Historic redevelopment projects so far fall well below new $3.5M tax credit cap
None of the six applicants for the state's popular historic tax credit has come close to hitting a new $3.5 million-per-project ceiling some six months after it went into effect.
The WisPolitics.com review of data from the Wisconsin Economic Development Corp. shows the biggest award under the agency's historic rehabilitation program over the first half of the fiscal year was $2.6 million to a Delavan limited-liability company.
The other awards, meanwhile, range from $65,412 for 107 King St LLC in Madison to $2.1 millon for McKinley School Apartments LLC in Milwaukee.
The review comes after then-Gov. Scott Walker last year signed a bill to set the $3.5 million per-project limit, effective July 1. That law raised the $500,000 cap Walker imposed during the last budget deliberations; the guv argued the cap would ensure the program did not crowd out other economic development opportunities.
The state credit, which accounts for 20 percent of eligible expenses and matches a similar federal credit, previously had no cap. Backers of a cap, including Walker, had argued a limit would bring more certainty to the program and noted similar programs in other states have ceilings.
Gorman & Company Wisconsin Market President Ted Matkom, whose firm is working to convert Milwaukee's former William McKinley School into a 35-unit apartment building, said the new $3.5 million cap is "in the back of my mind" when agreeing to take on new projects.
But, he said in an interview last week, it "doesn't really affect" most of what he works on, including the McKinley School Apartments project, which has an estimated total cost of just over $9 million.
WEDC awarded McKinley School Apartments LLC $2.1 million in September for its project. The units, Matkom said, will be targeted to veterans and their families.
Matkom said while the cap could have a "chilling effect" on big historic redevelopment projects in the state, most Wisconsin projects -- between 80 and 90 percent, he said -- will fall below that limit.
"If you have a $50 million historic project, you're going to run into the cap," he said. "If you have a $20 million project, you won't. It's just a matter of what the size of the project is that you're going to tackle, so a big, big factory that you're going to turn into apartments probably isn't going to work."
A number of large projects last year would have been ineligible for awards if the cap had been in place. That includes six in FY 18, the largest being a $12.4 million award to Milwaukee's Community Within The Corridor, which media reports show is looking to develop apartments, business and nonprofit space plus two recreational areas in the former Briggs & Stratton Corp. location on the city's north side.
Overall since 2014, the state awarded $321.9 million in historic tax credits, including $84.3 million over the 2018 calendar year, according to the WEDC data. That's up from the $82.7 million the agency doled out in 2017 and $67.3 million from 2016.
From July 1, 2018, through Dec. 19, the state awarded six projects worth $7.3 million in credits. In the past few years, WEDC spokeswoman Madeline Morgan said, two-thirds of historic tax credit awards have been made during the second half of each fiscal year. That means, she estimates, most of FY 19's historic tax credit awards will be given out over the next six months.
-- By Briana Reilly