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Historic Tax Credit back to work for RI; advances for agricultural vitality; Transit funding reform left at the altar… again

Grow Smart RI is very pleased that the General Assembly recognized the value of investing in our incredible collection of historic buildings and neighborhoods by restoring in modified form the State Historic Tax Credit. We also applaud the General Assembly for supporting the Governor’s budget provision that provided some initial funding for technical assistance to farmers and fishers, and for easing the estate tax burden for farm families.

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We are, however, disappointed that the Assembly chose not to seize several other opportunities to advance sustainable economic growth. Of particular concern was the Assembly’s lack of action on the proposal we and the Coalition for Transportation Choices have been pushing for several years to provide a new , non gas tax source of dedicated funding for RIPTA. We also were disappointed by the Assembly’ decision not to adopt the Governor’s proposed significant increase in the state’s current meager tourism promotion budget.

As a state we still clearly have a way to go to marshall the political will to adopt a systematic, asset based economic development strategy. For the next year, we urge the Assembly to build on its bold Historic Tax credit restoration action by expending more energy on how to invest prudently in our key assets and less energy on how to move the boxes on the state’s economic development organizational chart.

KEY LEGISLATION


State Historic Tax Credit

An intensive multi-year effort by Grow Smart and its allies to reinstate the State Historic Tax Credit finally bore results this year,  with the General Assembly’s approval of FY ’14 Budget Article 22 (Historic Tax Credit). Strong support from House and Senate leadership, extensive work by tax credit champion Representative Jay O’Grady and a willingness by different interests to work towards consensus were all essential to the Tax Credit’s passage. The Article as finally approved will make available approximately $34.5 million in credits from projects abandoned under the old program. The new program’s provisions include a $5 million per project credit cap, a base credit of 20% of qualified rehab expenses (QREs) and a credit of 25% of QREs for projects with 25% commercial space, and a requirement that projects with hard construction costs of $10 million or more have apprenticeship programs. (Grow Smart worked earlier in the session with labor to make the original apprenticeship proposal more inclusive and we concluded that the Apprenticeship section as passed represented a reasonable compromise.) In the months ahead we expect to continue working with our coalition partners to serve as an information clearinghouse for HTC stakeholders on the new program, to influence the content of regulations for the new program, and to chronicle the new program’s successes as part of our push for a new round of funding once the $ 34.5 million in credits abandoned from the old HTC program is all reserved. These credits may all be spoken for within a year to year and a half.


Transit Funding Reform

H-5073 | Failed

The House leadership budget that was approved by the General Assembly once again failed to include sustainable funding for the Rhode Island Public Transit Authority (RIPTA).  This is especially disappointing because it was stated as one of the Speaker’s top 3 priorities for this session of the General Assembly. RIPTA’s reliance on gas tax revenues — which go down when fewer people drive and more people take the bus — ensures that as ridership increases, RIPTA won’t have the money to sustain its fleet and provide the services the public wants. Three years of testimony from transportation experts, advocates and businesses failed to persuade the Legislature to support the Public Transit Investment Act put forward by Rep. Jay O’Grady, which would have provided new funding earmarked for RIPTA in the Transportation Trust Fund. Despite overwhelming support from a diverse cross-section of Rhode Island organizations and community sectors who testified over the years for sustainable and predictable funding for transit, the Legislature once again kicked the can down the road.


Agriculture

The Budget includes a $100,000 appropriation to fund the Local Agriculture and Seafood Small Grants and Technical Assistance Fund. This restricted receipt account, created under the 2012 Rhode Island Local Agriculture and Seafood Act, can be used to assist in the marketing of Rhode Island grown agricultural products and local seafood for the purpose of sale and promotion within the state of Rhode Island or United States; (2) Enhance the economic competitiveness of Rhode Island grown agricultural products and local seafood; (3) Provide financial and technical assistance support to organizations and farmers for activities and programs which enhance the economic viability of local agriculture, and support the development of a locally based, safe and sustainable food system; (4) Provide individual farm grants to small or beginning Rhode Island farmers that support the entry or sustainability within the respective industry; (5) Work with the state department of health to further develop and support food safety related programs and standards pertaining to local agriculture and seafood; and (6) Perform other activities necessary to facilitate the success and viability of the state’s agricultural and seafood sectors.

Article 9 | Passed

Article 9 of the FY2014 Budget amends RIGL 44-23-5 Appraisal of Estate to provide that all farmland included as part of an estate and used as farmland shall be appraised at its use value according to applicable federal and state law and not at its full and fair cash value. For many years, one of the major challenges for farmland preservation in RI has been the estate tax levied on a farm when a farmer dies. Until now, working farmland has been assessed at its zoned value rather than at its current use value. Since most farms are zoned for residential or commercial use, a farm’s assessed value often resulted in high estate taxes, creating a situation in which the family was forced to sell farmland to pay the taxes. This amendment helps to address that problem.


