FOR IMMEDIATE RELEASE:
November 30, 2011
IN CASE YOU MISSED IT:
Let’s update tax policy to help rebuild schools
From POLITICO
By Sen. Jim Webb, Sen. Mark Warner, Rep. Eric Cantor, Governor Bob McDonnell,
George Allen and Tim Kaine
Wednesday, November 30, 2011
America’s economic recovery continues to pose tough challenges. Our citizens need good jobs, and our students need the skills to compete for those jobs in the years ahead. During a time of economic uncertainty, we need to work together on creative ideas that confront these challenges in an innovative manner. With divided government in Washington, we need solutions that both parties can
support. Here’s one:
Republicans and Democrats agreed in 1986 on a private capital approach to modernize America’s oldest buildings. Congress authorized a federal rehabilitation tax credit, worth up to 20 percent of construction costs, for rehabilitating historic buildings. This policy has proved successful, except in one crucial category — older school buildings.
Because of a limitation on using the tax credits for tax-exempt property, public schools cannot generally benefit from this. In addition, an Internal Revenue Service rule, known as “prior use,” generally prohibits private investors from earning this credit if they renovate an older school into a more modern public
educational facility.
This means that if a local school building is turned into a luxury condo, developers are eligible for federal tax credits. But if private interests invest to modernize an old school, the IRS says these tax credits are not available.
Indeed, the limitations in current law effectively force localities to use the “borrow to build” approach — based on federally subsidized local government bonds. We have an important tradition of local control of education, but by denying local schools access to private capital to rejuvenate older buildings, we are
increasing local costs. Those increased costs mean fewer local education dollars are available to improve classroom instruction and ensure our children have the educational resources they need.
These restrictions are preventing major — and much needed — renovations at a time when the average K-12 facility is considered obsolete, built for a 20th-century curriculum when our children need a 21st-century education. It is time we improve those schools by fixing this policy. In Virginia, we’ve seen
firsthand what this change can do.
Read More: http://www.politico.com/news/stories/1111/69318.html
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