Fund the Historic Tax Credit Program

Published in Pawtucket Times, June 13, 2014

With November’s election cycle looming, state lawmakers are moving quickly to finish the people’s business. Once the session ends they will begin their political campaigns to garner votes to retain their seats. .Yesterday evening the House began its floor debate on the House Finance Committee’s $8.7 billion 2015 budget proposal. At press time, this columnist has no knowledge of the outcome. But, when the dust settles late Thursday evening, if a budget amendment to fund the HTC program is defeated or even if supporters are successful in getting one passed, the Senate chamber becomes the next battle ground to fund the tax credit program.

Last week, the House Finance Committee declined to recommend funding for this program, despite Governor Chafee’s inclusion of $52 million for the Historic Tax Credit (HTC) program in his FY 2015 Budget proposal. As a result, Grow Smart Executive Director Scott Wolf and his fellow Historic Tax Credit advocates are running a full court press to push House and Senate leadership to include funding for the popular economic-development and neighborhood-revitalization program in the 2015 Budget.

In the lobbying blitz, Wolf is telling lawmakers and everyone who will listen that the HTC program has successfully transform older cities and towns in the Ocean State, by spurring reinvestment, revitalization, and job generation. These programs provide an incentive in the form of a tax credit, to property owners to renovate old historic buildings. These state credits can be and often are paired with the federal historic preservation tax credit to renovate commercial properties.

Historic Tax Credit – Great Economic Development Tool

It’s a success in the Ocean State, too, notes Wolfe. Rhode Island’s HTC program has stimulated more than $1.6 billion of investment in more than 250 projects within less than 7 years. For every dollar the state invests, there is a more than five dollar return in economic activity based on a study Wolf’s organization, Grow Smart Rhode Island, commissioned several years ago.

Wolf adds, “The evidence that the historic tax credit makes a real positive difference can be seen on the ground in communities throughout the state – in bustling commercial properties like Hope Artiste Village in Pawtucket and along Westminster Street in Providence, in new apartments for urban workers and new affordable housing units. It can be seen in increased property tax revenues from rehabbed buildings. It can be seen in neighborhoods that have been rescued from the blight of vacant, derelict buildings.”

According to a media release issued jointly by Grow Smart Rhode Island and Preserve Rhode Island, $52 million in bond authorization remains in reserve from the total bond authorization approved in 2008 by the General Assembly for the original HTC program, which was discontinued in 2008 for any new projects but maintained for many other projects already under way at that time.

The General Assembly in 2013 reinstated the program, using $34.5 million in unclaimed tax credits from the prior program and, Wolf says, “The new program has ignited 26 new projects that will pump nearly $180 million into the Rhode Island economy, but 27 additional projects are waitlisted and in jeopardy if additional funding is not provided to sustain the program. By not including an extension of historic tax credit funding in the upcoming budget, the state risks forgoing up to $160 million in construction activity alone. Significant sales and employment taxes also will be lost.”

Preserve Rhode Island Executive Director Valerie Talmage says, “Our Historic Tax Credit program has an outstanding track record. From 2002 to 2008, it generated $1.3 billion in new private investment in Rhode Island’s real-estate economy, which resulted in 22,000 construction jobs, 6,000 permanent jobs, and total wages of more than $800 million. Our state cannot afford to shut this program down.”

Wolf added that suspending the HTC program again would be harmful because “We’d be ceding the competitive advantage provided by our world-renowned collection of distinctive historic buildings and neighborhoods to nearby states such as Connecticut, Massachusetts, Maine, and New York, each of which has ongoing and robust state historic tax credit programs.”

Finally, Wolf emphasized that another HTC program suspension would “Send a bad signal to investors and entrepreneurs about Rhode Island’s business climate and economic development credibility.”

Wolf and Talmage, together with their organization members, partners, and fellow advocates are calling on the General Assembly to “Continue the Historic Tax Credit program because it is a sound and critical investment in Rhode Island’s cities and towns and a proven job-generator and revenue producer, which our state sorely needs.”

In their lobbying Wolf, Talmage and their network of approximately 90 organizations who support the HTC program are quick to identify its positive impact. State officials will see higher state revenues through construction and other jobs generated by the HTC projects. In addition, job creation and increased employment taxes are derived years in advance of any outlay of state funding because Historic Tax Credits are not released for any enrolled project until the project is completed. Sales-tax revenues result from construction materials and other goods purchased for HTC projects also benefit the state in advance of any outlay.

Wolf and others also note that The Budget Office forecasts no fiscal impact to the state budget from the proposed $52 Million in debt service until FY ’19 because bonds won’t need to be issued until the projects have been completed and the tax credits have been claimed.

In an Op Ed in the Providence Journal, Pawtucket’s Mayor Donald R. Grebien and Central Fall’s Mayor James Diossa, support Wolf’s assessment of its impact in the state’s cities and towns. The Mayors say that their fiscally stressed communities benefit from Historic Tax Credits through increased property assessments.

