Efforts to secure an exemption for the NYS Rehabilitation Tax Credit program from the Governor’s and Assembly’s tax credit deferral plan continue, and your final assistance is needed to protect this program from changes that will halt or severely delay rehabilitation projects across New York State. Your making three phone calls to the Governor, Assembly, and Senate can assist the Preservation League and others working in Albany to keep the rehabilitation tax credit program intact and ready to work for Buffalo and New York State.
Governor Patterson proposed – and the NYS Assembly leadership then modified – a plan to defer 30 New York State tax credit programs, pushing state payback on credits earned in 2010 – 2013 out to the 2014 – 2016 timeframe. The Governor proposed a deferral of 50 percent of tax credit value; the Assembly countered with and passed a proposal to defer 100 percent of tax credit value for credits over $2m in value. The Assembly proposal (“Part Y”) applies the deferral per taxpayer, not project, meaning investors in or developers of multiple projects, or users of multiple tax credit programs, will trigger the $2m threshold when their cumulative credits across multiple programs or projects reach that level.
As things stand now, the Assembly has passed Part Y. The New York State Senate has not. And the Governor has not given any indication as to whether the Assembly’s Part Y proposal is acceptable to him. As the Legislature reconvenes this week, we continue to have a chance to keep the rehabilitation tax credit program off the tax credit deferral list.
What’s the impact?
There are concerns statewide that deferring the credit value of the NYS Rehabilitation Tax Credit program will have severe and long-lasting impacts for the program and construction starts for building rehabilitation projects across NYS. Deferring tax credit value will lower the equity value of the credits, meaning less investment in NYS projects, and national investors walking away from NYS development projects for a more predictable financial return in other state. As a result, building projects will be delayed or abandoned altogether.
The NYS tax credit program made significant concessions to the New York’s fiscal situation in 2009: the credit was limited to distressed areas, capped at a maximum of $5m per project, and limited to a 5-year pilot program, to sunset in 2014. None of the other 29 credits proposed for deferral was tailored to accommodate the state’s fiscal situation, yet still provide useful incentives and stimulus.
What’s the plan?
NYS Senate leadership continues to seek a carve out of the NYS Rehabilitation Tax Credit program from the list of thirty programs proposed for deferral. A core of NYS Assemblymembers continue to press for an exemption for this program, even as their House has already passed Part Y.
There are multiple options for the Senate to pass an exemption for this program, and Senate members and staff continue to evaluate the best option for securing approval in the Assembly and from the Governor. Stay tuned – the next week will prove very interesting, and maneuvering will likely continue past the sessions scheduled for this week.
Specific development projects around New York are evaluating ways to work around the proposed deferral plan.
How can you help?
Call the Governor and Assembly leadership to urge them to remove the NYS Rehabilitation Tax Credit program from the tax credit deferral list. Call Senate leadership to support their continuing efforts to save the Rehabilitation Tax Credit.
Leave a message with the contacts below. “The NYS Rehabilitation Tax Credit program is ready to fuel NY State’s economic recovery, but must not be subject to any tax credit deferral plan.” Let these offices know that NYS needs an intact rehabilitation tax credit program.
Governor David A. Paterson: Contact Larry Schwartz, First Deputy Secretary to the Governor: 518-474-8390
Speaker Sheldon Silver: Contact Dean Fuliehan, Secretary, Ways & Means Committee: 518-455-3786
Senate Democratic Conference Leader John Sampson: Contact Paul Rivera: 518-455-2715