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Cotuit

Historic Tax Credit Program at Risk

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Providence Business News article on state's historic tax credit program:

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That's excellent to read. It's such a great program that it's bound to offend someone's ideological sensibilities who'll try to get it killed despite all the good it's doing...

- Garris

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http://www.projo.com/opinion/editorials/co...ax.1c9d554.html

"A tax credit for restoring historic buildings has proven one of Rhode Island's best moves in recent years. It has spurred development, created jobs, added to local and state tax revenues, and saved architectural gems -- helping to preserve both the state's famed beauty and its economic vitality.

Yet the credit is now under attack in the General Assembly."

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As we've been discussing recently, the Historic Tax Credit is up for repeal. Of course there are two sides to this issue, and I'd really like to hear both of them. GrowSmartRI and Preserve Rhode Island will be launching a campaign soon to help save the tax credit, more information will be posted on that soon in this thread.

Tax break may be too expensive. Governor Carcieri looks to reduce the tax credit given to developers who renovate historic properties. [ProJo.com]

GrowSmartRI

Preserve Rhode Island

From GrowSmartRI's e-advocacy campaign:

Historic Tax Credit Program Once Again at Risk

Motivated to safeguard a program that is widely regarded as achieving multiple statewide objectives, a growing coalition is urging residents and businesses to voice their support and mobilize action at the local level

February 17, 2006, Providence, RI

Backers of the popular program include the business community, municipal leaders, preservationists and environmental and affordable housing advocates. Still, Rhode Island's nationally acclaimed historic tax credit program has once again become a target due to the short term fiscal concerns.

With the budget process just getting underway, it has been reported that the Historic Preservation Investment Tax Credit program may be reduced. This should concern anyone who values the success that this program has achieved in expanding our economy, revitalizing neighborhoods, cleaning contaminated brownfield sites and creating sorely needed housing and commercial space - all while curbing sprawl.

A Call to Action

With historic tax credit projects now underway in 21 Rhode Island communities, Grow Smart urges all concerned citizens to contact elected officials asking that they continue to support a program that has demonstrated its value.

Check out the projects in your community and let your local officials know about the importance of maintaining a strong historic preservation tax credit program.

Key Points:

  • The Historic Tax Credit program is the single best economic development and neighborhood revitalization tool that Rhode Island has seen in decades. Since its adoption in 2002, no other economic development tool has resulted in more investment in as many individual communities, large and small, than RI’s Historic Preservation Tax Credit program.

  • The Historic Tax Credit provides a direct cash infusion into state and local budgets. It is generating $5.47 in economic output for every dollar of tax credit issued. As of July 1, 2005, the program has stimulated $859 million of private investment in 189 projects statewide, returning underutilized property to local tax rolls, revitalizing neighborhoods and providing much needed housing and office space.

  • The State’s very substantial short and long term returns on its tax credit investment are not measured in the state budgeting process. Nor are the considerable economic benefits to many of Rhode Island’s cities and towns. The Tax Credit program is estimated to boost local property tax revenues by $8.97 million annually. The present value of that revenue stream is at least $179.4 million.

  • Tax credits are awarded only AFTER a project is complete. Therefore state and municipal governments receive significant benefits from the investment BEFORE any credits are awarded.

  • The Historic Preservation Tax Credit helps revive economically disadvantaged neighborhoods in urban, suburban and rural communities. In fact, based on a 2005 Grow Smart RI analysis, 75% of the projects enrolled in the program and 83% of the associated investment in such projects are occurring in neighborhoods with a median household income below the statewide average.

  • Let’s not slam the door on communities outside of Providence just as the full benefits of the program are starting to reach them. Now that the tax credit program has been in place for 4 years, many of these communities are just starting to see the benefit of its potential. From Woonsocket to Westerly, 21 communities now have tax credit projects. Find the projects in your community.

  • The tax credit program plays to Rhode Island’s strengths and that’s smart economic development. At the same time the program is improving environmental conditions by providing the necessary financial support to clean up contamination found on many of the historic sites being redeveloped. It is also addressing a major public safety issue by transforming vacant fire hazards near residential neighborhoods into dynamic, attractive residences and offices.

