Legislature Partially Restores Historic Preservation Program
Has state finally decided on new rules for program or will they continue to make changes?
Old buildings across Wisconsin just got a new lease on life.
The Wisconsin State Assembly unanimously passed an increase to the per-project cap in the state’s Historic Preservation Tax Credit program, and was supported by a 29-3 vote in the State Senate. The bill now heads to Governor Scott Walker, who is expected to sign the legislation into law.
The new legislation comes after a devastating budget veto by Governor Scott Walker in fall 2017 dropped the per-project cap from $5 million to $500,000. The move was a direct hit on economic development in Milwaukee and many other historic main streets across the state. It was set to go into place July 1st.
Developers can receive the state income tax credits for 20 percent of any eligible project costs to redevelop any historically-designated properties. Developers then use the credits themselves or sell them for less than their stated value. The credits, paired often with federal preservation credits, are a critical piece of financing projects that would otherwise be economically unfeasible compared to building new structures on empty sites.
The new bill sets the project limit at $3.5 million per parcel, supporting a $17.5 million project instead of a $2.5 million project.
“The Milwaukee Preservation Alliance is very pleased with the recent legislation passed by the Senate and Assembly increasing the State Historic Tax Credit cap to $3.5 million per parcel. We would like to thank our fellow coalition members who worked together to achieve our shared goals of preserving Wisconsin’s historic buildings and maintaining a strong economy. Wisconsin’s Historic Tax Credit Program is a proven low risk – high return on investment program that helps to create jobs across our state and supports important economic development projects in Wisconsin communities both large and small,” said the Milwaukee Preservation Alliance in a statement.
The credits are as critical for Milwaukee as they are for Wisconsin’s small towns. Discussing a long empty school in a rural area that got developed at a November rally for the credits, State Historic Preservation Officer Jim Draeger said: “you don’t get $2.5 million projects happening in these small towns.” Sixty percent of the credits go to communities with populations under 100,000.
Draeger reports that 16 percent of tax credit projects have gone to buildings that have been vacant for more than 20 years. Those buildings, he says, would be “unreachable” without the tax credit program and would be forced onto cities as an expense through abandonment, tax foreclosure and demolition. The program has turned liabilities into assets.
Since 2014 when the state expanded the credit amount from five percent to 20 percent, the state has awarded $96,187,670 in credits to projects in the city of Milwaukee. Those projects, a handful of which have yet to move forward, have an estimated investment amount of $477,454,576. Statewide the program has awarded $177 million in credits for an estimated investment of $892 million.
A November 2017 historic preservation rally to fight to maintain the federal credit, which was slated for elimination in the federal tax overhaul, included a discussion on the potential for a state bill. The proposed bill was expected to gain support as long as the state was expected to show a surplus, which was formally declared by the nonpartisan Legislative Fiscal Bureau in mid-January 2018.
The federal tax overhaul included a handful of changes to the program including paying the credits out over five years instead of one and eliminating a 10 percent credit for non-historically designated old buildings.
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