Like the disclaimer at the end of an ad for Viagra, the last question of the night following Paul Goldman and former Gov. George Allen's historic tax credit pitch to the Richmond Crusade for Voters was enough to take the romance out of the brief affair.
The idea is to sell historic tax credits on dozens of Richmond schools to developers as a way to cut the cost of renovations.
Sure, the city wouldn't have to float bonds to repair schools, former School Board Chairman Melvin Law says, but what about the long-term leases needed to rent renovated schools back from the developers who repair them? Doesn't that cost something?
“Well, of course there are no total freebees,” Tom Kasper, Goldman's go-to expert on tax credits, says from the back of the hall on Chamberlayne Avenue where the meeting was held late last month. In fact, Kasper says, a long-term lease “is viewed pretty much the same as a bond” by credit rating agencies.
That means if the city leases dozens of school buildings back from the developers who've renovated them, the school system will be forced to make hundreds of thousands of dollars in lease payments each year.
Considering the school system pays nothing now, it would be similar to the debt payments the city would make if it built new schools with municipal bonds: Both paths likely would be 30-year payment plans. (After the 30-year leases expire, ownership would revert to the city.)
Still, the plan is better than the proposal before City Council, Goldman says, which would move forward with $150 million in schools construction projects without the aid of state and federal historic tax credits. Using his tax credit scheme, Goldman says, those projects would cost closer to $90 million.
City leaders voted to expedite construction plans last Monday. Currently the plan does not include use of available state historic tax credits, which could net 15 percent to 18 percent savings on construction. If federal tax code changed, per Goldman's proposal, an additional 20 percent or more in savings could be available using the federal credits.
“Whether you do leases or bonds, the bottom line is the tax credit program saves hundreds of millions of dollars for the people of the city of Richmond and gets schools done faster, better,” Goldman says, defending the tax credit plan and its necessary long-term leasing arrangement as superior to traditional financing. “That's what people have to recognize and focus on.”