An enhanced Historic Rehabilitation Tax Credit is expected to breathe new life into the state's historic downtown areas while creating jobs and providing a boost to the economy. Governor Paterson held a ceremonial bill signing at the Buffalo and Erie County Historical Society yesterday.
While New York's preservation tax credit was adopted in 2006, the program did not provide adequate incentives to attract sufficient investment to struggling municipalities, particularly those upstate. The expanded rehabilitation tax credit program provides incentives to developers, municipalities, businesses and residents to make investments in distressed areas by rehabilitating historic properties that are listed on the State and National Registers of Historic Places.
"This law will result in significant investment in our struggling Upstate cities, both in the downtowns and the neighborhoods," says Assemblyman Sam Hoyt. "Buffalo, with her great inventory of historic buildings, will likely benefit more than any other city. In addition to restoring our historic buildings, this bill will create real jobs, revitalize our downtowns and stabilize our neighborhoods."
The enhancements signed by Governor Paterson will provide the following tax incentives for qualified historic properties:
• Gradually increase over five years the cap on the commercial credit value from $100,000 to $5 million and the residential credit value from $25,000 to $50,000;
• Target the credit in "distressed" areas -- those located within a Census tract identified at or below one hundred percent of the median family income;
• Increase the share of qualified rehabilitation costs that commercial property owners can claim for the credit from 6 percent to 20 percent; and,
• Offer the Preservation Tax Credit as a rebate for lower-income homeowners to provide them with a stronger financial incentive with relatively smaller tax liability.
The program will apply to taxable years beginning January 1, 2010, and will sunset in five years on December 31, 2014. Benefits are limited to properties on the city, state or national registry of historic places. The City of Buffalo currently has twelve historic districts and over 4,500 historic properties on the various registries.
"The expanded commercial historic tax credit will undoubtedly result in the adaptive reuse of significant buildings that might otherwise be demolished," says attorney Steven J. Weiss, partner in law firm Cannon, Heyman & Weiss, specializing in tax credits, affordable housing and community development law.
"While there is a cost of a tax credit to the State, the State is actually the winner here, beyond economic development and increasing jobs," explains Weiss. "First, the credits are one of a number of resources that come into play, so the State isn't footing the entire bill. Second, the syndication of credits will necessarily bring third-party investor oversight and accountability. Third, the incremental additional administrative cost to run this program is nil as the State Historic Preservation office is already obligated to do this work for the federal credit."
"Finally, the State has absolute assurance and certainty that the work will be done to federal Department of Interior standards before the credits flow to the owner, and in this regard the State investment is the last money in the deal," says Weiss. "This incentive makes sense from every angle."
WCP, thank you for the post and clarification. Do you know if the tax credit for improving income producing property is being raised from 20%?
From Steve Weiss:
The % is being raised from 6% up to $100,000, to 20% up to $5M