| Louisville, Kentucky
When state legislators consider implementing historic tax credit programs, a conservative approach is often to cap the program in order to control the cost. While this achieves the desired short-term goal, it can limit the potential of such programs to stimulate economic development to its fullest potential by creating competition and limitations that keep developers out of the market.
The historic tax credit in Kentucky was created as part of the 2005 JOBS for Kentucky Tax Modernazation Plan and has an annual aggregate cap of $5 million with a $400,000 per-project cap. But in 2014, a short-term bill called the Enhanced Historic Tax Credit was passed that was aimed at stimulating development in tax increment finance communities in the state.
Juxtaposing these two programs and their economic impacts, we can glimpse what effects an uncapped program may have on historic development in Kentucky and support a national call for uncapped state programs. We explore this topic in our Februrary 2017 State of Historic Tax Credits column of the Novogradac Journal of Tax Credits.
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Capping Kentucky: The Case against Annual Aggregate Caps for State Historic Tax Credits