Historic opportunity

April 07, 2004

MARYLAND'S Heritage Preservation Tax Credit has been a remarkably effective tool for encouraging redevelopment in Baltimore. Unfortunately, it's also been an expensive enterprise for taxpayers. But that doesn't justify the treatment the program is now getting in Annapolis, where some legislators want to shut it down, at least to commercial developers, for at least 15 months.

The tax credit's purpose is to encourage the reuse of historic buildings, both commercial and residential, anywhere in the state. Created eight years ago, the program quickly grew to become one of the most generous of its kind in the nation. Wisely, it's been capped in recent years. In 2004, for instance, the tax credits can't exceed $15 million (an amount that's been used up since early January).

With the program set to expire in June, Gov. Robert L. Ehrlich Jr. has proposed keeping it going - with some reasonable limits. But apparently that's not good enough for the state House Ways and Means Committee, which last week rewrote his plan in a way that has outraged preservationists and city business leaders. The changes lessen the benefits of the tax credit and make it far less attractive to developers. If adopted, projects such as Baltimore's burgeoning west-side redevelopment would be seriously jeopardized.

Fortunately, there is still time in the final days of the legislative session for cooler heads to prevail. Del. Sheila E. Hixson, the House committee's chair, needs to find a better way to rein in the tax credits without totally disrupting Baltimore's redevelopment efforts. Too much is at stake to let the program - and the economic opportunity it generates - be lost.

It's true that the city benefits from the tax credit far more than the rest of the state. That's not by design but by circumstance - Baltimore has pursued more commercial redevelopment opportunities. But the solution is not to cap Baltimore's participation. That would unfairly penalize a jurisdiction that's trying to do exactly what the program intends - make historic preservation a means of economic development.

Further, the state must not temporarily halt the commercial redevelopment program, as Delegate Hixson has proposed. Her reasoning is understandable - she wants the state to set aside money to pay for it - but this is a critical time for the city's redevelopment effort. A prolonged hiatus would be a momentum-killer for projects such as the Hippodrome Theatre. The question skeptics must ask themselves is this: Is it costlier for the state to help redevelop Baltimore or to lose out on the jobs and economic stimulus that these projects create? In eight years, the program has leveraged an estimated $330 million in private investment, with most of it going toward economically depressed areas. That's a clear victory for taxpayers.

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