Proponents of downtown development said Thursday that they are alarmed by Gov. Sam Brownback’s proposed elimination of a key redevelopment tool.
Brownback’s budget released Wednesday targets the Historic Preservation Tax Credit, along with a raft of others, for elimination to shift money to his proposed cut in the personal income tax.
But the historic tax credit is crucial to making many of downtown Wichita’s redevelopment projects financially feasible, developers said.
Downtown’s most prominent developer, David Burk, said that the credits have been used on many high-profile projects, including the Drury Broadview, Eaton Place, Grant Telegraph, Carnegie Library and River City Brewery.
“They’re critical,” he said. “There would not be a lot of development downtown, including Old Town, without the tax credit.”
Without tax subsidies of some kind, redevelopment in downtown just isn’t feasible, he said.
“It’s hard to get the same rental rates downtown as they do in the suburbs,” Burk said. “If you can’t get those rental rates, it’s hard to build new – and historic renovation costs more per square foot.”
Renovating old buildings costs more because of demolition costs, asbestos and lead paint removal, and the need for custom windows. The credit allows developers to recoup up to 25 percent of the cost of a project, but it must be thoroughly documented and approved, Burk said.
Jeff Fluhr, president of Wichita Downtown Development Corp., said the tax credit is essential to keeping momentum for downtown redevelopment. It will be needed for projects such as Union Station, the Commodore Hotel and possibly the buildings being redeveloped by Robert Eyster and Michael Ramsey. Buildings must be at least 50 years old to qualify.
The credit matters, Fluhr said. When the Legislature threatened to cap the credit in 2010, work on the Drury Broadview stopped until local leaders convinced legislators that it generates an economic boost and the legislators reversed themselves.
He said that since 2001, the program has created 15,000 jobs and $700 million in investment in Kansas. Fluhr and others, including Wichita officials, will be in Topeka lobbying the Legislature, trying to repeat their success of 2010.
“We’re going to work on this with our partners around the state,” Fluhr said. “We’ll demonstrate the importance of this program, not only for downtown, but for the whole state of Kansas.”