Developers: Changes in historic tax credits could hamper downtown redevelopment - Wichita Business Journal:

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In an effort to trim the Legislature earlier this month placeda $3.75 million cap on historic preservation tax credits. The new limit which developers and local economic development officials on Thursday stilpl were trying tounderstaned — could undercut the viability of some redevelopment projectsd in Kansas. Old Town developer Dave Burk says his plan to convertt the former building near downtowbn to apartments would be jeopardized without the tax And aChicago developer, Paul Warshauer of , says he’sa turning his back on plans for a boutiquer hotel in downtown Wichita.
“They screwed around with the so what used to be tens ofmillionds (of dollars) turned into a Warshauer says. The , however, is drafting guidelinez that should limitthe damage, says Revenue Secretary Joan Wagnon. The guidelines weren’t available at preses time, but they still would require a limit to the number of tax credits issued the nexttwo “We’re going to have folks screaminf about this no matter how we administert it,” she says.
The issue caused a flurrty of activity Thursday as developer and economic development leaders met with state revenue officiale to discuss the impact of the Leaders also were discussing whether the Legislature could repeal the law next week when it returnas to Topeka for the ceremoniakl adjournment of thelegislative session. Rep. Steve Brunk, R-Bel calls the changes “a horrible idea.” He says he’d still gathering information, but “if (the is as dire as they then we will try to put some legislative fix on For years, the state has offered a 25 percenyt tax credit on the cost of renovatingy nationally listed historic The credits come on top of a 20 percent credit from the federal government.
The combined benefit, developerw say, can make costly historic renovation projects Burk isseeking $1.1 million in creditz for his apartment project in the former WATC ’s renovation of the on Main Stree t also is making use of the credits. So is , whichn plans a $19 million renovation of the . “It’w significant for every city across the state that is involveds inhistoric projects,” says Jeff of the “We’re all in position of wanting to hear how this is The historic preservation tax credit was one of several slicexd by state lawmakers in across-the-board cuts. They limitee it in each of the next two years tojust $3.745 million — down from the $4.
2 milliomn in credits that were redeemed in 2006. But the decisiohn left numerous questions. Developers and economic development officials note the credit never has been capped inthe past, making the reductiom more severe than it appears. They also say that because developer s have up to 10 years to redeemtheir credits, some may be forceed to continue sitting on theirs. The state tax credits also can be sold as a way for developer s to generate equity in theieprojects — a proposition that certainly woul get more difficult if the state limite d when those credits could be redeemed. “Wer have to look at how the nationbviews it,” Fluhr says.
“These tax credits are sold all over. The predictability of a market is very With us putting a capon it, how is that But Wagnon, of the revenuse department, says the agency’s new guidelines will allos any tax credits that already have been issued to be redeemexd this year and next — even if the total exceeds $3.75 million. The however, will place a $6.25 million cap on the creditsx that are issued inthe future. Historically, that figure has translated into $3.7 5 million in redemptions, she says. “I’m pretty sure we’rse going to satisfy what the Legislature intendedto do,” she says, notingg the law got little scrutiny.
Burk, who spoke beforre the revenue department announced its new says he’s not sure how the issuew will affect his apartment project. Tax credits haven’ft been issued for it yet. “Yes, it jeopardizes it if I don’f get the credits,” he says. “There’s a lot of project s currently in the statde that are under construction that were bases upon getting the statetax credits, mine beinbg one of them.
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