A tax credit intended to preserve and renovate historic buildings would end this year under a bill heard by the Revenue Committee March 3.
LB475, introduced by Sen. Paul Schumacher of Columbus, would terminate the Nebraska Job Creation and Mainstreet Revitalization Act. Enacted in 2014, the act provides up to $15 million a year in tax credits for the rehabilitation, preservation and restoration of historically significant buildings. Credits for individual projects are capped at $1 million. The current sunset date for the act is Dec. 31, 2022.
Schumacher said the Nebraska State Historical Society, which jointly administers the act with the state Department of Revenue, has not followed the law’s intent, which is to provide aid to cities and towns throughout the state. Most of the credits have gone to projects in Omaha, he said, and the complex application process makes it difficult for small towns or developers to compete.
Cutting the program would help the state make up its current budget shortfall, Schumacher added.
“Right now, we’ve got to shake every nickel out of everything,” he said. “And this is $15 million a year of nickels.”
Renee Fry of the OpenSky Policy Institute testified in support of the bill. She said eliminating the tax credit would help the Legislature close the $288 million gap between the preliminary state budget and projected revenues. Investments in education, roads, Medicaid and correctional services can generate just as much economic activity as tax credits, Fry said.
“As we’re looking at significant budget cuts, we have to ask ourselves where we’re getting the biggest bang for our buck,” she said.
Testifying in opposition to the bill was Trevor Jones, director and CEO of the Nebraska State Historical Society. He said the application process for the tax credits is complex because the historical society must determine whether a project complies with complex federal standards.
“We would like to have that be a simpler process,” he said, “but the law constrains us.”
Jones acknowledged that most of the applications for the tax credit in 2015, the first year they were available, came from Omaha because developers there were ready to start projects. In 2016, he said, the historical society received 16 applications from Omaha projects and 14 from the rest of the state, including rural areas.
Also testifying in opposition was David Levy, a lobbyist for Turner Park North and a board member of Omaha by Design and the Nebraska Association of Commercial Property Owners. He said the program is working and helps small towns make use of buildings that otherwise are hard to renovate.
“By reusing those buildings, these cities not only revitalize their main streets and their downtowns,” Levy said, “but they also make most efficient use of existing municipal facilities and services, thereby saving additional public money.”
Levy agreed with Schumacher that the program can be difficult to use, but he said the application process should include safeguards to ensure public money is well spent.
“There have to be some standards, there has to be a balance so that the projects that benefit from this program are the projects that it’s targeted to — are the projects that actually need it,” he said. “That balance may not be in the right place right now, I fully acknowledge that.”
Michael Sothan, executive director of Main Street Beatrice, also testified in opposition to the bill. Since Beatrice was placed on the National Register of Historic places last year, he said, at least four developers have expressed interest in starting renovation projects in the city’s downtown.
“Without this tool, I know we would not see the type of investment in our downtown that we are talking about right now.”
The committee took no immediate action on the bill.