Statewide Preservation League Pushes for Increased Preservation Incentives
In 2006, New York State became the 28th state in the nation to enact a tax incentive to encourage the rehabilitation of historic commercial and residential properties.
A report recently released by the Brookings Institution suggests that such preservation tax credits can play an important role in returning struggling municipalities to prosperity.
The report, titled Restoring Prosperity in Older Industrial Cities, places the economic challenges of New York’s once-thriving cities in a broader regional and national context.
“As go cities, so goes the state – and as New York’s statewide preservation organization, we are strong advocates for policies to help revitalize cities and neighborhoods,” said Jay DiLorenzo, President of the Preservation League of New York State. “As the Brookings Institution study points out, reinvesting in our cities offers real hope of building sustainable neighborhoods for people of all income levels, and is more fiscally prudent at every level of government than many current land-use strategies.”
The Preservation League, which championed the effort to establish a preservation tax credit in 2006, is now leading a broad coalition to seek changes that will expand the program’s use. Senator Frank Padavan (R-C, Bellerose) and Assemblyman Sam Hoyt (D-Buffalo, Grand Island), are sponsoring the legislation (A.7935 / S.5425).
“Thanks to the leadership of Senator Padavan and Assemblyman Hoyt, the New York State Rehabilitation Tax Credit will be expanded to better serve municipal redevelopment and economic development goals in New York State,” said Daniel Mackay, Director of Public Policy for the Preservation League. “These enhancements will ensure that this program will match the economic and community redevelopment successes stimulated by such programs in other states, and we urge the Assembly and Senate to act swiftly to approve these bills.”
The Preservation League has been working with business, planning, philanthropic and environmental leaders from across the state to develop policy recommendations that could be implemented as part of a new urban and smart growth agenda emerging from the Brookings Institution report. An expansion of the rehabilitation tax credit was identified as a priority.
Recommended changes include:
Increase the commercial credit rate to 30% of qualified rehabilitation costs rather than 30% of federal credit value;
Remove the cap on the value of the commercial credit;
Create the ability to assign, transfer, or convey the commercial tax credits so that developers and financial interests without New York State Tax liabilities have additional incentive to invest in New York State projects; and
For the residential credit, expand the definition of “distressed areas” to increase the number of neighborhoods qualified for the program.
“The tax credit adopted in 2006 was a positive first step, but the Preservation League is already discussing the need to enhance this program with the administration of Governor Eliot Spitzer so that more communities can benefit,” said Mackay. “At least 26,000 additional residential buildings across the state would be eligible for incentives if these modest changes were implemented.”
According to DiLorenzo, rehabilitation tax credits have a demonstrated record of success in other states. “They encourage the preservation of important cultural and historic heritage, create incentives for the re-use of existing physical infrastructure, address affordable housing needs, and have proven to be highly effective at stimulating private investment in the redevelopment of urban cores. New York is well-positioned to seize upon new trends and attitudes which value cities’ special characteristics – and a stronger rehabilitation tax credit could be a powerful tool to fuel the revitalization of downtowns and surrounding neighborhoods.”