State Republican lawmakers are proposing to significantly raise a new cap on Wisconsin’s historic tax credit program that was set in the recent state budget.
Sen. Alberta Darling, R-River Hills, and Rep. Mike Rohrkaste, R-Neenah, and others are proposing to raise the cap on tax credit allocations for individual projects from $500,000 to $3.5 million.
Before the 2017-19 budget, the state had no cap on the per project or total sum of tax credit allocations. Supporters of the tax credit program say it helps restore historic buildings and boosts tax revenues, creates construction and permanent jobs, and boosts civic pride.
Gov. Scott Walker, who has long held concerns about the cost of the program, earlier this year in his proposed budget sought a $10 million cap on total annual tax credit allocations with a priority on job creation. The budget passed by the Legislature set the cap at $5 million per project, but the governor, using his veto pen, changed the language to cap allocations to $500,000 per project.
In his veto message, Walker argued that the changes were needed to keep the program focused on projects that create jobs and said that other states have caps.
In a memo to colleagues, Darling, Rohrkaste and others said the program has been “incredibly successful” in the state and nationally and has helped to revitalize over a hundred properties across Wisconsin. Recent studies have indicated that Wisconsin receives an $8-to-$1 return on investment over a 10-year period from the program, it says.
“Raising the limit will increase the feasibility of more projects across the state while still ensuring cost controls on the program,” the memo says. “The cap also ensures that communities and developers across the state will have certainty when applying for the HTC credit.”
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The League of Wisconsin Municipalities supports the increase.
“We went from having no limits on the HTC program to having a severe limitation of $500,000 per project put in place,” league deputy executive director Curt Witynski said. “We are pleased the Legislature is seriously considering increasing the per project cap to $3.5 million. This will return the HTC program to being a helpful tool for making rehabilitation of old urban properties more feasible for private developers.”
Until 2013, developers could seek a 20 percent federal credit and a 5 percent state credit for eligible costs on income-producing projects involving certified historic buildings, and a similar credit for non-historic buildings built before 1936.
In 2013, to the delight of developers and preservationists, the Legislature bumped the state credit to 10 percent and then to 20 percent, without a limit on the sum of annual credits issued, putting Wisconsin among national leaders.
The change brought a rush of developer requests that far exceeded projections, and in June 2014, the state put a three-week moratorium on new applications before reinstating the program.
In 2015, the governor, citing costs and the need for job creation, in his biennial budget proposed a $10 million annual cap on allocations with criteria to prioritize jobs. The Legislature, however, removed the cap amid protests.