Galvin sitting on development tax credits
Secretary of State William Galvin is sitting on millions of dollars in tax credits designed to spur the economic development of historic buildings across the state.
Despite the severe economic downturn and developers desperate for financial help, Galvin decided last year to hold on to 10 percent of his $50 million annual allotment of historical rehabilitation tax credits.
In letters to a number of developers in November, Brona Simon, who heads Galvin's Massachusetts Historical Commission, indicated there weren't enough tax credits to go around. "Numerous applications in this round resulted in requests that far exceeded the amount available for the entire year," Simon wrote.
Galvin spokesman Brian McNiff said in an emailed statement that the commission routinely keeps millions of dollars of tax credits in reserve "to meet unpredictable calls on the tax credit program that may rise from threatened historic structures in the next calendar year."
Galvin has come under fire for the way he runs the tax credit program. He doles out the tax credits using a secretive selection process that creates uncertainty for developers and maximizes his political clout. He has also resisted attempts by lawmakers and developers to find out who is receiving the tax credits and what is being done with them. A CommonWealth investigation last summer, relying on documents obtained under the Public Records law, found out that the Boston Red Sox have received more tax credits than anyone else. The tax credits are being used for the renovation of Fenway Park.
Robert D. Ansin, chief executive officer of MassInnovation LLC, says he needs about $5 million in state tax credits to kick-start a $50 million development project in Lawrence called Monarch on the Merrimack. Ansin said he has received tax credits worth about $1.6 million so far and needs another $3.5 million. His requests for tax credit allocations were rejected last November, with the historical commission saying it lacked the funds, but he received a total of $600,000 in tax credits in March.
Ansin said there may be a need to hold some tax credits in reserve, but he urged state officials to think about making fewer but larger allocations of tax credits to projects to get them moving in the depressed economy. He said many projects are sitting idle while they wait for the tax credits they need to begin construction. Galvin typically makes tax credit awards in the $200,000 to $500,000 range.
Ansin also said state officials should explore whether they can retrieve tax credits awarded to projects that are no longer being pursued or not being pursued actively.A number of bills have been filed on Beacon Hill to raise the annual allocation of historic rehab tax credits to as high as $100 million — or remove the limit entirely in economically distressed Gateway Cities like Lawrence, Lowell, New Bedford, and Fall River. Some lawmakers have also said they would like to take oversight of the program away from Galvin.
"State tax credits, when coupled with federal credits, are increasingly becoming the critical source for attaining project feasibility," the report said. "It is anticipated that the number of applicants and demand for state credits will continue to increase, and an expanded program will be needed to unlock the enormous amount of development potential that these projects represent."