Bi-Partisan Legislation to Extend Redevelopment Zone Historic Tax Credit is introduced
Landmarks Illinois President & CEO Bonnie McDonald testified before the House Revenue & Finance Committee on Wednesday at a subject matter hearing in Chicago in support of bipartisan legislation to extend the River Edge Redevelopment Zone (RERZ) Historic Tax Credit. The RERZ is a job-creating initiative that has fostered the reuse of historic buildings and resulted in $82.1 million in private investment in Illinois’ aging river cities, but is currently set to expire at the end of 2017.
House Bill 2972 would ensure this imperative economic development tool is available until January 1, 2022. Landmarks Illinois, the only statewide historic preservation advocacy organization in Illinois, also believes the RERZ historic tax credit is a vital incentive encouraging private investment in historic rehabilitation projects to revitalize our cities.
“Today, I am here to testify in support of HB 2972 in collaboration with the five cities benefitting from this legislation,” McDonald said at the April 12, 2017, House Revenue & Finance Committee subject matter hearing. “The RERZ Historic Tax Credit has achieved its objective of stimulating private investment to help rejuvenate the state’s economy, create jobs and revitalize neighborhoods in the pilot cities. This catalytic incentive works, and I ask you today to consider a full hearing on this bill.”
The RERZ historic tax credit allows for a credit on state income taxes equal to 25 percent of the qualified costs of a historic rehabilitation project in the Illinois cities of: Aurora, East St. Louis, Elgin, Peoria and Rockford. The credit applies to income-producing properties and parallels the 20 percent federal historic rehabilitation tax credit, creating more development opportunities in Illinois and leveraging millions of dollars in federal monies not currently flowing into our state. A 2013 study by the University of Illinois-Springfield found that this credit is expected to return up to $10 for every $1 invested.
Thirty historic preservation projects eligible for the RERZ historic tax credit are either complete or underway in four of the five Illinois river cities. These were once vacant, underperforming properties located in disinvested areas. Thanks to the RERZ tax credit, however, new housing units, offices, restaurants and an art school are being developed, and downtown areas and neighborhoods are being revitalized. A multi-year extension of the RERZ tax credit is necessary to keep this momentum and move these projects from the drawing board to ribbon cutting. Additionally, if HB 2972 passes and the RERZ tax credit is extended, the 18 projects currently at risk would bring the total private investment to almost $200 million – monies that would not have been spent in Illinois without this incentive, meaning a loss of that income and sales tax revenue to one of our neighboring states.
“Having helped developers, property owners and elected officials revitalize vacant and underutilized properties for almost 20 years, I have seen that a state historic tax credit, paired with the federal version, is an imperative tool,” McDonald testified. “It ensures we are regionally competitive and the jobs created are local; they cannot be outsourced. Plus, because preservation is more labor-intensive than material-intensive, it puts more people back to work in Illinois.”
State historic tax credits are currently available in 34 states. Passing the RERZ historic tax credit extension in Illinois is a wise investment that is estimated to return up to $10 to the state’s general fund for every dollar allocated in the five years after the historic preservation project is complete. In Rockford alone, the program is expected to create 1,071 construction jobs, 556 direct permanent jobs and 203 indirect and induced jobs. The RERZ historic tax credit continues to deliver results to the state by fostering a positive domino effect stimulating reinvestment in neighboring properties not necessarily taking advantage of this incentive, as well.
HB 2972 was introduced Feb. 9, 2017. A companion bill in the Senate, SB 1783, was approved by the Senate Revenue Committee on April 5, 2017, and moves to the full floor for a vote.