  • We shouldn’t squander one of our few competitive advantages over our neighboring states. Massachusetts is now seriously considering an expansion of its own historic tax credit program.

  • For the tax credit program to continue producing major benefits and investment, we need to make the program more stable and predictable. The current uncertainty about the program’s future is halting the progress of several major projects already underway. If investors lose confidence in RI’s historic tax credit program, developers will not be able to raise the capital to move these projects forward.

  • The historic tax credit program benefits many different kinds of people and groups as reflected in the broad coalition that backs it – Chambers of Commerce, affordable housing advocates, developers, the business community, historic preservationists, neighborhood associations, mayors and environmentalists.

Unless otherwise noted, the above data is based on a study performed by the real estate consulting and investment firm of Lipman, Frizzell, and Mitchell completed in March 2005, based on 111 projects enrolled in the program through September 2004. Items noted in italics have been updated as of July 1, 2005.

For more information on this campaign, please click here. Thanks to John Flaherty at GrowSmartRI for providing this information.

taxcredit4.gif

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I can see restricting the credit to properties located in economically distressed areas such as enterprise zones. One can make the case that it is not be necessary to use the credit for renovations to the Hope Club but it should definitely be in place for projects such as the Paramount Cards mill where there is a clear need for economic development.

On the other hand, there is no doubt beyond whether a given project is located on College Hill or the Central Falls line that the credit is a major counterweight against sprawl. In light of America's unsustainable dependence on foreign oil, almost any measure that helps to curtail sprawl is probably worth whatever short-term costs.

As we've been discussing recently, the Historic Tax Credit is up for repeal. Of course there are two sides to this issue, and I'd really like to hear both of them. GrowSmartRI and Preserve Rhode Island will be launching a campaign soon to help save the tax credit, more information will be posted on that soon in this thread.

Tax break may be too expensive. Governor Carcieri looks to reduce the tax credit given to developers who renovate historic properties. [ProJo.com]

GrowSmartRI

Preserve Rhode Island

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As the below article from the latest Providence Business News illustrates, just the possibility of a repeal is already hurting the local economy--developers are standing on the sidelines. It's not only the projects that get cancelled (e.g. Paramount Cards) that we need to worry about, but even more so the projects that are never even considered because of the new questions surrounding the tax credits.

As a State, we need to get this FUD (fear, uncertainty, and doubt) behind us as quickly as possible so as to minimize its negative effects.

The damage is being done right now! :w00t::cry:

Potential tax credit cuts worry local developers

BY RYAN MCBRIDE

[email protected]

Please do not reproduce news articles in full. Please provide a link

-Cotuit

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I've added more information about the campaign to retain the Historic Tax Credit to the first post of this thread.

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Good Projo editorial:

http://www.projo.com/opinion/editorials/co...es.2eb256e.html

You can email state leaders on the subject by going to:

http://www.growsmartri.com/special%20pages...edit021706.html (scroll down)

They probably won't respond, but that doesn't mean they don't hear you. Typically, politicians start to react when they get a critical mass of phone calls/emails that is lower than you might think.

PS-I used the growsmart email link to send my comments to the politicians but the list automatically gets formatted without spaces between the individual addresses so I had to manually separate them. :wacko:

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Good Projo editorial:

http://www.projo.com/opinion/editorials/co...es.2eb256e.html

You can email state leaders on the subject by going to:

http://www.growsmartri.com/special%20pages...edit021706.html (scroll down)

They probably won't respond, but that doesn't mean they don't hear you. Typically, politicians start to react when they get a critical mass of phone calls/emails that is lower than you might think.

PS-I used the growsmart email link to send my comments to the politicians but the list automatically gets formatted without spaces between the individual addresses so I had to manually separate them. :wacko:

Not only should the tax credit be preserved, but the processing fee should be rolled back to what it was before last year's increase. Obviously, the fee increase has had no appreciable effect on revenues since the state is still facing a budget deficit this year and beyond.

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As the below article from the latest Providence Business News illustrates, just the possibility of a repeal is already hurting the local economy--developers are standing on the sidelines. It's not only the projects that get cancelled (e.g. Paramount Cards) that we need to worry about, but even more so the projects that are never even considered because of the new questions surrounding the tax credits.

