Historic Revival for Tax Credits
Tuesday, March 29, 2011
Rhode Island’s huge stock of historic commercial buildings is “the best cash crop we have as a state” according to Grow Smart Rhode Island executive director Scott Wolf. But we need to restore historic tax credits to fully reap the benefits.
Why that large amount of historic commercial property is “like wheat is to Kansas” in Wolf’s eyes is because of the $5.35 of economic value leveraged in total economic output for each dollar of state tax credit that was invested in the State Historic Preservation Investment Tax Credit Program prior to its effective demise in 2008. Wolf and Grow Smart RI believe that it is time to bring that engine back in these moribund economic times, making its revival a priority item on the organization’s lengthy 2011 Legislative and Policy Agenda.
Tax Credit Short-lived
The historic tax credit program enjoyed a short but fruitful life. It began in 2002, but was slowed by a 2006 increase in processing fees paid by credit recipients, and in 2008 it was closed to new applicants. But it generated extremely healthy economic numbers. Those who wanted to stay on with their projects, some of whom had not yet enjoyed the financial benefits, were subjected to stricter requirements in 2008, a further increased fee, and a lower credit rate, as well as having to sign a contract with the state. All this for a program that Grow Smart RI quotes Greater Providence Chamber of Commerce President Laurie White as calling “one of Rhode Island’s most effective tax incentives.”
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“A lot of high wage, high growth jobs that we in Rhode island are committed to pursuing have an employee base that prefers working in an urban, funky environment than a suburban cul-de-sac,” Wolf explained.
It also brings companies to formerly rundown urban areas, such as the move of United Natural Foods from eastern Connecticut to the American Locomotive Works off Valley Street in Providence, and the relocation of Atrion Networking to the reborn Hope Artiste Village in Pawtucket.
Bringing It Back
Dan Baudouin, executive director of the Providence Foundation, says his group “was originally a promoter (of the historic tax credit), and the Foundation brought a good deal of its knowledge and experience to doing it.”
“It is harder to do now with the economy the way it is,” Baudouin stated, “and the large number of construction labor force unemployed. But some part of it should come back to get people back to work.”
Baudouin also noted that with a restored historic credit, it would not allocate to the recipients for two to three years, thus avoiding an immediate impact on tight budgets.
Helping Construction Industry
It is precisely the fact that because the rehabbing of old buildings is more labor-intensive than new construction that Wolf sees the opportunity for more jobs in the state.
“These buildings are even better for the environment than 'green field' (built on open space or forest areas) or new buildings, but a bit more expensive,” he said. "The Rhode Island construction industry was one of the hardest hit by the recession – so historic building is one of the best ways to get forward.”
According to Wolf and Grow Smart RI, there are also societal advantages. Revitalization of historic buildings in older neighborhoods can reduce crime rates, decrease the incidents of arson, and breathe life back into neighborhoods. For example, the success of new projects in formerly “dead” areas is evident in such places as Olneyville and the Rising Sun complex rehabilitation.
Looking to Repeat Success
Grow Smart RI has been meeting with a variety of groups with a broad-based interest in historic buildings to see what can be done, including for-profit and non-profit developers, preservationists, and the Providence and Pawtucket Foundations. Wolf said he is also touching base at the State House with legislators, House Speaker Gordon Fox and Governor Lincoln Chafee to possibly see some progress on capitalizing on the state’s “cash crop.”
“We need to address concerns about the previous program, but in ways that still provide the positive impacts on revitalizing economic development that was the hallmark of many of the earlier program’s projects,” he concluded.
Sowing the seeds, so to speak.
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