Rehabilitation Tax Credit Spurs Over $3 Billion of Investment in Historic Properties Since 2013
Two-Thirds of the Projects Help Revitalize Historic Commercial Centers in Upstate New York
Investment Complements “Finger Lakes Forward”, “CNY Rising and “Southern Tier Soaring – Regional Blueprints Aimed at Growing the Economy and Creating New Opportunities
Governor Andrew M. Cuomo today announced that in 2016, New York State led the nation in the number of completed historic property revitalization projects using rehabilitation tax credit programs. Since the Governor signed legislation to bolster the state’s use of rehabilitation tax credits in 2013, the state and federal program has spurred $3 billion of investment in historic commercial properties. In 2016, $748 million in investments was generated by the state and federal credit to revitalize historic buildings throughout the state.
“Rehabilitation tax credits provide a valuable incentive to invest in underutilized historic buildings and transform them into cornerstone landmarks for communities across New York,” Governor Cuomo said. “These numbers prove that this program is an effective economic development tool and we will continue our efforts to preserve this state’s historic properties and drive growth throughout the process.”
State officials announced the tax credit milestones at the 2017 New York Statewide Preservation Conference, held in historic Sibley Square, a $200 million revitalization project in the heart of downtown Rochester. Sibley Square is one of 88 commercial redevelopment projects in the Finger Lakes to leverage the rehabilitation tax credit since 2013. More than two-thirds of these projects are located in upstate New York communities, complementing the Finger Lakes Forward, Central NY Rising and Southern Tier Soaring economic initiatives, which are working to transform regional economies through public-private partnerships.
The state rehabilitation tax credit further incentivizes the federal rehabilitation tax credit program. Both credits offer a 20 percent tax credit for qualified rehabilitation expenditures for the owners of income producing properties listed or in the process of listing on the New York State and National Registers of Historic Places. While the state credit has been available in various forms since 2007, its limits made developers reluctant to use either the federal or state credit for riskier projects in upstate New York.
In 2013, Governor Cuomo signed legislation to improve the credit by enabling a property owner to partner with investors who do not have New York State tax liability and take the credit as a refund. The ability to take a refund helped expand the pool of investors willing to participate in New York State projects. In addition, the legislation signed by the Governor extended the program through 2019, which helped remove uncertainty about the program’s future.
In federal fiscal year 2016 alone, the State Historic Preservation Office approved $732 million commercial rehabilitation projects that are now in or moving into the construction phase, known as Part 2 applications, and closed out the review of an estimated $748 million worth of completed rehabilitation projects, known as Part 3 applications – more than any other state. Since 2013, SHPO has approved more than 300 Part 2 applications to use the credit to rehabilitate historic structures. Collectively, the projects have created more than 5,500 units of new housing, including 1,900 units of low- and moderate-income housing. More than 200 of the 300 Part 2 applications are for development projects in upstate.
Rose Harvey, Commissioner of the Office of Parks, Recreation and Historic Preservation, said. “The historic preservation tax credit programs have revitalized hundreds of landmark buildings across New York State, created thousands of local jobs for skilled craftspeople, and has stimulated our economy while instilling pride of place among New Yorkers. Our historic built environment is a remarkable example of our state’s dynamic role in our nation’s history. With developers and property owners rehabilitating the assets from our past, the historic tax credits are helping to create a pathway to New York State’s future.”
Acting Commissioner of Taxation and Finance Nonie Manion said, “The credit for Rehabilitation of Historic Properties provides added incentive to restore buildings that hold special significance to our state and local communities. Along with other revitalization initiatives, this tax credit can help spur development and jobs, as well as breathe life back into neglected landmarks.”
NYS Homes and Community Renewal Commissioner RuthAnne Visnauskas said, “The historic preservation tax credits work in conjunction with other public and private resources to restore the character of neighborhoods while creating much-needed affordable housing,” said. “The historic tax credits are an important component of the work we do. Under Governor Cuomo's leadership, HCR is working with partners and putting resources like this to work reconnecting neighborhoods, restoring vacant or underutilized buildings, and breathing new life into communities.”
Jay DiLorenzo, President of the Preservation League of New York State, said, “Historic rehabilitation tax credits have been instrumental in attracting investment to long-vacant historic properties, from neighborhood schools to mills and factories. Projects in our state are able to access not only New York State rehabilitation tax credits but federal tax credits – for up to 40% of their qualified rehabilitation expenses. This helps developers balance risk and reward when taking on challenging renovation projects, and ultimately benefits all New Yorkers.”
Wayne Goodman, Executive Director, The Landmark Society of Western New York, said, “There is not a more effective tool in connecting economic and community revitalization with our enduring heritage than the historic rehabilitation tax credit program. The Landmark Society of Western New York works tirelessly to not only facilitate development projects that utilize these credits, but to also lead efforts in creating National Register listings that act as the primary gateways for these credits and subsequent economic benefits. These tax credits are absolutely critical in sustaining preservation’s vital role in economic development.”
Peg Breen, President of The New York Landmarks Conservancy, said, “The Federal and State preservation tax credits have helped large landmarks like Harlem’s Apollo Theater. And we have helped a dozen moderate income homeowners in Brooklyn, Upper Manhattan and Jackson Heights receive state credits.”
Regional “Part 2” tax credit project designs approved by SHPO from 2013 to the present are as follows:
Western New York – 88 projects approved identifying $532.2 million in qualified rehabilitation costs.
Finger Lakes – 29 projects approved identifying $289.7 million in qualified rehabilitation costs.
Southern Tier – 32 projects approved identifying $113.6 million in qualified rehabilitation costs.
Central New York – 27 projects approved identifying $272 million in qualified rehabilitation costs.
North Country – 10 projects approved identifying $35.5 million in qualified rehabilitation costs.
Mohawk Valley – 8 projects approved identifying $40.4 million in qualified rehabilitation costs.
Capital Region – 63 projects approved identifying $268 million in qualified rehabilitation costs.
Mid-Hudson Valley – 26 projects approved identifying $43.9 million in qualified rehabilitation costs.
New York City/Long Island – 55 projects approved identifying $1.39 billion in qualified rehabilitation costs.
Tax credit program
Owners of income producing real properties listed on the National Register of Historic Places may be eligible for a 20 percent federal income tax credit for the substantial rehabilitation of historic properties. The final dollar amount is based on the cost of the rehabilitation. The work performed must meet the Secretary of the Interior's Standards for Rehabilitation and be approved by the National Park Service. Owners of income producing properties that have been approved to receive the 20 percent federal rehabilitation tax credit automatically qualify for the additional state tax credit if the property is located in a federal census tract that is identified as a Qualified Census Tract, having a median family income at or below the State Family Median Income level. Owners can receive an additional 20 percent of the qualified rehabilitation expenditures up to $5 million.