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Tax credit passed by lawmakers may be cut<br> Paterson mulls delay of preservation bill<br>

What New York State giveth, New York State can taketh away, sometimes just a week later.

Gov. David A. Paterson is reportedly considering a budget reform that would delay for six years the same historic preservation tax credit improvements state lawmakers approved last week.

"I can't believe the governor would try to do this," said Rocco Termini, developer of the downtown Hotel Lafayette and several other tax credit projects. "This would put them on hold again."

Preservationists say their concern is that Paterson will include the tax credit changes in an emergency spending bill that would likely pass the State Legislature.

"I think they're very serious," said Daniel Mackay, director of public policy for the Preservation League of New York State. "I also think it sends an extraordinarily bad signal."

Mackay said the historic preservation tax credit is just one of about 30 business, environmental and smart growth tax credits that Paterson might delay in his quest to reduce the budget deficit.

They include the state's brownfield redevelopment and low-income housing tax credits, as well as several Empire Zone tax credits.

"Unfortunately, the proposal would include the rehabilitation tax credit," said Assemblyman Sam Hoyt, D-Buffalo. "I'm working diligently to get that removed."

Hoyt, one of the Legislature's chief advocates of the tax credit bill, acknowledges the governor's timing is bad, given the measure's passage just a week ago.

He also thinks the bill should be pulled from Paterson's budget proposal because of its unique impact on upstate's struggling economy.

"Upstate New York deserves special consideration when it comes to economic development initiatives," Hoyt said Tuesday.

The bill, which was sponsored by Paterson, is designed to correct what developers consider deficiencies in New York's tax credit law.

Supporters said the changes would increase investment in historic preservation projects by expanding the pool of eligible tax credit users to include banks and insurance companies.

Paterson spokeswoman Jessica Bassett said the governor still believes historic preservation tax credits play a vital role in creating jobs and stimulating upstate economies.

"His proposed expansion of New York's historic preservation tax credit, which recently passed both houses of the Legislature, is targeted to make the greatest possible impact with existing resources," Bassett said in a statement.

When the bill passed last week, it was hailed as a boon to upstate and prompted Termini to predict the Hotel Lafayette project would start "60 days from the point the governor signs the bill."

Tuesday, Termini's positive outlook had suddenly turned bleak.

"This renders the tax credits useless," he said.

The Buffalo developer said the governor's action would force him to again shelve his plans for converting the building at Washington and Clinton streets into a hotel, apartments and a "one-stop" banquet center for weddings.

It also could impact nine other Western New York projects with an estimated value of $175 million.

"This will kneecap the rehabilitation bill," Mackay said. "This will completely gut it."

Lawmakers supporting the governor's budget proposal, many of them from downstate, argue that it's difficult to enact or continue tax credits that reduce revenues at a time when the state is cutting funding for schools, hospitals and others entities.

State budget officials estimate the historic preservation bill will cost the state $3 million this year, although supporters claim that income and sales taxes generated by construction projects would offset that figure.

e-mail: pfairbanks@buffnews.com

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