Former Gov. George Allen and former Virginia Democratic Party Chairman Paul Goldman say they've come up with a way to address the state's crumbling public school infrastructure and the need to put people back to work in the construction industry.
All it takes, they said, is a common-sense fix in the federal tax code that would allow application of a historic-rehabilitation tax credit to the renovation of the nation's aging school buildings -- 28 percent of which were built more than 50 years ago.
Allen and Goldman said the result would benefit municipalities that cannot afford to fix aging buildings by providing tax credits to private investors who would undertake the projects. The investors would then lease the renovated schools back to local governments for a set period of time before eventually returning the structures to localities.
"This is a positive, constructive solution that will improve opportunities for Virginians and Americans," Allen said at a news conference yesterday in Richmond -- a city where the average school building is 55 to 60 years old.
"It does not require the federal government to tax, spend, bail out or borrow a single nickel."
Allen and Goldman first outlined the proposal -- dubbed the School Modernization and Revitalization Tax Credit (SMART) in an opinion article published in yesterday's New York Times.
According to the article, in 1986, Congress passed a federal tax credit of 20 percent for historic-rehabilitation projects. Allen and Goldman said most buildings more than 50 years old can qualify for the tax credit, which can account for up to 20 percent of the cost to modernize them.
The credit applies to renovation of school buildings by private investors who use the buildings for something different, such as condominiums or office space. But it does not apply if the structures are returned to their prior use.
Simply changing the code to allow the renovation of schools would pay great benefits, said Allen.
"If you have a modernized school, that's great for children, learning in an up-to-date school," said Allen, a former U.S. senator.
The plan would help create jobs in the construction industry and reduce the cost of the building to taxpayers by 20 percent to 30 percent, Allen said. A revitalized school building also would boost energy efficiency and be better for the environment, he added.
Goldman said a similar public-private partnership idea was behind the renovation of the school building that became the Maggie L. Walker Governor's School in the Carver section of Richmond. That arrangement was made possible because the pre-existing use of the building was as a local school and the renovated use made it a regional school.
Virginia also offers a 25 percent historic-rehabilitation credit, which potentially could drive the cost to modernize down 45 percent, if the federal code were changed.
Goldman said a tax credit to modernize buildings with the guaranteed tenancy of a government entity such as a school system would be an incentive to private developers willing to take on the projects, especially during lean economic times for the industry.
Allen would not go into details on the conversations he has had with former colleagues in Congress and noted that lawmakers are tied up with the health-care reform package.
But he said the time had come for bipartisan cooperation on a common-sense solution to the problem.
Contact Jim Nolan at (804) 649-6061 or jnolan@timesdispatch.com.
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