Developing an Old Mill in Pawtucket

Antique Dealer and entrepreneur Scott Davis knows a good program when he sees one. The Eastside resident is planning to develop his old Fuller manufacturing mill on Exchange Street into a combination of commercial and residential space, but any state backpedaling of funding the HTC program will make it difficult to get his project off the ground.

An inquiry by Davis to Chairman Raymond Gallison of the House Committee on Finance, about the suspending of funding for HTC program resulted in an email explaining the decision. The chairman noted that a primary reason for rejecting Governor Chafee’s proposed additional $52 million HTC funding was based on the assertion that there were already sufficient funds in place in the existing program to meet current demand.

Davis disagrees. “My project, which is a rare and historically significant wooden mill built in a prominent Pawtucket city location alongside the Blackstone River is Number 65 in the queue,” he says, noting that he believes that none of the current funds in place will ever be allocated to his project.

“Financial assistance is essentially the only way that my mill project will ever be able to developed, says Davis, who notes that the cost to restore the historic structure versus the prevailing rental rate for space in Pawtucket simply doesn’t work out.

Chairman Gallison also noted that issues with tax credit brokers are a stumbling block for the program,” says Davis. “It is unimaginable that the resulting (legislative) decision] would be akin to ‘throwing out the baby with the bathwater”. If there is a problem with the brokers, Davis calls on lawmakers to fix it, but threatening so many important buildings, jobs, and resulting tax revenues in the process just doesn’t make sense to him.

Davis says that previous HTC funds have made 8 major Pawtucket projects possible. According to the Pawtucket Foundation, the tax incentives were the catalyst for $150 million in local investments that increased property values by 728 % and increased Pawtucket tax revenues by over $1 million annually.

“Keeping these historic buildings intact while awaiting funding assistance is extremely expensive and no doubt we will lose many of them if we can’t save them promptly,” predicts Davis. “ I can tell you from personal experience that just keeping my small 26,000 sq. ft. mill ‘on hold’ costs me several thousand dollars per month just for taxes, insurance, utilities, fire safety, security and basic upkeep,” he says.

HTC is No 38 Studios

Some speculate that recent headlines about 38 Studios and tax credits in general may have spooked House and Senate Leadership to back away from funding the HTC program. Ultimately, the ball is in the court of Senate leadership who must respond to the budget proposal submitted by the House. How can lawmakers fear another 38 Studio debacle when the Historic Tax Credits are only issued upon completion of the project? In other words, after construction workers have laid the last brick – only after new residential and office space is actually available.

But, Gregg Paré, the Rhode Island’s Director of Communication, says don’t expect any action in the Senate to fund the state’s HTC program this year if the House fails to act. “The Senate is in agreement on the budget with the House,” he says, noting that Senate leadership usually iron out any differences before the budget reaches the House floor.

Paré says that the Senate has only once modified the House budget proposal in decades. But, now it’s time for this legislative action to happen again this year especially if the House budget does not include funding for the HTC program.

To Wolf, Talmage, and Davis, and to municipal leaders in a number of Rhode Island’s cities and towns, it is obvious that the program works and serves as an important tool for community revitalization and economic development.

For this columnist, funding the HTC program is just the right thing to do, for the economy and most importantly, for the tax payer.
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Herb Weiss is a writer covering health care, aging, medical issues and the economy. He can be reached at hweissri@aol.com.

Complete Streets Legislation Stalled in House Committee

            Published May 19. 2012, Pawtucket Times

            A properly designed road system helpsolder Rhode Islanders to successfully “age in place” and stay safely and comfortably in their homes for as long as they choose. But the benefits of so-called Complete Streets design benefits people regardless of age, abilities or mode of transportation.  AARP Rhode Island has joined a broad-based coalition of 17 aging, health and transportation groups and smart growth advocates to push state policy makers into making the Ocean State’s streets, highways and byways more accessible and safer for all users. Out of 2,111 legislative proposals submitted this year for consideration by the Rhode Island General Assembly, H 7352 and S 2131, its companion measure in the Senate, would accomplish this lofty goal.

          Coalition members fear that their efforts to make sure that the state’s transportation infrastructure becomes more user friendly for all ages and abilities is in jeopardy with the House Committee on Municipal Government which has held H 7352 for further study.  While the Senate passed the companion measure (for the second year in a row) last month, this House Committee might just kill the legislation unless it can be resuscitated. 

The Details of H 7352

            The legislationwould require that whenever the state is building or modifying a road, planners and designers must consider Complete Streets design conceptsthat is, considering safe travel by all users, current and projected, particularly pedestrians and bicyclists of all ages and mobility capabilities.  Features of Complete Streetsdesign include sidewalks, paved shoulders suitable for use by bicyclists, lane striping, bicycle lanes, “share the road” signage, “road diets” (narrower lanes to discourage speeding and leave room  for pedestrians and bicyclists), roundabouts, crosswalks, pedestrian control signalization, bus pull-outs, curb cuts, raised crosswalks and ramps and traffic-calming measures.

