Reconstruction can be just as good as construction when it comes to creating jobs and stimulating the economy, and is more likely to be done in cities. Not only is that where most of the old buildings are, but where the needs were greatest even before the economy went south and remain so now. And it is why the Legislature should pass, and Gov. Paterson sign, a bill that would improve the state’s Rehabilitation Tax Credit program for historic properties.
The bill has been improved over the one the governor vetoed last year, both in substantive and political terms. For commercial properties the rate of credit would be raised from 6 percent to 20 percent; the cap raised from $100,000 to $5 million; and the credit could be allocated within business partnerships to allow for greater investor flexibility and attract more out-of-state financing. For residential properties the cap would go from $25,000 to $50,000.
These changes will make investors much more likely to take on rehab projects, helping give the state and local economies the boost they need. But, mindful of New York’s precarious fiscal situation, the bill’s sponsors would limit the enhanced credits to distressed areas, keep them from taking effect until the 2010-11 fiscal year, and have them sunset after five years. That won’t deprive the state of any revenue now, but should encourage investors to start planning now for reconstruction in 2010.
The above restrictions would reduce the estimated revenue loss to the state from $60 million a year under the bill vetoed by Paterson last year to $30 million or $40 million. But the loss wouldn’t start being felt until 2010, when the recovery may have begun and the state could be in better shape.
It should also be remembered that the state would be forgoing revenue which probably wouldn’t have been coming otherwise. And, that new tax revenue — income, sales and property — would be created from the jobs, building material purchases and construction. The Legislature and governor should get together and get this done.