Up until a few years ago, not many people outside of economists were familiar with the term Keynesian economics, although it served us well throughout the later part of the Great Depression, World War II, and the post-war economic expansion. Based on the ideas of John Maynard Keynes, the theory advocates a private economy with a heavy oversight of government and public policy. The Stimulus package started by George W Bush and expanded by President Obama was a study in Keynesian theory, and depending on which side you lay, it was not enough, or too much, but did avert total financial collapse. Even though it might have seemed like we could not afford it at the time, we could not afford
not to do it either. Two items came across my desk this week that fall into this category. The first is the debate over reinstating the historic preservation tax credits to rehabilitate abandoned mills and empty warehouses.
300 million dollars in tax credits leveraged $1.3 billion in private investments in the state from 2002-2008, returned over 200 properties to the tax rolls, generated employment and housing in towns that had little hope for economic development, and helped to preserve the historic character of these towns. Lawmakers hope the reinstatement of this credit will help to create jobs and spur further economic development. The second Keynesian success story is the economic impact study that found the $50 million housing bond Rhode Island voters passed in 2006 generated about $800 million in economic activity, creating 1, 225 affordable homes in the state, and supported 6,100 jobs that generated about $300 million in wages. The study also found that more than half of the residential construction in Rhode island from 2007-2010 was supported by the bond initiative. Now that the bond money has run out, Rhode Island is one of the only states in the country that will not have a dedicated funding stream for affordable housing. T
his Week's Real Estate Insight: There is serious consideration being given to a new affordable housing bond for 2012, but with the economic challenges facing the state, the fate of this initiative and the historic tax credit are up in the air. We need to leverage our minds as well as our wallets; Construction and Real Estate make up about 1/5 of the state's economy, and employ about 1/10 of the state's workforce. We need jobs and we need affordable housing. Please urge your lawmakers to support both the reinstatement of the historic tax credits and the continued funding of affordable housing.