            Meanwhile, this legislation allows common-sense exceptions, such as on interstate highways, where pedestrians and bicyclists are prohibited, and on projects where the space is too limited or costs would be disproportionate to the use such features would likely get.

            Furthermore, this legislation also requires the State’s Department of Transportation to issue a report within two years detailing what it has done to comply with the law, how it has changed its guidelines on such features as lane width, design speed and more, and what best practices the agency has employed.  It would also be required to include information on exceptions made, and why they were made.

            In a press release touting the passage of S 2131, bill sponsor, Senator Louis P. DiPalma, noted that the legislation’s goal is to plan streets that encourage people to use healthy, greener, transportation modes whenever possible, contributing in their own health as well as the wellbeing of the environment.

            “Cars shouldn’t be the only consideration when public roads are being built.  The health and environmental benefits of walking, bicycling and other active modes of transportation are well know, and we should be building our roads in ways that are safe for those activities and encourage people to choose them,” said Senator DiPalma.

Pushing for Safer Roads, Highways and Byways

            In her testimony before the House Committee on Municipal Government, AARP State Director Kathleen Connellsaid the goal of H 7352 is to direct the Department of Transportation  to plan with all users in mind.  “Making it easier for older people to get around is an obvious reason we’re involved, but Complete Streets design promotes public safety, helps revive our towns and cities and increases property value,” she said.

            Molly Clark, Manager, Health Promotion and Public Advocacy for the American Lung Association, also testifying to support H 7352, predicted that Complete Streets design that would promote walking and bicycling and this would ultimately improve the health of Rhode Islanders.

             Also attending the Committee Hearing, Co-Chair John Flaherty, of the Coalition for Transportation Choices, advocated for 21st century transportation system “that’s good for the economy, good for the environment and that provides clean, healthy and affordable transportation choices for all Rhode Islanders.”

            There is no fiscal note estimating the true costs of H 7352 due to the multitude of factors that must be considered.  However, bill supporters believe that this legislative proposal does not necessarily add costs to the road construction project.

            Addressing concerns about the legislative proposals “possible” fiscal impact on the State’s budget, Senator DiPalma notes that H 7352 has been crafted in such a way to reduce the fears of fellow lawmakers that there could be initial and future costs if the legislation is enacted.  Provisions would protect the state’s coffers by requiring common sense exceptions to take effect if a road construction design project incurs a cost that is disproportional to its benefits, he says.

It’s All About the Economy

            Doing it right the first time makes economic sense,” says AARP Associate Director for Advocacy Deanna Casey.

             Enacting H 7352 is just good economic policy, adds Scott Wolf, Executive Director of Grow Smart Rhode Island.  According to Wolf, “forRhode Islandto thrive economically it needs to attract and retain talented young people. These people, research shows, are looking for places that are vibrant, user friendly and possess an abundant natural and architectural beauty.” 

            Wolf stated “Rhode Island has many of these ingredients but we need to be much more user friendly with regard to transit, walk ability and bike ability to maximize our appeal to this new segment of workers. He added, “Adopting an aggressive complete street strategy that requires all roads built to accommodate bikes, pedestrians, and mass transit as well as autos could do a lot to increase our appeal to this critical cadre of mobile young talented workers.”   

             In these tough economic times usually a price tag on a legislative proposal is just enough for General Assembly leadership to doom a legislative proposal’s passage by not taking action on it.  Just refer it for further study.  Complete Street supporters are puzzled by the inaction in the House panel because of the protections built into the measure to rein in initial or future costs of a project.  At press time, the City of Pawtucket along with eight other cities and towns, have already passed resolutions supporting the Complete Street legislation being considered by the Rhode Island General Assembly and another eight communities are also considering supporting this legislation by enacting  resolutions.  Most important, the State’s Department of Transportation is not even blocking passage but endorsing it.

           According to the National Complete Streets Coalition, in 2011 alone “over 140 jurisdictions adopted a policy, up from 80 that committed to Complete Streets in 2010. In total, 352 regional and local jurisdictions, 26 states, the Commonwealth of Puerto Rico, and the District of Columbia have adopted policies or have made written commitment to do so.”

           Elections are looming and House and Senate leadership are looking to adjourn in early June.  The Rhode Island General Assembly must move quickly in the waning days of the 2012 legislative session to join 26 states that get it.  House leadership must do the right thing to make streets, highways and byways more accessible and safer for all Rhode Islanders, regardless of age, abilities or modes of transportation.   That is to pass H 7352.    

             Herb Weiss is a Pawtucket-based writer covering aging and health care issues.  His Commentaries are published in two Rhode Island Daily’s The Pawtucket Times and Woonsocket Call.