Sen. Charles E. Schumer’s effort to expand and extend federal tax credits for revitalizing vacant and under-utilized historic buildings is to be applauded. In Buffalo, such icons as the Statler Towers, the AM&A’s building and the H.H. Richardson Complex all need government support, and because of their status as local landmarks, they deserve it.
Schumer is calling for an extension of the federal New Markets Tax Credit, set to expire at the end of the year. The credit, targeted at low-income communities, covers 39 percent of the investment costs for eligible projects. That tax credit has been one of the essential solutions to Buffalo’s redevelopment puzzles.
The senator is also pushing the Creating American Prosperity Through Preservation (CAPP) Act, which would increase the federal historic tax credit from 20 percent of investment costs for smaller projects up to $7.5 million to 30 percent of the cost.
By lowering the cost of entry into the program, historic buildings on New York’s Main Streets and along the Erie Canal corridor in villages such as Medina and Albion will benefit.
Moreover, the CAPP Act will serve projects in New York at no additional cost to the state. And it would eliminate the federal taxation of the proceeds of state credits transferred through partnerships, offering New York State rehabilitation projects greater leverage from our own state rehab credit.
The state historic tax credit is also in need of several critical fixes. The bill raising the state tax credit limit per project from $5 million to $12 million was passed by the Legislature last June. The new limit would allow larger, more complicated projects to proceed, such as the old AM&A’s store on Main Street, a project developer Rocco Termini has said he would tackle if he gets the assistance needed from an increased tax credit.
But even if the governor signs the bill, developers will have just two years remaining to take advantage.
The Legislature has not yet acted on a proposal to extend the program, due to expire in 2014, for five years. And securing the ability to allocate the federal and state credits to separate development partners is critical to attracting new investment to these projects across the state.
Potential developers need both the federal and state credits working together.
Therefore, at minimum, an extension of the state program is just as important to this type of effort in Buffalo as changes to the federal credits.
Both the federal and state governments are facing enormous economic struggles. But it cannot be said too many times: historic tax credits incentivize development, which, in turn, puts people to work and improves local economies. Income and other taxes generated by rehabilitating historic buildings generate many times the cost of the credits.
The state should get behind Schumer’s efforts to push the federal New Markets Tax Credit and the CAPP Act, while also extending and pushing for an amended state tax credit limit.
Working together, these programs can put tired buildings back to work and help local, state and national economies rebound.