. In general, realization of these tax benefits required Park Service certification (1) that the structure to be rehabilitated was listed individually in the National Register or contributed to the significance of a historic district in or eligible for the Register and (2) that the rehabilitation work was consistent with the historic character of the structure. By 1986 the Service had approved more than 15,600 projects with a total rehabilitation value likely to exceed $10 billion.
The preservation tax incentives had several consequences beyond these impressive figures, some of which have been alluded to previously. Among them:
Not surprisingly, SHPOs protested the reduced funding and the administration's efforts to end the grants program altogether. They argued, correctly, that the tax benefits were no help to non-revenue-producing properties. They also contended that they should be compensated for the staff work they did in support of the national program: nominating properties to the National Register, reviewing and commenting on federal agency undertakings under Section 106, reviewing and commenting on rehabilitation projects for federal tax benefits. "Although the funding allocated to this program has decreased considerably from what was allocated in the late 1970s, the federal government, i.e., the National Park Service, has increased the requirements and demands on the states dramatically beyond what we coped with in the late 1970s," the Kansas SHPO complained to Rep. John F. Seiberling. "There seems to be some perverse logic at work that as the funding drops the demands on the states must increase." 
The administration took the position that grants had been justified to get the state historic preservation offices and programs going, but because preservation most benefited the states and localities, they should now be willing to continue these programs without direct financial aid. From this perspective, the states were essentially serving themselves in nominating properties to the Register and reviewing federal undertakings and tax act projects within their jurisdictions. An April 1986 letter to the governor of Virginia summarized this position:
Accustomed to federal aid, state program participants were unlikely to accept this argument. Most surely realized, however, that no administration would favor substantial grantsnor would Congress vote more than token appropriationsso long as deficit reduction remained a paramount national objective. For better or for worse, it would fall to the states and localities to weigh the social and economic benefits they derived from preservation and decide whether and to what extent they wished to offset the decrease and possible disappearance of federal money. Success in obtaining state and local funding would come to those best able to portray the benefits of preservation at these levels.
In a 1986 article prepared for The Public Historian, Jerry Rogers suggested one approach that preservationists might take in lobbying their state legislatures:
The tax incentives, of course, were also vulnerable to termination. They represented a substantial federal "tax expenditure" in terms of foregone revenues, and they were a complication and loophole in the tax codeboth negatives when deficit reduction and tax simplification vied for top billing on the nation's domestic policy agenda. Although the Reagan administration favored the tax incentives, the tax reform package it advanced in 1985 sacrificed them to the goal of simplification. Preservationists lobbied successfully to retain somewhat reduced benefits in the tax reform bill approved by a House-Senate conference committee and embraced by the administration in August 1986. The survival of preservation incentives in the new tax legislation was clear evidence of their bipartisan popularity.