CLINTON — A bill that would increase the amount of tax credits available for renovation of historic buildings has area leaders enthusiastic about its potential impact on the city of Clinton.
Senate File 436 calls for the historic preservation and cultural and entertainment district tax credit program to be expanded from $45 million to $60 million dollars in the upcoming fiscal year up to fiscal year 2016. At that time the amount will be reduced to $50 million.
The bill passed through the Iowa Senate with no opposition last Wednesday. Sen. Rita Hart, D-Wheatland, during a legislative coffee on Saturday at the Clinton Area Chamber of Commerce, said Clinton has the potential to reap substantial economic benefits from the bill.
"It means a lot to Clinton particularly," Hart said. "It's a great bill to be passed. It's a great investment bill."
If the expanded program encourages more development, it would also mean construction jobs and promote private investment, which would provide an economic boost for the area, Clinton Area Chamber of Commerce President and CEO Nathan Sondgeroth said.
Historic tax credits have played an integral role in downtown Clinton renovations including the Van Allen, Howes and Armstrong buildings. All three of those rehabilitations were funded at least 15 percent by historic tax credits. According to those who have performed such renovations, the cost to restore an old building is nearly double what it is to construct a new building, making tax credits and other incentives critical to developers' bottom lines.
"It's helps to encourage developers and that's what you need," Clinton Engineering Co. manager Mike Johnson said.
Johnson's company performed the renovation of the Armstrong Building that houses the Clinton Area Chamber of Commerce as well as apartments in the upper levels. Johnson said the greater availability of tax credits could stir development.
"It doesn't take away all the risks, but it could mean that some of the projects that have been sitting on the sideline will come out," Johnson said.
Sondgeroth echoed Johnson's sentiments.
"Historic tax credits have shown to have a clear and absolute return when you have a stock like Clinton," Sondgeroth said. "This could have a direct positive impact on Clinton not only in downtown, but in the Lyons District as well."
One project in particular that Clinton area leaders hope will benefit from the expansion is the Wilson Building project. Investors with Cedar Rapids based Frantz-Hobart plan to transform the six-story structure into 29 market-rate apartments with historic tax credits playing a major role in the $7 million renovation. According to partner Jim Hobart, the company is very close to securing the funding for the project. Hobart said he fully supports expanding the program, which often has a backlog of projects to fund.
"The more money that's available in the pool, the more renovations are possible," Hobart said. "Sometimes there are projects we get into that don't get funded for the year we are working on them. It's obviously better if you start working on a project and don't have to wait to get the funds two years later."
The bill was introduced to the house on Monday. Rep. Steve Olson, R-DeWitt, said the item is not on the House's debate calendar yet and it's not clear if the bill will be discussed before the end of the session.
"If it does come up, I will be supportive of it because it is an economic growth tool that has been used successfully in the past," Olson said.