Testimony of Nancy Smith, Executive Director of GrowSmart Maine
In opposition to the proposal to cap FY15 Historic Preservation Tax Credit
March 5, 2014
Senator Hill, Representative Rotundo and members of the Joint Standing Committee on Appropriations and Financial Affairs. My name is Nancy Smith. I live in Monmouth and I am the Executive Director of GrowSmart Maine, a statewide non-profit organization working at the intersection of Maine’s economy, environment and communities.
I am speaking today against the proposal to cap historic preservation tax credit payments in FY15 because the tax credit program is one of Maine’s most significant successes in its positive impact on Maine’s economy, environment and our communities.
The historic preservation tax credit (HPTC) is an important component of the overall financing for historic preservation projects. The tax credit provides equity for a project; it is an asset, not debt. Tax credits, paid out in the four years following certification and completion of the project, can leverage additional resources necessary for the redevelopment of historic buildings. Without the tax credit, these projects likely would not happen.
You have heard from the developers and allied professionals who create historic preservation projects across much of the state. You’ve heard of the broad benefits of the tax credit through immediate job creation and overall economic activity association with the renovation of these buildings. You have also heard that the concept of the cap is detrimental to Maine’s reputation as a place for strategic investments. FY15 tax credits will be paid out on projects already completed and put in service, based in large part on what these credits bring to the overall financing of the projects. To reduce those credits now is bad policy. It throws a caution flag on the field of future investments in this program. Maine communities, our economy and our open natural areas will suffer as a result.
It is within this context that I want to talk with you about the value of the state HPTC well beyond the benefits seen in the construction of these historic preservation projects.
1. The varied use of the buildings: housing, both market rate and affordable; businesses in retail and hospitality sectors, medical offices such as in the Lamb Block in Livermore Falls and even a broadband hub to improve the economic potential of the entire region, as is planned in an historic rehabilitation project Dover-Foxcroft. All of these uses strengthen the community and the economy.
2. Impact on surrounding properties: One of the basic tenets of economic development is that growth draws growth. Properties surrounding these rehabbed historic buildings also become more desirable for economic activity, strengthening the entire neighborhood and providing significant additional tax base for the community.
3. Reduces development pressure on open space outside of downtowns and village centers: Because most of these historic buildings are located on Main Streets and in downtowns, the strong draw towards those areas pulls development pressure away from open fields and forestland, keeping those areas available for productive use in farming and forestry.
4. Long term cost of government services is reduced when growth occurs within existing infrastructure. Investments and management of transportation, water and sewer and other essential infrastructure are most cost-effective when focused in relatively dense areas such as downtowns.
GrowSmart Maine’s highest priority this session is supporting the historic preservation tax credit in its current form. We ask that this committee dismiss the proposal to cap FY15 tax credits.