Why historic preservation tax credits work so well

[begingri]

Consider these facts about Michigan's Historic Preservation Tax Credit:

• It creates jobs. Rehabilitation projects financed with help from Michigan's state tax credit have created 36,000 jobs, many of them in the struggling construction industry.

• It is cost-efficient. Every dollar of tax credits leverages $11.37 in private investment -- offering taxpayers one of the best dollar-for-dollar returns on investment of any state program. Moreover, since these credits are issued only after the project is completed, tax revenue and job creation impact is obtained before any taxpayer money is spent.

• It leverages federal dollars. Michigan historic rehab projects totaling $1.46 billion in costs have attracted $251 million in federal historic tax credits to the state. federal dollars that are fueling Michigan's economy.

• It returns underutilized and vacant real estate to state and local tax rolls. The credit fills a gap not offered by any other type of financing, often making the difference between economic vitality and continued blight. The Merchant's Row project on Woodward Avenue is one example. Thanks to the credit's financing, five vacant, historic buildings were converted to 150 loft-style apartments, bringing foot traffic, $58.8 million in total economic impact and 1,471 jobs to the area.

• It's good for tourism. Unique historic and cultural sites, authentic downtowns and interesting arts venues such as Mackinac Island, Saugatuck/Douglas and Holland draw millions of visitors to the state, in addition to attracting potential residents and businesses.

http://www.freep.com/article/20110414/OPINION05/104140406/0/7daysarchives/Why-historic-preservation-tax-credits-work-well?odyssey=nav|head

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Speaking of historical tax credits, does anyone know if they are back in Snyder's budget?

[Gistok]

Nice comments. Stephanie Meeks apparently has replaced Richard Moe as President of the National Trust for Historic Preservation.

Richard Moe was the one who tried to save the Madison-Lenox, only to have no one from the Ilitch family meet with him. They got their comeuppence however, when the Detroit United Artists Building was placed on the front cover of the National Trust Magazine [[with the painted windows). Apparently the Ilitch's are now interested in the United Artists... at least to some degree...

If Gov. Snyder does eliminate the State Historic Tax Credits... it would be very short sighted of him...

[mikefmich]

IMHO Republicans have not been known for unbridled support in the historic preservation arena. I would seriously doubt Snyder would even give it another look.

I used to be rather active with perservation years ago, it boggled my mind when the Federal credits were cut from 25 to 20%. That difference cost us many edifices in the US.

When Illitch was pushing a new stadium, I wondered why he couldn't/wouldn't take advantage of that.
With costs of $400m plus to build Comerica, no matter the lament that Tiger Stadium was outmoded, I gotta believe that even a quarter billion PLUS the tax credits on that would've went a long way and saved much money. 250m could fix a LOT of outmoded-ness

[Redleg81]

Historically, historic [[hee,hee) preservation credits favor [[along with brownfield credits) URBAN areas-- You know, those dens of liberally minded voters-- They haven't any interest in stengthening those entities, with the possible exception of GR and maybe Holland..... So even though it hurts us all in the long run, they still feel somewhat insulated out there in Sprawlville as they knock out some of the support structure that cities like Detroit depend on........

[Richard]

http://www.freep.com/article/20110414/OPINION05/104140406/0/7daysarchives/Why-historic-preservation-tax-credits-work-well?odyssey=nav|head

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Speaking of historical tax credits, does anyone know if they are back in Snyder's budget?

As of last week MEDC conversation still stands at Thanks for trying to bring jobs to MI and Detroit but at this time that is all we can offer. Thanks.

Detroit wise, I guess it depends on if you are in the local click as to any help on any incentives ,Outsiders need not apply.

Kinda wondering though how GE pulled after the fact incentives from the Gov promising to place 400 jobs in what was quoted as being the largest solar production facility in the U.S.

Every other large scale solar production facility in the US has already sold out to the chinese and now have become suppliers verses manufactures.My personal research has shown me that in order to compete with the overseas manufactures you would need the production facilities capable of 1.5 GW which would require a workforce of 7500 personal.

So how does one at a time when it is clearly stated that no incentives are available across the board, pull millions upon millions of incentives after the fact place a production facility in the state of MI at a level that has been proven that in every other state in the US that it is completely not feasible.

Of course the killing of brown-field and other credits have red lined Detroit and the state of MI ,it has also dropped the commercial property values dramatically
when it comes to funding options,so if you have tons of cash then it is worth it or have a stake in new construction of facilities you have eliminated the competition.

