In Support of LD 1810

Testimony of Nancy Smith, CEO of GrowSmart Maine In Support of LD 1810, An Act to Expand the Maine Historic Rehabilitation Tax Credit

Download a PDF of this testimony here

May 9, 2023 

Senator Grohowski, Representative Perry  and Honorable Members of the Joint Standing  Committee on Taxation,

My name is Nancy Smith, I live in Ellsworth,  and I am the CEO of GrowSmart Maine. We are a statewide non-partisan non-profit organization helping communities navigate change in alignment with smart growth.  We advocate for comprehensive policies and funding for smart growth practices and outcomes. 

We have partnered with Build Maine to guide a transparent crowd-sourcing of policy proposals that began over a year ago, and has drawn together a hundred people from across Maine and beyond. Policy Action 2023 has resulted in sixteen proposals from eight working groups, all addressing the shared goal, “to address barriers to and create incentives for equitable, sustainable growth and development that strengthens downtowns and villages of all sizes while pulling development pressure away from productive and open natural areas. We do so acknowledging that Maine has urban, rural, and suburban settings for which any solution may or may not be a fit and a variety of people who deserve to be welcomed to their communities.”  

This testimony reflects the positions of GrowSmart and Build Maine.

There are three goals for Policy Action 2023, and we are already seeing results in each category:

  • To pass sound policy solutions to address the goal noted above
  • To build advocacy capacity within the broad reach of Mainers who support the goal
  • To advance the provocative discussions necessary for meaningful outcomes with long term, sustainable impacts in strengthening our downtowns and pulling development pressure away from productive and open natural areas.

Those who have been leading this effort represent respected organizations with a long history of effective public policy work. With LD 1810, they are proposing sound policy that will lead to the deep discussions needed to maximize the value of this tax credit. The 2008 Historic Rehabilitation Tax Credit replaced an earlier program that was ineffective and therefore unused. While the substantial project credit has encouraged the rehabilitation and reuse of historic buildings throughout much of the State since that time, the small credit has only been used on 13 projects. LD 1810 will open to tax credit for use by more people on more historic buildings.

The  2020 economic impact study, as well as the 2021 OPEGA report, also affirm its value.  Several  recommendations from that report are addressed with this bill:

From the OPEGA report:

“The current HRTC, which was enacted in 2008 (36 MRSA §5219-BB), replaced a previous version of the credit (36 MRSA §5219-R) that was much more limited than the current version. Since enactment, the current HRTC has undergone relatively few substantive changes. The enacting law and changes are as follows: 

  • PL 2007, c. 539, Part WW enacted the current HRTC under 36 MRSA §5219-BB. 
  • PL 2007, c. 693 provided for the allocation of credits under the HRTC to project partners, members or owners that are exempt from taxation. 
  • PL 2009, c. 361 changed the basis for determining “certified affordable housing” and the basis of qualification as a “certified qualified rehabilitation expenditure” and assigned responsibility for certifying historic structures to the Director of the MHPC. • PL 2011, c. 240 provided for the application of the credit to condominiums. 
  • PL 2013, c. 550 changed the $5 million cap from per certified rehabilitation project to either per certified rehabilitation project or per each building that is a component of a certified historic structure, whichever is greater. This change allowed a portion of a building or a single building in a complex to qualify for the $5 million cap. It also provided that a certified rehabilitation project placed in service over multiple taxable years is allowed up to $5 million in credit for the portion of the certified rehabilitation placed in service for each taxable year. 

Since enactment, much of the current credit’s overall design has remained unchanged, including key elements such as eligibility requirements, credit percentage, and credit limitations. For many of these design features, there may have been changes if the underlying federal eligibility requirements changed.”

The benefits of this proposal are significant, as outlined in the attached Fact Sheet. 

For the owner-occupied structures:

  • There is an additional 5% credit for property owners at or below 120% of Area Median Income, for properties will include an affordable dwelling unit provided to a renter at or below 100% of the Area Median Income, or for properties that have been vacant for more than five years. These provisions strengthen the vibrancy and fiscal health of the community.
  • Including energy efficiency and resiliency in the list of qualified expenditures adds to the many climate benefits of rehabilitating historic buildings.
  • The tax credit is voluntary for the property owner, increases the municipal tax base, and creates jobs in construction and tourism sectors

For small projects that don’t make use of the federal tax credit, the state credit is increased from 25% to 30% and the cap on qualifying expenditures increases from $250,000 to $1,000,000. These changes will make possible more of these small projects across Maine.

We urge the committee to support LD 1810. GrowSmart and Build Maine stand ready to assist the committee in any way that is helpful.