By Steven J. Weiss
Gov. Andrew M. Cuomo has signed legislation that will have an extremely positive impact on the renovation of historic commercial structures in Western New York. Included are two important modifications to the state commercial historic tax credit program that signal good news for area developers. Notable projects potentially benefitting are the H.H. Richardson Complex, Statler Towers, Niagara Hotel and the 298 Main St. and 500 Seneca St. renovation projects.
First, the state’s historic commercial credit program, set to expire at the end of 2014, was extended through 2019. The extension reflects the Cuomo administration’s recognition of the value in saving and repurposing the many historic treasures in our state, and the need to give it a full opportunity to serve its purposes. This is especially important in light of initial delays due to errors in the law from the prior administration. The governor and the Legislature recognize rehabilitation of an old building, even more so than construction of a new building, will create jobs. Additionally, these buildings are part of the character of our communities and landscapes.
The second modification will make the New York State historic tax credit “refundable” for buildings placed in service after Jan. 1, 2015. The state program is tied to the federal historic credit program requiring state and federal credits flow to the same investor. As a result, only New York taxpayers could benefit from the federal and state historic credits, thus limiting these investments to New York taxpayers. The Cuomo administration understood this limitation precluded non-New York taxpayers from investing in transactions, reducing competition for these investments and the amount of equity raised.
Given the shortage of New York taxpayers interested in these investments, there have been historic rehabilitations unable to find tax credit investors at any price. The new refundability of the state historic tax credits will allow non-New York taxpayers to invest in transactions in our state. This widens the pool of potential investors to the entire country, so virtually all of these transactions should be able to find investors, thus increasing the pricing and competitiveness for these transactions. A non-New York taxpayer without any New York tax liability would apply for a refund in order to monetize their New York credits.
From the perspective of historic preservation, economic development, creation of jobs, energy conservation and efficient use of resources, the governor and Legislature are to be commended for their leadership and creativity. We can expect to see an increase in the number of transactions across the state and right here in Buffalo, which will add to the charm and character of our communities for a long time to come.
Steven J. Weiss is a founding partner with Cannon Heyman & Weiss, LLP and is the Public Policy Committee chairman and a board member of the Preservation League of New York State.