Due to a cap of $5 million per year and the allocation of tax credits given on a pro-rata basis, Kentucky’s Historic Preservation Tax Credit program is not conducive to meaningful revitalization and larger scale developments. The majority of these revitalization projects require significant upfront capital and the current process leaves too much uncertainty for developers. Furthermore, surrounding states have much larger programs: Ohio’s is $60 million, Missouri’s is $140 million, and West Virginia, Virginia, & Illinois are uncapped. Consequently, more investment in these sort of projects occurs in Kentucky’s border communities instead of staying in-state.
Hired after the 2014 session started and a bill sponsor already chosen by other interested stakeholders, we were late to the party and had to hit the ground running. We immediately began participating in the existing coalition’s (developers, preservationists, the State Historic Preservation Office, etc.) weekly conference calls in order to gain a better understanding of the issue and determine what efforts have already been undertaken. It became clear early on that more education and obtaining support from the key decision makers in the House and Senate was necessary.
We first secured six additional sponsors to the filed legislation including House Speaker Greg Stumbo and House Majority Caucus Chair Sannie Overly. Because the 2014 legislative session was a budget year, it was vitally important to realize that any individual tax credit bill was unlikely to pass as a stand-alone. We therefore built a contingency plan and drafted language that could be inserted into the Budget Conference Committee process. The priority became ensuring the Budget conferees were well educated about how ineffectual Kentucky’s historic tax credits are and understood the economic impact/tax revenues the 21C Lexington and Whiskey Row Project would generate.
At 6:00 in the morning, the Budget Conference Committee agreed to and then both chambers ultimately passed a one-year, separate program for those historic rehabilitation projects in Louisville and Lexington which are larger than $15 million. Qualified developments were entitled to a 20% refundable tax credit up to $30 million of the project cost. As a result, the 21C Lexington, Whiskey Row Project, and Brown Forman’s Old Forrester Distillery will receive $6 million over a four year period instead of the normal allocation of $200,000.