ALBANY – A measure to expand tax credits to encourage development of historic properties in Buffalo and other cities and villages will be vetoed by Gov. Andrew M. Cuomo.
Administration officials, speaking on condition of anonymity, told The Buffalo News on Wednesday evening that the governor will veto the bill that both houses passed last June and that was a major goal of downtown Buffalo developers.
The Senate sponsor of the measure, Sen. Mark Grisanti, a Buffalo Republican, said this week in an interview that he was less optimistic about the bill’s chances because of the fiscal hit on the state by Superstorm Sandy. But an administration source said the veto is not directly about the bill’s costs.
“While the governor is supportive of expanding the tax credit and the goals of the bill, it’s something he’d like to see addressed during the budget process next year rather than outside,” the official said.
The bill was approved three months after the 2012 state budget was approved. State budget officials estimated the higher tax-credit measure would cost the state $20 million in tax revenues in the upcoming fiscal year and $80 million over the following two years.
The measure would raise the current $5 million tax credit for certain historic rehabilitation projects to $12 million – a level that developers in Buffalo and elsewhere feel would encourage rehabilitation of larger residential, office and mixed-used projects. The existing tax credit program, due to expire in 2014, has been used on such projects as the rehabilitation of the Hotel @ the Lafayette downtown.
Grisanti had said he believed the bill would be revenue- neutral for the state because of additional income and sales taxes generated by construction activities.
“I’ve always been cautiously optimistic, but when you have Hurricane Sandy and the billions of dollars in devastation that it caused, I think the focus has to be making sure we have the money to meet the needs of people who have basically lost everything,” Grisanti said.
There were plenty of signs the measure was in trouble with the Cuomo administration.
For starters, Cuomo has in the past vetoed other bills that cost state money when done outside the normal budget process in the early spring.
But the more obvious signal was that the bill was not sent to Cuomo until after last month’s elections. Given the close ties Grisanti has enjoyed with Cuomo, it is likely the governor, if he were going to sign the bill, would have done so during the senator’s recent re-election campaign. The bill was not sent to the governor until last week, even though the Senate and Assembly passed it in June.
Grisanti said he was given no advance indication of the governor’s intentions with the bill. But in an interview Tuesday at the Capitol, he was already laying the groundwork for a new effort to get the measure passed next year.
“So we’d have to go back to the drawing board in January and see what we can do,” Grisanti said. He said the governor’s budget office earlier this year raised concerns about the bill’s costs. One approach, the senator said, might be to lower the $12 million credit proposal or to phase in the hike from $5 million to higher amounts over several years.
Developers – led by Buffalo’s Rocco Termini, who rehabilitated the Lafayette – say the tax credits are vital to convince companies to take the financial risks often associated with restoring historic buildings. Business groups backed the idea as a benefit to both cities and villages, especially in blighted areas of upstate.
Grisanti and Assemblywoman Crystal Peoples-Stokes, D-Buffalo, told The Buffalo News in June that Cuomo personally told them he supports the increase in the historic preservation tax credit.
“I believe the governor will sign it, because when I asked him about it, he said he would, so I have no reason to doubt what he said to me. I trust him,” Peoples-Stokes said at the time.