Credits that work

Our view: Historic rehab tax credit program too valuable to be allowed to die

November 30, 2009

What do you call an economic stimulus program that produces an $8.53 return on every dollar invested? A smashing success? The envy of the White House? The greatest idea government's had since the income tax refund? In Annapolis, they use quite a different title: Endangered.

That's because the enormously successful Maryland Heritage Structure Rehabilitation Tax Credit is set to expire next year because state lawmakers can't agree on a plan to extend it. The program, which gives developers an incentive to renovate older buildings, has been hotly debated - but, in the irony of state politics, the controversy stems from its very success.

From the west side's Atrium Apartments on Howard Street to The Can Company shopping and office complex on Canton's Boston Street, many of the most innovative and valuable commercial and residential redevelopment projects to be undertaken in Baltimore over the last decade have been made possible by the heritage tax credit.

Baltimore is not the only community to benefit from this economic revitalization engine - small towns from the Eastern Shore to Western Maryland have, too - but the city has clearly benefited the most. There are simply more opportunities to renovate historic (and undervalued) buildings in Baltimore than anywhere else in the state.

But even that fact works to Maryland's advantage. With some of the highest concentrations of poverty in the state, the city is also the ideal target for such investment. A report produced earlier this year by the Abell Foundation found that for every $1 million in tax credits, 72.5 jobs are created.

Yet over its 13-year history, the tax credit program has been treated like an unwanted stepchild by the state legislature. It's been capped and cut and tied up in red tape in order to reduce its cost and funnel more of the benefits to other jurisdictions.

Much of the opposition can be traced to one person, House Ways and Means Chairwoman Sheila E. Hixson, who hails from Montgomery County, a subdivision with far fewer historic rehabilitation projects than the city. Delegate Hixson might be convinced to extend the program beyond its 2010 expiration - but no doubt only in its current form. Gov. Martin O'Malley has sought to upgrade the program to add resources and reduce its waiting period (often of a year or more), but a measure to do so died late in the last legislative session.

Such a stand-off could stop the Baltimore economic renaissance in its tracks. As it is, a project like Tide Point could no longer qualify for the $17.7 million tax credit it actually received nearly a decade ago because the program has been scaled back so much. (It's down to a total of just $5 million for commercial projects during the current fiscal year).

Enough is enough. The state's budget crisis can't be used as an excuse not to renew the heritage tax credit program. The economic recession is proof of how much it's needed: Cutbacks to the program over the years have likely cost the city hundreds, if not thousands, of jobs.

Putting Baltimoreans back to work doesn't add to the state's long-term budget woes, it helps reduce them. More jobs not only means more people paying taxes, it results in fewer dollars needed in safety net programs.

If there's ever been a more successful economic development program undertaken in Maryland, we haven't seen it. That lawmakers would even consider abandoning a relatively modest tax credit that's spurred so much historic preservation and job-creation is stupefying even by State House standards.

Readers respond
This is a great program. Can't believe developers are not in Annapolis lobbying for an extension of this tax credit. I love historic buildings. They are living connections to our past. What's to quibble? Extend the tax credit, rehabilitate more old buildings, preserve what our ancestors left us and create jobs. Annapolis is losing its collective sanity looking this gift horse in the mouth.

Caravan

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