Local developers have been watching Washington carefully, as Republicans in the two houses put together their tax bill, with potentially devastating effects on local development.
Developers say they believe they have a handle on tax proposals that would affect development. There are two areas most concerning local developers.
One is the fate of historic preservation tax credits, used for most local adaptive reuse development projects. Those credits could be sold to bring in cash to help pay for the project.
The new law tentatively changes that somewhat by paying out the tax credits over five years, cutting their value substantially.
The tax package also potentially cuts into help for affordable housing. Architect Matt Meier was in front of the Buffalo Planning Board Monday for a Doat Street project using the tax credits eventually sold to investors.
"Corporate or the wealthy tax impact is so reduced where they're not looking for an alternative to invest in these resale credits, then the tax credit market might be severely hurt even without omitting the tax credits because then there's less appeal," Meier said.
Developer Rocco Termini said he rushed forward building purchases on Chandler Street so financing is covered by the current tax laws this year, rather than waiting for the effect of the new law next year.
"If you are working under the new tax law, the credits are going to be worth a lot less because the benefits have to be present-valued, because we paid out over five years," said Termini. "Now they're paid out in year one, so what used to be worth maybe 90 cents is going to be worth like 65 cents."
Architect Steve Carmina has been watching the tax fight closely because it affects clients and some of his own projects.
"It's been my major point of anxiety for the last 10 weeks, so along with many others in our industry and people like Rocco Termini and we just talked about it a little bit tonight," said Carmina, "but we're certain that in the current bill - which is the combined Senate and House bill - that the tax credits are saved and as are new market tax credits, some of the housing fund tax credits which are important to affordable housing."
