The federal historic tax credits that spurred the redevelopment of downtown Davenport would still be available under the tax reform bill passed by the Senate, but are eliminated in the House bill.
Both versions of the tax reform bill are now in a House and Senate Conference Committee charged with reconciling the two versions.
At present, a developer can be allocated tax credits amounting to 20 percent of qualified rehab project costs to help finance renovation of historic buildings.
Developers can use the tax credits themselves or, as is usually the case, they can sell them to investors to generate equity (money) to finance the redevelopment. Tax credits are attractive to investors because they provide a dollar-for-dollar reduction in the investor's federal tax liability on ordinary income.
At present, the 20 percent credit may be used in one year. Under the Senate bill, the credits would be spread out over five years, or at a rate of 4 percent per year.
This is not ideal for tax credit boosters because it could have the effect of reducing investor interest, Davenport Alderman Marion Meginnis, 3rd Ward, said.
Meginnis is a strong supporter of historic tax credits because she has seen all the redevelopment they have spurred — and could continue to spur — in Davenport and communities throughout the country.
"Investors ... are looking for a way to reduce their tax liability," she said. With a smaller annual reduction available, they might not want to buy the credits. This, in turn, may cause developers to shy away from historic rehabs, she said.
Still, the Senate version is better than elimination, she said.
The Quad-Cities Chamber of Commerce, various private developers, including Economic Growth, a nonprofit developer based in Rock Island, Landmarks Illinois, the National Trust for Historic Preservation and other entities, have spoken in favor of the credits that were first enacted by the Reagan Administration in 1981.