Per-project cap increases from $500,000 to $3.5 million in bi-partisan vote
Wisconsin lawmakers increased the limit on tax credits for historic rehabilitation projects from $500,000 to $3.5 million on Tuesday.
The bill passed in the state Senate 29-3 and unanimously in the Assembly. It now goes to Governor Scott Walker, who issued a line item budget veto in September, reducing the per-project cap from $5 million to $500,000.
The $500,000 cap was to go into effect on July 1.
A coalition of preservationists, economic development groups and real estate organizations advocated for the increase.
Proponents of the $3.5 million increase said without the higher cap, hundreds of real estate developments would be in jeopardy and economic development projects across the state could be crippled.
The issue attracted widespread interest and statewide involvement, said Tracy Johnson, president and chief executive officer of the Commercial Association of Realtors.
Of the $177.6 million awarded to Wisconsin projects since fiscal 2014, 54 percent, or $96.2 million, was awarded to Milwaukee projects, according to the Wisconsin Economic Development Corp., which awards the credits.
Between fiscal 2014 and 2017, 15 of the 61 Milwaukee projects were awarded less than $3.5 million. Thirteen of the 61 projects were awarded less than $500,000.
Scott Ramlow, co-owner and president of Uihlein/Wilson- Ramlow/Stein Architects, Inc., which specializes in historic preservation projects including the restoration project of the Old Main building at the Milwaukee VA Soldiers Home, said the $3.5 million increase will have a direct impact on several projects his clients are planning this year.
A $500,000 cap could support a $2.5 million overall project, while a $3.5 million cap could support a $17 million project, Ramlow said.
“If you look at it in those terms, a $17 million project gives you a substantial building and a good return on investment,” Ramlow said. “It also makes a lot of projects a lot more feasible.”
The increase in the cap is all the more important considering the change to the federal historic tax credit program that went into effect with the passage of the Republican tax cut bill signed into law Dec. 22. The bill preserved the 20 percent federal historic tax credit, but the credit is now paid over five years instead of a lump sum.
That change could affect the gap of the project’s overall financial structure, Ramlow said.
“This doesn’t necessary kill the deal, but it makes it different,” Ramlow said.
Jim Villa, CEO of NAOIP Wisconsin, said Tuesday’s vote is a victory for historic preservation and commercial development and a strong signal that the state’s policy makers understand the diversity of tools developers use.
Villa said the coalition who worked on the bill has also worked closely with Walker’s office to make sure the administration is comfortable with the change.
“He has to look at the macro of the state’s finances, but we are confident,” Villa said.