Senator to look into tax credit loophole

File photoThe former home of Casa de Lucca restaurant, at 146 Rantoul St. in Beverly is one of that buildings in the historic district that a developer wants to tear down and replace with one large apartment building. State officials are eyeing ways to close a loophole that allowed a local company to collect $2 million in tax credits for preserving buildings while a new developer has announced plans to tear down the buildings.

BEVERLY — State Sen. Joan Lovely said Thursday that she is considering filing legislation to close a loophole that allowed a Beverly company to reap more than $2 million in historic rehabilitation tax credits.

"It's something that we need to consider to prevent something like this, a promise made and a promise broken," Lovely said.

Lovely's comments came in the wake of a resolution filed by Beverly City Councilor Scott Houseman last week condemning a local business for its "manipulation" of the Massachusetts Historic Rehabilitation Tax Credit Program. The program issues tax credits to companies for preserving historic properties and also qualifies them for matching federal tax credits.

Windover Development received $2.2 million in tax credits in 2014 for turning a former factory in Beverly into veterans housing. But its successor company, Beverly Crossing, is now planning to demolish three adjacent historic buildings, despite a promise from Windover that the buildings would not be demolished if it received the tax credits.

The regulation governing the tax credits program says the government can "recapture" the tax credits within five years after they are issued, but that time period has expired.

Lovely, a Democrat from Salem, said she originally assisted Windover in applying for the tax credits through the Secretary of State's office, and called the decision to demolish the buildings "disheartening."

"Everybody five or six years ago felt really good that those buildings were going to be preserved in exchange for $2 million in tax credits," Lovely said. "The tax credits were put in place to make sure that buildings get preserved. Promises need to be kept."

The historic rehabilitation tax credit program is overseen by the Secretary of State's office, which has said this is the only time in the program's existence that a company will have demolished buildings after receiving tax credits. Asked about the Beverly situation, Secretary of State William Galvin said in a statement, "We aggressively protect all historic properties, but unfortunately, our hands are tied by the statute, which limits the clawback period to five years."

Beverly Crossing is planning to demolish the former Casa de Lucca restaurant and Press Box barroom buildings and the former Sullivan Chiropractic building to build the Depot Square 2 apartment building on Rantoul Street across from the train station. The Casa de Lucca and Press Box buildings are former hotels associated with the city's railroad history. They were cited by Windover when it applied to have the area designated as a historic district so that it would be eligible for the tax credits.

Lovely said she has heard from Beverly residents who are upset about what they perceive as an abuse of the tax credit program. She said she and her staff have been discussing how to prevent a similar scenario moving forward, which she said would most likely require legislation.

"It doesn't help this situation, but we are going to take a look now," she said. "We want to live and learn from this and take another hard look at that five-year clawback."

Windover CEO Lee Dellicker and Beverly Crossing President Chris Koeplin have declined to talk about the tax credits. Dellicker called Houseman's resolution "disturbing and defamatory" and said he is considering his next step.

Staff writer Paul Leighton can be reached at 978-338-2675 or pleighton@salemnews.com.

 

 

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