Once again look at who benefits from the elimination of the credits at the state level and look at what properties and new construction developers their relatives own in Detroit.

[Rocko]

And as a follow up, look what is posted at detroitnews.com today [[see below). Never mind that without HP tax credits, THIS project would NOT be happening. at all. period. the end.


April 18. 2011 2:52PM
Crews break ground on $53M Broderick Tower renovation

Louis Aguilar / The Detroit News

The long-awaited groundbreaking of the $53 million renovation of the Broderick Tower, the 34-story building in downtown Detroit's Grand Circus Park that's been empty since 1985, happened this morning.


Many Detroit Tigers fans know the Broderick Tower, designed by Louis Kamper, as the big blighted building that can be seen from the seats inside Comerica Park.


If things go as planned, apartment dwellers within Broderick will be able to take advantage of the building's commanding view of Comerica Park. Plans call for 127 apartment units, including two-story units that may fetch up to $2,700 a month in rent, according to Motown Construction Partners LLC, which owns the building.

The low end would be $600-a-month studios.

The ground floor is set to be a sports bar. A group called Invest Detroit will set up shop on the second and third floors.



laguilar@detnews.com

From The Detroit News: http://detnews.com/article/20110418/...#ixzz1JuKsOG8E

[swingline]

The Lansing City Pulse article had some spot on quotes from the Lansing EDC guy, Bob Trezise:

Trezise is one who disagrees. While he hasn’t completely given up hope on the Comfort Station project, Trezise said the governor’s plan to cut back on these types of tax credits is just a philosophical difference, particularly on how to redevelop cities.

“I don’t see how vacant buildings help cities,” he said. “My frustration [[with not granting the incentives) is that these historic and brownfield credits don’t cost taxpayers any money.”

Trezise said historic and brownfield credits are being viewed as the same thing as the film incentives.

“Our tools and incentives like these credits that help cities so much are tainted somewhat by incentives that really do give cash to businesses, i.e. film incentives,” he said. “We need to make sure each class of incentives are examined under the right category. I’m not sure that’s being done right now.”

* * * * * *

Trezise, who met with Snyder on incentives, said the governor argues that the market will determine where development happens.

“I argue that the free market has spoken loud and clear. The free market is urban sprawl and poor environmental policy,” he said. “I know what the free market did to cities. We don’t need to repeat history. These historic and brownfield credits at best even the playing field between contaminated sites and greenfield sites.”

The federal government and 30 states recognize that historic rehab credits work successfully to promote economic development, not to mention sound social practices for the built environment. Why should Michigan be any different? Our budget problems are no worse than most states. He could probably make retaining the credits revenue neutral in his budget proposal by making the new corporate tax rate 6.1% instead of 6%.

[Rocko]

This article really highlights some of the reasons and ways that HP tax credits really do wonders in our state.....how unbelievably shortsighted to even consider chopping up the current system, which helps to rehabilitate historic structures, revitalize downtown areas, and invest in Michigan.

http://www.lansingcitypulse.com/lans...cut-short.html

[begingri]

Head of DEGC: Tax credits may change, but Gov. Snyder is sincere about Detroit redevelopment

http://www.mlive.com/news/detroit/in...dit_names.html

[Novine]

"“I argue that the free market has spoken loud and clear. The free market is urban sprawl and poor environmental policy,” he said. “I know what the free market did to cities. We don’t need to repeat history. These historic and brownfield credits at best even the playing field between contaminated sites and greenfield sites.”"

I'm surprised that an economic development person is out there perpetuating this kind of stuff. Urban sprawl and poor environmental policy aren't the result of a "free market", there a product of a market rigged with rules and subsidies to reward those who pursue sprawl development and get away with abusing the environment. If those actors had to pay the true cost of the actions, we wouldn't have nearly the amount of sprawl or environmental impacts as we've experienced.

[Richard]

If you are the head of an agency that is in charge of brownfield credits along with others and your relatives own a construction company that builds sub divisions and large malls and complexes it just makes sense to eliminate these credits which in turn devalues any property that would otherwise have value with the credits.

It is all about cheap dirt,brownfield properties will have no value you can then use fed demolition dollars to save even more money and make even more profit.

When they ran the article pinpointing land speculator holdings why did they skip the land holdings along Woodward that are owned by relatives of the state level
who would stand to profit by the eliminating of the brownfield credits ?

[Rocko]

Happy Easter everyone!