Tourism Marketing Investment

Failed

Stripped from Article 1 – As part of the Governor’s proposed budget for FY2014, he recommended increasing Rhode Island’s investment in tourism marketing by $600,000 annually. Grow Smart believes that making this kind of investment in tourism promotion is critical if our state is going to begin playing more effectively to our strengths and competitive advantages in the economic development arena.  Both Massachusetts and Connecticut invest about 20 times as much as Rhode Island in tourism promotion, a multiple several times larger than the extent to which each of these states exceeds us in population.


OTHER LEGISLATION OF INTEREST


Land Conservation

H 5386a | Passed

Requires state and local government agencies that are exercising condemnation via eminent domain to notify onservation easement holders and RIDEM at the same time they notify property owners of their plans for condemnation. This will help to ensure land protected with conservation easements doesn’t, as an unintended consequence, become “a target” for eminent domain projects.


RI Community Preservation Act

H-5633 / S-696 | Failed

These bills attempted to replicate a very successful Massachusetts program which enables municipalities to create a funding stream for capital investment in land conservation, parks, historic preservation and affordable housing. Since the legislation was adopted in Massachusetts in 2000, over 150 municipalities have voted to implement it. Although the bills were not voted out of committee this year, sponsors and advocates plan to promote the legislation again in the 2014 General Assembly.


Slopes Bill

H-5703A / S-544 | Passed

This act provides for the addition of certain definitions relative to “slope of land,” and other terms within the chapters of the general laws relating to zoning and subdivision of land. Notably, slope of land shall not be excluded from the calculation of the buildable lot area or the minimum lot size, or in the calculation of the number of buildable lots or units. The new law now mandates that the entire area within the perimeter of the lot be viewed as what is called “high and dry” and buildable. For example, if a developer wants to build on a 10-acre parcel in a community with a 2-acre minimum lot size, only five single-family homes can be built.  In some towns, any area exceeding a certain rise in height — also known as slope — is excluded from this initial calculation.


Development Setbacks for Wetland and Septic Systems

H-5425 (original) / H-5425a | Passed

The General Assembly has approved a substantially reworked bill that would establish a statewide task force to recommend by 2015 how the state can better manage its natural resources while balancing the need for economic development. The legislation represents a slower, more thoughtful approach to the original bill, which met with stiff resistance from environmentalists and community officials. The earlier version would not have allowed municipalities to have septic system and wetland regulations “inconsistent or in excess of” those of the Department of Environmental Management and the Coastal Resources Management Council.  Nineteen communities currently fall into that category and local officials complained at State House hearings that their natural resources should not be jeopardized by an attempt to establish conformity intended to benefit developers. In a compromise, the bill was revised to direct the state Division of Planning to establish a task force to submit a report to the governor and General Assembly by Dec. 31, 2014. The report is intended to spur legislation that could be introduced in the following legislative session.


An Act Relating to Parks and Recreational Areas

H-5826 | Failed

Would have changed the definition of “owner” to exclude the state and municipalities for the purposes of liability limitations relating to public use of private lands. This proposal would have eliminated municipal and the state liability protection when people are using land for outdoor recreation.  This would have had a dampening effect on how municipalities and the state permit public use of parks and other protected lands.  This has been a recurring proposal that has failed to earn approval.


An Act Relating to Taxation – Levy and Assessment of Local Taxes

S-322a / H 5394a | Passed – Grow Smart urges Gubernatorial Veto

(would prevent a municipality from taxing a new single-family dwelling unit/residential condominium unit at its full and fair cash value for as long as said new dwelling or condominium unit is not occupied, has never been occupied, and is for sale)

Our principal reason for opposing this legislation is that it may have the unintended consequence of discouraging municipalities from using Tax Increment Financing (“TIF”) arrangements to revitalize blighted land and properties . Grow Smart RI has long been a proponent of facilitating the use of TIF’s by municipalities, as evidenced by our work with the League of Cities and Towns and other stakeholders several years ago to exempt most of the revenues designated for TIF’s from the municipal property tax levy cap.


Property tax change for subsidized rental housing

H-5404a / S-207a | Passed – Grow Smart urges Gubernatorial Veto

On July 3rd, the House and Senate passed bills which, if allowed to stand, will increase the amount that a municipality is allowed to charge in property tax for subsidized rental housing developments from 8% to 10% of a property’s gross scheduled rental income in the previous year. This represents a 25% increase over the property tax that can currently be charged. Grow Smart strongly opposes the legislation and has written to the Governor urging their veto for the following reasons:

  • At a time when the state needs more affordable rental housing, this legislation will have a chilling affect on future development and could make it impossible for projects currently in development to move forward.
  • The General Assembly set the 8% rate in 1995, based on careful consideration of the impact that transferability and rent restrictions have on the value of subsidized rental housing. Since 1995, the Rhode Island courts have consistently upheld the 8% rate.
  • This legislation contradicts current state housing policy promoting the creation and continued operation of affordable rental units which has been supported by voter passage of the 2012 Housing Bond and by newly appropriated rental subsidies, both of which were intended to promote the creation and continued operation of affordable rental units.
  • Operators of subsidized rental housing cannot raise rents to cover the increased operating costs resulting from increased property taxes. They are already struggling to operate rental housing on a break-even basis.

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