Could changes to tax credits halt Iowa projects? - KWWL - Eastern Iowa Breaking News, Weather, Closings

Could changes to tax credits halt Iowa projects?

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WATERLOO (KWWL) -

Downtown Waterloo, once a thriving Midwest city, is making a comeback. New businesses, like Rocket Bakery, choosing to be downtown.

"I think the downtown has come so far. If everyone just keeps working on it, it is going to get better and better," said Rocket Bakery owner, Sam Ludwig. 

Part of what makes new projects like SingleSpeed Brewery and others possible are Federal and State Historic Tax Credits.

JSA Development has restored countless historic buildings in the Waterloo area and has plans to use the credits on projects like 1917 Franklin Park Building and three Walnut Neighborhood homes.

After Congress nearly cut the federal program during the tax overhaul, what survived takes the 20% credit and extends it over five years.

Before the change, investors could collect the entire 20% tax credit during the year the project was completed.

"It takes longer to get the benefit back. When it takes longer to get the benefit, it is worth less, so there is less money to put into the project," said David Deeds, JSA Development. "Unfortunately, it still costs the government the same amount, but it is less valuable to the projects."

This means future projects may not be possible for developers, especially those in blighted neighborhoods.

Congressman Dave Loebsack of Iowa City toured many of Waterloo's projects with JSA on Thursday. He says the change wasn't the right move.

"The Federal Historic Tax Credits were really misplaced. I think there are a lot of folks that don't understand, in Washington D.C., how important these tax credits are for communities in Iowa, communities all over America," said Loebsack.

More than 30 Waterloo projects in the last 15 years have used the credit, but it reaches every Iowa community.

"In a lot of these smaller towns, especially; if we don't save these small towns with historic tax credits, we are going to have a lot of problems in rural Iowa," said Loebsack.

Loebsack would like to see the 20% federal credit reversed to full returns during the year the project is completed.

The Iowa State Historic Tax Credits are currently in question as a proposed tax bill moves to the Senate floor for debate as early as next week.

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