Could New Port Richey tap tax credit incentive money to fund improvements to the Hacienda Hotel or pay off the debt on the property?
New Port Richey City Council members said during their Tuesday, April 23 meeting they want to explore the idea and authorized the city attorney to look into the matter.
President Barack Obama signed into law this year an act allocating $7 billion over two years to the dormant New Markets Tax Credit program, which seeks to spur investment in low-income communities.
In its first 12 years, the program distributed more than $25 billion of tax credits nationally into business transactions that helped “leverage substantial private investment in new projects and business expansion,” according to a memo from city attorney Jim Lang.
“In many cases, the use of the tax credit model provided a net benefit or 'subsidy' of greater than 5 to 20 percent (after transaction costs) to projects costs or business expenses,” Lang’s memo reads.
The New Markets credit is available at the federal and state levels.
Lang provided an example for how the city could use tax credits:
Federal and state New Market tax credits could be combined with historic tax credits to help the city pay off the estimated $2 million balance the city still owes on its 2003 purchase of the Hacienda Hotel. These credits might also be used to help pay for renovation and construction projects on the building, which is listed on the National Register of Historic Places.
“The program might be ideal for the Hacienda Hotel,” Lang told the council Tuesday.
There are several hoops the city might have to jump through to tap New Markets tax credit money.
There is one catch: The city must maintain ownership of the property for seven years, but has to establish its own nonprofit organization to assume oversight of the hotel, its debt, renovations and day-to-day management.
“You’re becoming the private developer on this project so that the city can continue to maintain and oversee the direction this historic gem will go in the in the future,” Lang said.
Locals came to the city council months ago with a bundle of ideas on how the property can be used, but no one was in a rush to sell it off.
The city would have to decide a use for the property if it wanted to take advantage of this tax credit program.
Deputy Mayor Bill Phillips thought the possibility of using the tax credit needs to be discussed. He said if the city could get rid of the debt on the property, “it allows you much more flexibility than where you are today.”
He said “the seven-year-hold is a real issue.”
Councilmembers Jeff Starkey and Chopper Davis also said they wanted to move forward with exploring the use of tax credits.
What do you think about this idea? Should the city move forward to help rid itself of the estimated $2 million it still owes on the property? Share your thoughts by commenting below.