SIOUX CITY — Developers of $90 million of historic renovation projects in downtown Sioux City can breathe a slight sigh of relief.
A wide-ranging tax bill moving toward final approval in Congress this week spares the federal Historic Tax Credit program from the chopping block.
A House-passed bill had proposed eliminating the program, which allows developers to receive tax rebates of up to 20 percent on eligible projects, such as restoration of buildings on the National Register of Historic Places.
House and Senate negotiators released details of the agreement reconciling competing tax proposals last Friday. It maintains the 20 percent credit, but it will now be paid out over five years, rather than the current entire sum.
“I wouldn’t necessarily call it a victory yet, not until everything is done,” said Roger Caudron, a spokesperson for local businessman Lew Weinberg, who has proposed a $56 million renovation of the historic Warrior Hotel and Davidson Building. “We are encouraged, but not out of the woods.”
Caudron said the change in how the credit is paid out may present an obstacle to the Warrior work and other projects. He noted developers typically use this program to help inject cash into their restoration work by selling the credits to larger companies.
“With the requirement, that credit actually cannot be used fully over the first year — it has to be used over a five-year period — and that diminishes the value of the credit by about 17 percent,” Caudron said.
Caudron said Weinberg and other developers have been lobbying Congress to include a provision that would allow projects that were started under the old tax credit rules to be grandfathered in.
“We’ve been trying to get a provision in the bill that would be a transition rule so that the projects like Davidson/Warrior that are in process would utilize the old rule and be able to finish their projects,” he said. “We don’t know at this point in time if that has been included or not.”
Weinberg and Restoration St. Louis, which specializes in historic restoration projects, plans to restore the Warrior's grand second-floor lobby and ballroom and the upper floors into a 146-room Marriott Autograph Collection hotel.
The project, which backers warned would fail without historic tax credits, also calls for transforming the vacant Warrior and Davidson spaces into luxury apartments, bars, restaurants and other retail outlets.
The loss of the Historic Tax Credit program also would have dealt a fatal blow to an Omaha developer's plan to renovate a trio of historic buildings in Sioux City.
J. Development, which specializes in restoring historic structures, has proposed to invest $16.25 million to convert the 105-year-old Commerce Building into 77 apartments and 18,000 feet of first-floor commercial space; $12.4 million to convert the 93-year-old former Methodist Hospital into 69 market-rate apartments; and another $5.95 million to build 30 market-rate apartments and establish 6,175 square feet of commercial space on the first floor of the former Hatch Furniture Building.
The City Council on Monday approved an agreement with J. Development that provides a series of property tax rebates and other incentives for the three projects.