DUBUQUE, Iowa (AP) — Dubuque community leaders breathed a collective sigh of relief in mid-December after Congress voted to preserve the Federal Historic Tax Credit in its sweeping $1.5 trillion tax package.
“With more than 800,000 square feet of larger buildings in the immediate downtown of Dubuque that need total rehab … (the loss of the credit) would have been devastating,” said Dubuque developer John Gronen.
Plans to redevelop the former headquarters of Dubuque Malting and Brewing Co. would have ground to a halt and the continued restoration of the Millwork District, which Gronen spearheaded, would have stalled, he said.
But while lawmakers did not kill a key tool for rehabilitating old buildings and historic downtowns, Gronen and others expressed anxiety over a caveat they argue could weaken the program.
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The Reagan-era tax incentive, credited with helping put the cost of complicated restoration of historic buildings on par with the construction of new buildings, was thrown on the chopping block last month when the U.S. House of Representatives voted to abolish the credit. While the new law keeps the incentive, instead of allowing developers to reap the 20 percent credit when restoration work is completed, it will be spread out over five years.
That could make the credit less attractive to investors who don’t want to wait to cut their tax liability, making it difficult for some developers to finance larger projects, said Duane Hagerty, CEO of Heritage Works Inc. The Dubuque nonprofit works to preserve, protect and promote the city’s historic architecture.
“It’s not optimal, but when the alternative is to lose it entirely, you kind of take what you can get and work to try to restore the lump-sum payment” over time, Hagerty said.
He worries the change could make it more difficult for Cedar Rapids, Iowa, developer Steve Emerson to attract investors “at a reasonable rate” to fund the redevelopment of the 120-year-old brewery complex at 3000 Jackson St.
Emerson, president of the architecture and design firm Aspect Inc., purchased a more-than-63,000-square-foot portion of the building in March. He could not be reached for comment on Dec. 26.
Emerson previously told the Telegraph Herald that he was pursuing a federal redevelopment grant and workforce housing and historic preservation tax credits, which would largely dictate how the project takes shape.
Projects currently in the works or which can get underway in the next six months might be eligible for a lump sum under existing law, Hagerty said.
Iowa’s oldest city, Dubuque, has been the largest beneficiary of the program in the state, the Telegraph Herald reported . Since being established in 1976, $195 million in such tax credits were awarded to 257 projects in Iowa. That amount leveraged an additional $979 million of private investment that created 10,817 permanent and 8,997 construction jobs, according to Smart Growth Development.
Gronen said the credit has allowed cities such as Dubuque to “rediscover their urban cores” by tackling slum and blight and for rural communities to reinvigorate desolate main streets.
Hagerty and Gronen praised efforts by Smart Growth Development, a bipartisan nonprofit coalition of developers, business leaders and city and economic development officials from across the state, who pushed lawmakers to preserve the tax credit. And they credited U.S. Rep. Rod Blum, R-Dubuque, and U.S. Sen. Chuck Grassley, R-Iowa, for pressing conference committee members to ensure it was included in the final bill.
“Our office has received calls from developers in the First District thanking Congressman Blum for working hard to preserve the HTC,” said Blum’s communications director, Alexah Rogge, in an emailed statement. “They understand that compromise is necessary and the big picture win of keeping this credit is what’s important to our district.”
Information from: Telegraph Herald, http://www.thonline.com