Proposed Cuts to Tax Credits Will Stall Upstate Revitalization

ALBANY, NY (06/22/2010)(readMedia)-- The Preservation League of New York State joined economic development, smart growth and environmental groups in denouncing the Legislature's plans to undermine years of work to revitalize the upstate economy, protect open space and foster green initiatives.

The New York State Senate and Assembly are considering tax law amendments that would "temporarily" defer certain state tax credit incentives for up to six years. Among the targeted credits are the recently expanded (2009) NYS Rehabilitation Tax Credit programs. Just last week, the Senate and Assembly passed legislation designed to bolster these programs by bringing new private investment to redevelopment projects.

"The New York State Legislature is considering tax law changes that will gut this program one week after they passed legislation that allows it to attract significant new national investment to distressed communities throughout New York State," said Jay DiLorenzo, President of the Preservation League. "Just as redevelopment projects are set to launch in cities throughout the state, this proposed change pulls the rug out from beneath their financing plans."

According to Robert Simpson, CEO of the CenterState Corporation for Economic Opportunity in Syracuse, "This rehabilitation tax credit has been anticipated by many as one of New York's most effective economic development programs, but before we can begin to realize its long-sought economic and community redevelopment benefits, the Legislature is about strip the program of the incentives that make it work."

Deferring incentives of the New York State Rehabilitation Tax Credit program will prevent projects from securing financing, as partners will no longer be assured of a timely return on investment.

"When the expanded Rehabilitation Tax Credit program was adopted in 2009, a number of modifications were made to reflect New York State's difficult financial situation," said Daniel Mackay, Director of Public Policy for the Preservation League. "This program has already been adapted to work in a tough fiscal climate. If further changes are imposed upon the program, it will lose all effectiveness as an economic development tool."

In 2009, the rehabilitation tax credit programs were limited to distressed census tracts in New York State, commercial rehabilitation project credits were capped at a maximum value of $5 million, and the credits were limited to a five-year pilot program, set to sunset in 2014. Despite those limitations, an economic benefits assessment for the program commissioned by the Preservation League showed a $12:1 return on state investment, noting significant job creation and increased local and state tax revenue returns in addition to community redevelopment benefits.

Twenty-eight other business tax credits were also mentioned in legislative discussions, a number of which address environmental clean-ups, promote alternative fuel and energy development, stimulate affordable housing and green building development, and conserve open space.

Targeted Smart Growth and Environmental Tax Credits

1. Rehabilitation of Commercial (Historic) Properties Credit (expanded in 2009, 2010 enhancement bill is Governor's program bill, and has passed Senate and Assembly)
2. Historic Homeownership Rehabilitation Credit (expanded in 2009, 2010 enhancement bill is Governor's program bill, and has passed Senate and Assembly)
3. Alternative Fuels Credit
4. Clean Heating Fuel Credit
5. Biofuel Production Credit
6. Conservation Easement Tax Credit
7. Fuel Cell Electric Generating Equipment Expenditures
8. Brownfield Redevelopment Credit
9. Remediated Brownfield Credit for Real Property Taxes for qualified sites
10. Environmental Remediation Insurance Credit
11. Low Income Housing Tax Credit
12. Green Building Credit
13. Solar Energy System Equipment Credit
    
    Other targeted business credits
    
    
14. Credit for Employment of Persons with Disabilities
15. Special Additional Mortgage Recording Tax Credit
16. Empire State Commercial Production Credit (TV)
17. Purchase of Automated External Defibrillator
18. EZ Wage Tax Credit
19. EZ Capital Tax Credit
20. EZ ITC Credit
21. EZ EIC Credit
22. Employment Incentive Credit
23. QEZE Tax Reduction Credit
24. QEZE Credit for Real Property Taxes
25. Security Training Tax Credit
26. QETC Facilities, Operations and Training Credit
27. QETC Employment Credit
28. Credit for servicing certain mortgages
29. CAPCO Credit
30. Power for Jobs Credit

At least one expensive state credit is not included on this list: the NYS Film Tax Credit, which Governor Paterson extended in early 2008.

"Environmental funding has already been gutted in this year's state budget. Rolling back incentives that serve as a bridge to a better economic and environmental future only adds insult to injury and risks inflicting long-term damage on New York," said Marcia Bystryn, president of the New York League of Conservation Voters.

The proposal under consideration would defer 50% of allowable credits accrued by a project from 2010 – 2013 until 2013 -2016. Rules for allocation in 2013-2016 will be promulgated by the Commissioner of Tax & Finance, so there is not yet any suggestion as to how the credits will be issued in that three year period.

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