Groups oppose limits on use of tax credits

Preservationists join developers in criticizing recommended changes

February 13, 2003|By Scott Calvert | Scott Calvert,SUN STAFF

Developers and preservationists criticized proposed new limits yesterday on a state subsidy that has aided a surge in renovations of older buildings, primarily in Baltimore.

"It's typical politicians would ruin something that works well," said David Hillman, who used $9 million in historic preservation tax credits to convert the Standard Oil and Hecht Co. buildings to housing.

The recommended changes, backed by Gov. Robert L. Ehrlich Jr., would limit the tax credit program to $25 million a year statewide for commercial and residential properties.

FOR THE RECORD - An article in yesterday's editions about historic tax credit legislation quoted J. Rodney Little of the Maryland Historical Trust as saying that credits would be awarded exclusively on a first-come, first-served basis. Officials now say the applications would be ranked to determine the most deserving if the requests exceed $25 million, the annual limit in the legislation proposed in Annapolis. The Sun regrets the error.

Ehrlich wants to get a handle on the program's cost, which came in last year at $28 million. Developers and homeowners can receive a credit of 20 percent of the cost of an eligible renovation project, subject to approval by the Maryland Historical Trust.

But Hillman and others say a limit would create uncertainty, making it harder for developers to get bank financing. A $3 million per-project limit is in place.

Under a plan laid out yesterday at a Senate committee hearing in Annapolis, the historical trust, a state agency, would allot credits on a first-come, first-served basis, according to trust director J. Rodney Little.

Only the first 250 applications received each year from January to March would go into the mix, possibly causing a stampede to be first. Last year, nearly 500 applications were received.

The prospect of a mad rush is not so far-fetched. When legislation was introduced to make Feb. 1 - a Saturday - the cutoff for applications this year, one developer showed up at the state office and cried when a guard barred him from entering, Little said.

Sen. J. Lowell Stoltzfus, an Eastern Shore Republican, wants other Ehrlich-backed changes added to his legislation, which originally called for killing the credit.

They include making nonprofit groups ineligible and limiting any developer to three applications per tax year. For homeowners, the credit would top out at $20,000, with $2.5 million of the $25 million set aside for such projects.

"They're overregulating a program to a point where they're threatening the entire program," said Preservation Maryland executive director Tyler Gearhart.

During the hearing, acting Housing Secretary Victor L. Hoskins said applications for the credit would be "scored and ranked" to determine which received assistance. But Little said later, "It'll be first-come, first-served."

Little said one change might appease developers by allowing the state to commit credits for the next year if the $25 million limit was reached. "For developers it's probably more important to have that assurance to take to the bank than when they'll get it," he said.

But the number of applications would hold firm at 250, he said.

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