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he historic Redmont Hotel in Birmingham, Ala., was among the dozens of properties in Alabama to get support from a state historic tax credit approved by the Alabama Legislature in 2013. The credit expires in May and state lawmakers are debating whether to extend it another seven years. (file photo)

Sen. Del Marsh, R-Anniston (file photo)

A tax incentive credited with fueling the recent revitalization of aging buildings in downtown Birmingham and Mobile will expire next month with no legislative action.

Alabama Senate President Pro Tem Del Marsh said Wednesday he was holding up legislation authorizing a seven-year extension of the state's historic tax credit until there is a better understanding of its financial implications.

Marsh said he was concerned about the budget impact on the initial three years of the tax credit program, which doled out up to $20 million a year to developers willing to take on revitalization projects of aging or historic structures.

Among Marsh's concerns are the lack of claims on the $60 million set aside in the initial program. Developers and city leaders have been credited the first three years of the program with spearheading the revival of the Admiral Semmes Hotel in downtown Mobile and the Pizitz building and Lyric Theater in Birmingham, among other prominent buildings.

"In the last three years, $60 million in tax credits have been given, and I was informed that none of it is claimed yet," Marsh, R-Anniston, said. "What is alarming to me is if these hit at one time, the $60 million, it could throw us into proration with the Education Trust Fund. If we are to add another $140 million over the next seven years and ... it's not being claimed, it could cause some serious budget problems going forward."

Marsh said the expiration of the three-year tax credit program doesn't mean the economic incentive is permanently dead. He said he wants to authorize an independent, third-party study to conduct an economic impact analysis on all credits authorized by the Legislature. Included among those is a credit for film production in Alabama.

"I am not convinced the credits are advantageous to the state," Marsh said. "I want to make sure we are creating a program that (doesn't just benefit) large corporations and big developers."

Marsh, though, said the historic tax credit legislation had been tricky because it had received wide spread support by the mayors in Alabama's largest cities, was embraced by a bipartisan swell of state lawmakers and was cited by developers as a key toward revitalizing downtowns.

Also, 33 states throughout the U.S. and, especially in the Deep South, maintain historic tax credit programs that are often coupled with a 20 percent federal tax credit to spur downtown revitalization projects.

Some states, unlike Alabama, do not cap the amount of credits that are issued annually for redeveloping aging structures. Louisiana, for instance, provides a 25 percent credit for commercial development without any cap. Mississippi's 25 percent credit allows up to $60 million of investment annually.

"I've been called by everyone and their brother and I understand it," Marsh said. "People like these credits."

But Marsh argued that they aren't a necessity in redeveloping older properties.

"My wife and I just finished restoring a hotel in Anniston and it was a costly project," he said. "I didn't take any credits and it's a structure worth saving and we did it. I believe there are people out there who will take on these projects and yes, they will take the tax credits if they can get it. Who wouldn't? But I don't think they are necessary for preservation."

Marsh added, "I'm more concerned on the impact of the budget process in both the Education and General Fund."