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Cultural Districts to Get Tax Benefits
May 29, 2008
Original Times-Picayune (posted on www.nola.com) article→
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The statewide law offers both sizable tax credits for renovation of historic buildings and a sales tax exemption for “original, one-of-a-kind works of art” sold by businesses within areas designated as cultural districts.
The Times-Picayune
Cultural Districts to Get Tax Benefits
Monday is deadline to apply for program
Tuesday, May 27, 2008
By Bruce Eggler, Staff writer
New Orleans neighborhoods and business districts hoping to take advantage of a new state program offering tax incentives to “cultural product districts” have less than a week to submit applications to the city.
The Legislature last year passed a law intended to stimulate parts of what Lt. Gov. Mitch Landrieu — who oversees the Department of Culture, Recreation and Tourism, and backed the bill — refers to as the state’s “cultural economy.”
The statewide law offers both sizable tax credits for renovation of historic buildings and a sales tax exemption for “original, one-of-a-kind works of art” sold by businesses within areas designated as cultural districts.
Under state guidelines, such a district must be “geographically contiguous,” contain “cultural resources that play a vital role” in the life of a community, “focus on a cultural anchor such as a major arts institution, art and entertainment businesses, an area with arts and cultural activities or cultural or artisan production,” and “be engaged in the promotion, preservation and educational aspects of the arts and culture of the locale.”
A recent meeting at City Hall to explain the new program drew representatives from neighborhoods ranging from the Downtown Development District to Freret Street, Holy Cross and Broadmoor.
Jeff Thomas, a special assistant in the city’s Office of Recovery and Development Administration, said the new program can be “a vital piece of the recovery,” although he said the city must balance its benefits against a loss of tax revenue from the new incentives.
Recovery Director Ed Blakely told a City Council committee Friday that three or four areas in the city are almost certain to qualify for the new program, “and we think we can get up to about seven.”
Neighborhoods or business districts in New Orleans hoping to participate in the program must submit applications by Monday to the recovery office, which will make the initial decision on whether the applicants qualify. The City Council will be asked to approve the list June 19.
The list then will be sent to the state’s Office of Cultural Development, which will review applications from cities and parishes throughout the state and determine by Oct. 1 how many districts meet the criteria.
Further applications will be accepted and reviewed every six months thereafter.
Although designation as a cultural district would make renovations to commercial and residential buildings within the district eligible for state historic tax credits, owners must apply individually to the state Division of Historic Preservation to determine whether their property qualifies as historic.
If a neighborhood already has been designated as a historic district, as many parts of New Orleans have been, residential buildings there already are eligible for state historic tax credits. Designation as a cultural district would make commercial buildings eligible for the credits for the first time, except in the Downtown Development District, where they already are eligible.
Federal historic tax credits also are available in designated historic districts.
For the Downtown Development District, the new program’s chief benefit would be the sales tax exemption offered for galleries.
Artworks shipped out of state already are exempt from sales tax, so the new benefit would apply mainly to works sold to local collectors.
Jonathan Ferrara, owner of a Julia Street gallery, said most of his sales are to out-of-state buyers, so the value of the new exemption would be limited. However, he said, “any kind of tax incentive is going to inspire more sales,” and he praised the cultural products legislation as “another step in making New Orleans more of an arts destination.”
The board of the Downtown Development District voted recently to urge the city to approve the DDD’s application to be one of the designated districts. But board member Jim McNamara questioned the action, citing the loss of sales tax revenue to the city, and he and Frank Glaviano voted against the resolution, which passed 6-2.
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Bruce Eggler can be reached at beggler@timespicayune.com or (504) 826-3320.
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