In what he called “a major victory for economic development in Upstate New York,” Assemblyman Sam Hoyt announced a long-sought package of amendments to the historic preservation tax credit program signed into law by Governor Paterson in Buffalo last summer. Sam, the sponsor of the bill in the Assembly, said he expects the amendments to “create a snowball effect of private sector investment that includes the creation of hundreds of new jobs and many historic structures in communities across upstate will be saved and restored.”
The new law opens the eligibility pool for the tax credits, providing more incentive to invest funds in rehabilitation projects across the state. The amendments allow banks and insurance companies to claim the tax credit, giving greater access to those wanting to restore and rehabilitate historic commercial structures. “Banks and insurance companies are among the most experienced users of the federal rehabilitation tax credit program,” said Jay DiLorenzo, President of the Preservation League of New York State. “By removing the hurdles that prevented them from fully utilizing the New York State Rehabilitation Tax Credit Program, higher levels of private investment will finally begin to flow to redevelopment and revitalization projects across the state.”
In fact, banks and insurance companies comprise 90% or more of potential investors in the preservation tax credits, according to Steven Weiss, partner in Cannon, Heyman & Weiss, LLP, a Buffalo law firm specializing in development tax credits, providing an idea of the potential impact of this development. His firm is currently assisting with projects across the state with an overall value of a quarter Billion dollars under the preservation tax credit program as is–about 20% of his firm’s business. He expects that to double or triple within a year with the amendments.
Keep in mind that, as discussed here, the key to the tax credits providing economic stimulus is that they can be sold to investors for a percentage of their anticipated value. That provides working capital for projects to move forward. Construction permits are purchased, materials are ordered, workers are hired. More money flows into our recession-hit economy.
“This legislation is extremely important for continued development in Upstate New York,” said Senator David J. Valesky of Syracuse, sponsor of the legislation in the Senate. “Making the preservation tax credits available to banks and insurance companies will result in tens of millions of dollars of investment in our downtowns, hundreds of jobs and a revitalization of our upstate urban cores.”
The amendments passed unanimously in the Senate, and by a vote of 100 to 1 in the Assembly. The Governor has pledged to sign the legislation.
Hoyt and Valesky were also the prime sponsors of the Historic Rehabilitation Tax Credit legislation signed into law in 2009 that provided tax incentives for investors of both commercial and residential development of historic structures across New York State. Since the law took effect on January 1, 2010, the residential component of the original bill–which covers owner-occupied structures listed on the State and National Registers of Historic Places–has already seen a rise in applications. The commercial aspect has been strengthened by the passage of the new amendments.
“Unlike new builds, preservation projects are predominantly labor,” Steven told me, one of the reasons that the program acts as an economic stimulus and job creator. As we talked, Steven was looking out his window in the Larkin District, and told me he could immediately pick out twenty people working on building reuse projects.
Many high-profile projects in Buffalo that will receive a boost from these amendments include the Lafayette Hotel, Horsefeathers, The Corn Exchange, Genesee Gateway, Alling & Cory, Bethune Hall, and The Cooperage.
What about the other fix to the tax credit program that local developers have been pushing? Referred to by some as “bifurcation,” it would allow the state and federal preservation tax credits to be purchased separately by investors–a key factor when approaching investors around the country who may have no New York State tax obligations to incent them. It’s already a part of successful programs in other states. According to Rocco Termini, who has been heavily involved in the lobbying effort, these additional enhancements should be a top priority for next year’s legislative agenda. Rocco is also pushing for the five Million dollar cap to be removed for significant large projects such as the Statler and AM&A’s.
Another project Rocco has in the works, the Hotel Lafayette, should benefit significantly from the current amendments, and he has been setting the stage to move forward. He has a meeting Monday with prospective tenants regarding Empire Zone assistance, and expects to be ready to move project work forward “in 60 days” after the Governor’s approval of the amendments.
Given all the sturm und drang we’ve been hearing coming out of Albany lately–and, well, for over a year now–how can something like this can get accomplished in such an environment? In the view of Preservation Architect (and developer of the Cooperage) Clint Brown, Sam Hoyt setting this as a legislative priority and following through relentlessly was the key. “A veteran legislator knows how to get things done, even in times of crisis,” Clint–a veteran himself on this issue–told me. “Experience matters.”
For more information on the Hist
oric Rehabilitation Tax Credit:
Preservation League of New York State
New York State Historic Preservation Office
Assemblyman Sam Hoyt
Senator David Valesky