From the Detroit News, "The Home Newspaper":

April 24. 2011 1:00AM
Backers work to keep best of brownfield credits in Michigan

Jeff Karoub / Associated Press

Detroit — Urban development experts and local officials are quietly trying to preserve key elements of what they consider the most important economic program for rebuilding Michigan's struggling cities, a tax credit for redeveloping areas that at one time contained shuttered factories or old industrial sites.

There's a lot of nervousness as the developers of projects such as Presbyterian Villages of Michigan wait to see what lawmakers will do. Those backing Presbyterian Villages are trying to put the finishing touches on the financial pieces needed to create the $38 million redevelopment project in a Detroit neighborhood that would provide housing, health care and other community services for the elderly.

As the closing date approaches for putting the 17 financial layers together, Gov. Rick Snyder's proposals to scuttle business tax credits for brownfield redevelopment, historic renovation and other improvements are causing concern.

"Everyone's kind of standing and waiting," said Brian Carnaghi, Presbyterian Villages' senior vice president of finance and business development. "This one is a little bit out of our control."

Snyder's proposed changes are still being debated in the budget process. He says businesses will be better served if the state switches to a 6 percent corporate income tax on corporations with shareholders rather than having so many costly incentive programs that don't always yield jobs. He has said some tax credits might be allowed, but hasn't indicated that he backs tax credits for completed projects that have redeveloped blighted, obsolete or contaminated sites.

State officials say current commitments will be honored, and they plan to work with applicants during the transition phase.

But some urban development experts say the brownfield credit must be kept if economically hard-hit cities are to rebuild.

"If you want to see . . . revitalization of some of our core urban areas, where you have existing infrastructure and old, unused buildings, you have to continue to use tools like this," said John Byl, chair of the Michigan chapter of National Brownfield Association and a Grand Rapids lawyer. "If they simply eliminated the program or minimized it so drastically . . . we would see downtown urban development come to a screeching halt."

Byl, who is working with the Snyder administration on developing a new brownfield program, said he's "cautiously optimistic" that the state can "continue some of the great achievements with the current program."

He said brownfield credits have been crucial to the success of several statewide projects, including restoring the glamorous Book-Cadillac hotel in Detroit,
rehabilitating a vacant, 100-year-old high school as Union Square Condominiums in Grand Rapids and redeveloping the former Traverse City State Hospital into a vast residential and retail development called The Village at Grand Traverse Commons.

One issue now being worked out is how much money should be set aside for such credits for brownfield and historic redevelopment. Snyder originally proposed a $50 million appropriation that would also include Michigan Economic Growth Authority incentives, but he has indicated the amount could be increased to as much as $100 million.

"He understands the feedback" from local and county economic development leaders, said Michael Finney, president and CEO of the Michigan Economic Development Corp. "It's unclear whether we'll be able to do as many projects as we did in the past, but we're willing to make some movement in the amount of money available."

One imperative, Finney said, is moving away from unlimited credits in a cash-strapped state and dedicating a set amount of money so Michigan is "paying our way."

"There are projects that have been incentivized as high as 80 percent," Finney said. "When it takes that level and there's very little private investment, there's something that's fundamentally wrong."

Finney said Snyder's proposed 6 percent corporate income tax also would benefit many would-be developers. If lawmakers approve replacing the Michigan Business Tax with the new tax, an estimated 95,000 businesses wouldn't have to file a state business tax return.

"We now have a lower starting point for companies so the need to incentivize them at a really high level is reduced," Finney said.

But Art Papapanos, vice president of board administration for the Detroit Economic Growth Corp., is concerned that many projects on the drawing board in Detroit won't receive state approval for brownfield credits, hurting efforts to redevelop the state's largest city. He can't recall a project during the past decade in the city that hasn't included them.

"You cannot expect [[developers) to spend money to on a what-if basis," he said. "I don't know where we'll be in line."

Presbyterian Villages' Detroit project, which this month was among eight to receive approval from the Detroit Brownfield Redevelopment Authority, now is waiting for state economic development officials to give the go-ahead. The project includes
$2.7 million in credits worth about 10 percent of the first phase's cost.

Carnaghi said he hopes the governor and legislators look at how many people are teaming up on the revitalization project in the city's East Jefferson Neighborhood, including Henry Ford Health System and the United Methodist Retirement Communities.

"All the other funders made commitments based on everybody else's commitment," he said. "Everyone is kind of waiting for the brownfield tax credits to arrive."

From The Detroit News: http://detnews.com/article/20110424/...#ixzz1KSU6sfcY