Well, sort of … – R.T.
From the Mayor’s Office:
Mayor Petty and City Manager Augustus Stand Against Provisions in Proposed Federal Tax Reform
Today Mayor Joseph M. Petty and City Manager Edward M. Augustus, Jr. sent a joint letter to Congressman James P. McGovern, as well as Massachusetts Senators Elizabeth Warren and Edward Markey, explaining that they have concerns about the proposed federal tax reform bill, specifically language that would have negative effects on the City of Worcester and its residents.
Focusing on the proposed changes to tax-exempt bonds, historic tax credits, new markets tax credits, and low-income housing tax credits, the letter outlines the ways in which these programs benefit the entire city. “These amendments will have a negative impact on the City of Worcester and our ability to continue to provide the vibrant and strong community expected by our residents,” states the letter.
The proposed changes to these programs would affect critical infrastructure financing, private investment, economic activity, and job creation. The letter states further that, “Eliminating incentives that support local government, reduce costs and allow for infrastructure investment is a complete disservice to municipalities and our residents.”
The letter closes with the Mayor and City Manager urging Senators Warren and Markey to maintain these tax benefits.
The Honorable Edward J. Markey The Honorable Elizabeth Warren
United States Senate United States Senate
255 Dirksen Senate Office Building 317 Hart Senate Office Building
Washington, DC 20510 Washington, DC 20510
Dear Senator Markey and Senator Warren:
We are writing in opposition to certain provisions included in the federal tax reform legislation. These amendments will have a negative impact on the City of Worcester and our ability to continue to provide the vibrant and strong community expected by our residents.
The elimination of tax-exempt bonds and advance refunding for tax-exempt bonds would have a disastrous impact on the ability of government to finance critical infrastructure projects. These tools are used to construct affordable housing units, schools, hospitals, roads, bridges and other public infrastructure. Advance refunding enables the City of Worcester to lower our borrowing costs, specifically when faced with market conditions similar to those like the Great Recession of 2008. Without the availability of tax exempt bonds and flexible financing, private developers will have limited incentives for investing in less lucrative projects that often benefit our poorest residents and communities. The elimination of or reduction to the flexibility and benefit of tax-exempt bonds will have a far greater negative impact on the issuer of the bonds (state and local governments) than it will on the private market that currently is the recipient of the bonds. Residents of communities like Worcester, specifically those with the highest needs and support from government, will face the brunt of the changes to tax-exempt bonds.
Historic Tax Credits
The elimination of the historic tax credit will have a significant negative impact on the City of Worcester. As a community with aging housing and building stock, maintaining and restoring historic buildings is critical to preserving our cultural history as well as preventing blight and degradation of our community. The Historic Tax Credit is a key tool to our economic development strategies as it incentivizes developers to undertake costly rehabilitation projects and maintain our historic assets. Without the historic tax credit, preservation of these assets is at risk. Historic tax credits are also a “pro-growth” tool that stimulates economic activity, creates jobs and provides additional taxable revenue. The following properties in the City of Worcester have benefitted from historic tax credits. Many of these properties were slated for demolition but instead have been revitalized with a positive reuse and serve as reminders of our past while reinforcing our future.
• Worcester Courthouse
• Central Building (322-332 Main)
• Boys Club – Ionic Ave & Lincoln Square
• Former YWCA (29 High/10 Chatham)
• Abby’s House (52 High)
• Crompton and Knowles
• Wellington Community (Apartment buildings on Wellington, Jaques, and Ethan Allen)
• Paul Revere Insurance Building (18 Chestnut)
• Fire Alarm and Telegraph (230 Park)
• Junction Shops
• Melville Shoe Factory (44 Hammond)
• People’s Block (371-377 Main)
• Hadley Building (653 Main)
• Indian Hill School (155 Ararat)
• Quinsigamond Firehouse (155 Blackstone River)
• Worcester Corset Company (45 Grand)
New Markets Tax Credits and Low Income Housing Tax Credits
Tools like New Markets Tax Credits and Low Income Housing Tax Credits are also essential and must be maintained to attract private developers to rehabilitate underutilized properties in the city, and provide housing opportunities for the poorest among us. The financial feasibility of these projects becomes unattractive to developers without these tax credit tools, especially in distressed, lower-income areas.
Tax reform is a complex and polarizing issue. However there are certain provisions that have withstood previous reform efforts out of the necessity to operate effective and efficient government. Tax-exempt bonds, historic tax credits, new market tax credits and low income housing tax credits impact areas that, if eliminated, would have long-lasting and generational adverse effects on Worcester’s ability to create a thriving, vibrant community. Operating local government during times of rising costs and aging infrastructure is difficult. Eliminating incentives that support local government, reduce costs and allow for infrastructure investment is a complete disservice to municipalities and our residents.
We urge you to maintain these valuable tax benefits. Please do not hesitate to contact us with any additional questions. Thank you for your support.
Edward M. Augustus, Jr. Joseph M. Petty
City Manager, Worcester Mayor, Worcester