Just when the state historic rehabilitation tax credits seemed a done deal and set to play a major role in the revitalization of Buffalo and upstate New York, the entire plan could be kneecapped to the point of inertia as a result of the New York State Legislature's consideration of tax law amendments that would "temporarily" defer certain tax credits for a period of up to six years.
This is wholly unacceptable. This tax credit program must be carved out of an attempt to balance this year's budget on the backs of future returns and development. It's shortsighted and Assembly and Senate leadership should correct Gov. David A. Paterson's egregious error in targeting the rehabilitation tax credit.
The rehabilitation credit is but one of 30 business, environmental and smart-growth tax credits that will serve the state down the road that is at risk of this dramatic reworking. Other potentially affected programs include the state's brownfield redevelopment and low-income housing tax credits and several Empire Zone tax credits, to name a few. The range of which have extraordinary impacts for the City of Buffalo.
But there is an argument that the rehabilitation piece holds special and important significance for the economic vitality of upstate and Buffalo, in particular. The state rehabilitation tax credit program has been recognized for its economic stimulus impact and long-term potential to be revenue-positive. With this proposed change, it will not be allowed to work. The predictability of these programs is a critical element for someone undertaking a project in anticipation of receiving a credit. Suddenly adding a deferral piece inserts a wild measure of unpredictability for a program as sophisticated as the state historic rehabilitation tax credit and will certainly frighten investors. If New York is going to radically change tax credit policy across such an extensive range of programs, such a debate and vote should occur on a stand-alone bill.
Last year, Assemblyman Sam Hoyt, D-Buffalo, and Sen. David J. Valesky, D-Syracuse, and a coalition of municipal leaders, economic development and historic preservation proponents very effectively and sincerely negotiated a series of changes with the governor and Legislature that acknowledged the state's fiscal situation and made significant accommodations to the state rehabilitation tax credit program. The program was finally honed to serve redevelopment and community renewal goals in distressed communities and neighborhoods in a fiscally appropriate manner.
The compromises on this legislation have already been made -- it's been capped and given a five-year sunset -- and a deferral component to this particular program pushes it past the point of effectiveness.
Gutting a program even before it has a chance to deliver on its promise of jobs, downtown reinvestment in existing infrastructure, sales and property tax increases is wrong.