As a State, we need to get this FUD (fear, uncertainty, and doubt) behind us as quickly as possible so as to minimize its negative effects.

The damage is being done right now! :w00t::cry:

Potential tax credit cuts worry local developers

BY RYAN MCBRIDE

[email protected]

Please do not reproduce news articles in full. Please provide a link

-Cotuit

Ooops--sorry about that--I obviously got carried away by my passion about the historic tax credit issue.

Unfortunately, the article isn't easily linked to. If you go to providencebusinessnews.com and click on the electronic subscriptions link on the right you should be able to find it on page 5 of the most recent issue (for a limited time, PBN is offerring free access to its electronic subscription).

Here's a choice excerpt:

Ranne P. Warner, who recently completed the Riverfront Lofts, a historic mill rehabilitation in downtown Pawtucket, said she

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Journal backs movement to save the historic tax credit.

Save the cranes! [ProJo.com]

Can someone tell me what exactly the argument would be for repealing it?

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Journal backs movement to save the historic tax credit.

Save the cranes! [ProJo.com]

Can someone tell me what exactly the argument would be for repealing it?

For the life of me, I can not. I did however just follow Grow Smart RI's email link and let our leaders know how I feel. Very easy, and felt good. I hope others do the same.

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The argument for repealing it is that the state loses revenue when investors, to whom the credits are sold, cash them in on their tax returns.

The economic benefits of the program are great (and certainly justify the existence of the program) but they are less tangible than the immediate loss of revenue to the short-sighted bean-counters on Smith Hill who are also legally required to balance the budget.

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Did everyone see the spreadsheet that lists all the Tax credit projects? SOme of the projects I didn't know about and some are ones whose status has been less than certain, including the Old Projo Hotel project on Westminster. Evidently the owners have applied for the credit.

http://www.growsmartri.com/pdfs/Cumulative06-01-20.pdf

Looking at all the projects that are in Providence, it's totally beyond me why Costantino would ever even consider messing with it.

Costantino has been one of the most vocal over the past couple of years about repealing/reducing it. He might listen to his constituents on the matter.

Fox (my rep) was one of the sponsors of the Tax Credit but now he's waffling. I'm going to give him an earfull this week!

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This program is definitely savable if sustained pressure is applied to our lawmakers. There are approximately 4 months between now and the end of the legislative session. Organization will be important, obviously. It's good that Grow Smart RI is leading the call for action, but we need the preservation and neighborhood groups involved as well (isn't there someone on our list from Preserve RI)? Is Grow Smart reaching out to WBNA, South Providence Neighborhood Groups, Hopkinton First, Middletown First? Those community groups would do well to join the cause because the anti-sprawl effect of the program would benefit them.

Another possible contact to make is with the trade unions. Their members receive work that the credit generates. Also, the local building suppliers need to be reached out to since their business is tied to the credit being able to generate the refurbishment of historic structures. Any contacts with them in this group?

Affordable housing. I'm thinking One Rhode Island or Ocean State Action. Can they cite any affordable housing that has been created?

Also, the lawmakers seem to be able to cite the cost of the credit fairly easily. There must be an easily citable tax revenue figure as well, yes?

Just a stream if consciousness of ideas at this time. I'm sure these and other ideas will be bandied about at the next meeting as well as in this thread.

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Governer Carcieri created the Office of Tax Research and Analysis by Executive Order 05-17. He should charge this office with studying the impact of the Historic Tax Credit program vs other aspects if the state's tax policy and base the decision on its findings. It might present the state for some more options at closing the operating budget gap. If you are going to create a new level of government that could add value in this instance, by all means use it.

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It's good that Grow Smart RI is leading the call for action, but we need the preservation and neighborhood groups involved as well (isn't there someone on our list from Preserve RI)?

PreserveRI is already a partner on this with GrowSmartRI.

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For what little it may add, I'm going to ask the Wayland Square Neighborhood Association if they want to formally come out and back the continuation of the tax credit...

- Garris

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ProJo Business article about historic tax credit.

Historical tax credits under fire. Developers who renovate old mills and historic buildings are worried about Governor Carcieri's proposal to reduce the preservation tax break. [ProJo.com]

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