This sounds like a great idea with the mentioned improvements put in it. Give people the incentive to do more and they will.

How to help upstate

This is the week when Gov. Spitzer will reveal how he intends to pay for his ambitious plan to create a $1 billion fund to help revitalize the upstate economy. The details will be in his proposed budget, but one remedy for upstate is already in place. All that is needed is to make it work as originally intended. It’s the state Rehabilitation Tax Credit Program, and it has been around for a while. The trouble is, it is too narrowly defined to encourage owners of residential and commercial historic properties to make the kinds of improvements necessary to rehabilitate them.

The program could work, however, if Mr. Spitzer were to include an expanded version of the tax credit in his budget, and if the Legislature were to do the right thing and pass a bill co-sponsored by Sen. Frank Padavan, R-Queens, and Assemblyman Sam Hoyt, D-Buffalo, that would fix the flaws in the current program. The Senate has already passed the measure, but the Assembly has yet to follow.

As originally envisioned, the tax credit program was to provide a financial incentive for businesses to rehabilitate commercial sites in urban areas and turn them into income-producing properties. The same goal was envisioned for owner-occupied residential properties. But when it came to determining who would qualify for the program, the eligibility requirements were so narrow as to render the program all but ineffective.

For example, there’s a cap of $100,000 on qualified rehabilitation costs for commercial buildings. That’s not enough to prompt developers to invest in an urban project that could cost hundreds of thousands, or even millions of dollars.

At the same time, the residential credit is limited to owners of “historic structures in distressed areas,” which is so restrictive that only a few hundred homes throughout the state now qualify. Moreover, the tax credit of up to $25,000 isn’t much help to owners in these distressed areas who are living on modest incomes.

The eligibility standards for homeowners need to be expanded, and the cap on qualified rehabilitation costs should be raised to $50,000. Owners should be eligible for a tax rebate if their incomes are too low to make full use of the tax credit. On the commercial side, the $100,000 cap should be lifted, and the state credit should be transferable to encourage more investors to choose rehabilitation over new construction.

The Padavan-Hoyt bill would accomplish these goals and enable New York’s program to work as effectively as similar programs in other states. And the benefits would be substantial. A recent study shows that Rhode Island’s rehabilitation tax credit program has leveraged $2.4 billion in total economic activity. That’s the kind of growth upstate needs.

THE ISSUE: A tax credit program is too narrow to be effective.

THE STAKES: A revised plan can only help prime the economy.

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