State Historic Tax Credits

STATEMENT ISSUED BY GROW SMART RHODE ISLAND

JUNE 13, 2014

Contact:  Scott Wolf, Executive Director, Grow Smart RI, 401-273-5711, Ext. 4

 

Grow Smart RI Reacts to House Budget

Praises leadership for several smart moves, but denounces failure to extend historic tax credit funding

Grow Smart Rhode Island applauds House Speaker Nicholas Mattiello for his leadership this year on behalf of several worthwhile investments in our state’s future prosperity.  These include a more sustainable approach to funding Rhode Island’s mass transit system, approval of the South Street Power Station redevelopment project that will include a joint URI/Rhode Island College nursing school complex, and ballot measures to provide funding for development of new transit hubs, preservation of public historic buildings, capital improvements to major cultural and arts facilities throughout the state, brownfield clean-up, acquiring and upgrading local recreation facilities and the preservation of farmland.

However, we express our deep disappointment in the House’s decision Thursday to pass a State budget for FY’15 that does not replenish funding for the State Historic Tax Credit program. While the House Budget does not end the Historic Tax Credit program, it places in jeopardy the economic viability of a number of the 27 projects currently on the program’s waiting list. As a result we fear that a lot of significant economic investment that was poised to materialize in the state’s urban and town centers will fail to do so.  This will represent a major missed economic opportunity for Rhode Island.

If the State Senate next week accepts the House budget, this will mark the second time within a 6 year period that Rhode Island has suspended funding for the Historic Tax Credit program. This fitful, start-and-stop approach to economic development sends a bad signal to investors and entrepreneurs about pursuing development work in our state. It heightens the already existing perception that Rhode Island changes its rules for economic engagement and public/private partnerships cavalierly and frequently.  That perception can undermine other efforts, such as the corporate and estate tax reforms included in the adopted House budget, to upgrade Rhode Island’s reputation as a good place to do business.

To minimize the negative impact of the suspension of Historic Tax Credit funding, Grow Smart urges the General Assembly leadership to demonstrate quickly its stated commitment to continue the State Historic Tax Credit, a commitment that we obviously applaud.  We hope that General Assembly leaders will seriously consider fast tracking for early 2015 a replenishment of funding for the Historic Tax Credit program.

Grow Smart stands ready to work with the state’s political and civic leaders to address lingering concerns about the Historic Tax Credit program, especially the concern about the role of brokers in the program. Tax credit programs are complex, and across the country, states with successful Historic Tax Credit programs carefully evaluate them and make adjustments as needed. The important thing is that they make adjustments while keeping the programs funded and operating so that property owners and developers can continue to rely on the stability of tax credits when considering the feasibility of future projects.  In fact, our General Assembly already made some key improvements when it re-established the Historic Tax Credit program in 2013.  Perhaps most importantly, there is now a provision in the program that provides an alternative to the common practice of selling tax credits to investors at a discount.  This provision, which is already being used by several projects enrolled in the current Rhode Island Historic Tax Credit program, is modeled after a key component of Maine’s successful State Historic Tax Credit program.

The Historic Tax Credit Program is a powerful economic development tool — let’s make sure that Rhode Island continues using that tool effectively to capitalize on one of our key competitive advantages-our world renowned collection of historic buildings and neighborhoods.

 

Grow Smart RI provides statewide leadership for diverse public and private interests seeking sustainable and equitable economic growth.  We promote such growth by advocating for compact development in revitalized urban, town and village centers balanced with responsible stewardship of our region’s natural assets – farmland, forests, the coastline and the Bay.

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 Historic Tax Credit:  Quick Facts and Talking Points

  • Last year, the State Historic Tax Credit (HTC) program was reinstated with limited funding — and 26 new projects have been approved by Taxation to move forward. However, there are 27 additional projects on a waiting list. Without continued  funding for Historic Tax Credits, most of these projects will not happen.
  • This could  mean the loss of nearly $160 million in construction activity, an investment of jobs and revenue which our economy desperately needs.
  • According to the State Budget Office, the $ 52 million in additional HTC funding proposed by the Chafee Administration would come from bonds already authorized by the General Assembly (back in 2008), bonds that would not need to be issued until FY’18 and that would not result in any interest payments until FY’19.
  • “If it ain’t broke, don’t fix it”! Rhode Island’s Historic Tax Credit program has an excellent track record. From 2002 to 2008, it generated $1.3 billion in new private investment in Rhode Island’s real-estate economy. This resulted in an estimated  22,000 construction jobs, 6,000 permanent jobs, and total wages of more than $800 million.

Rhode Island needs this kind of investment!

 

READ WHY WE NEED MORE FUNDING THIS YEAR

 

READ ABOUT THE ROLE OF BROKERS IN THE HISTORIC TAX CREDIT PROGRAM

JOIN THE 2014 COALITION FOR NEIGHBORHOOD & ECONOMIC RENEWAL (CNER)

The Coalition for Neighborhood & Economic Renewal (CNER) represents all the organizations and businesses that believe that Rhode Island needs continued funding for the Historic Tax Credit.  Last year 110 organizations and businesses signed on to the CNER , and this show of support was instrumental in getting the 2013 Historic Tax Credit Program passed.  If you would like to add your organization or business to the 2014 CNER, please email Grow Smart’s Executive Director Scott Wolf with a simple message “Sign us up for the CNER.”