Reagan Tax Plan Cited in Remodeling of Mission Inn : Threat to Landmark’s Renovation Seen
President Reagan’s income tax reform proposal could jeopardize the rehabilitation of the historic Mission Inn, city officials and private investors said Wednesday.
The $30-million remodeling project is scheduled to begin in the fall and take at least two years to complete, said Maureen McAvey, director of development for Carley Capital Group, the company buying and developing the Mission Inn.
But by eliminating a 25% federal tax credit for investors in historical rehabilitation projects, the President’s tax reform proposal “could jeopardize the economic feasibility of the project,” McAvey said Wednesday.
The 84-year-old Riverside landmark, which hosted Ronald and Nancy Reagan on their March 4, 1952, wedding night, is currently owned by the Riverside Redevelopment Agency, which will close the hotel June 30, said Merrell Watts, the agency’s assistant executive director.
Carley Capital Group, based in Madison, Wis., will then buy the Inn for $3 million, a sale that McAvey and Watts said they expect to close in August or September.
(The redevelopment agency, fearing the hotel would be demolished, bought the Inn in 1976 for $2 million, Watts said. Losses have piled up since then at an average of $30,000 a month, he said.)
“If the 25% tax credit is eliminated . . . it would put quite a crimp in the existing financing,” Watts said. “It would, of course, be devastating to their financial package, (but) it doesn’t mean there won’t be a renovation.”
McAvey hopes Congress will at least add a grandfather clause to Reagan’s plan, she said, to prevent rehabilitation of the Mission Inn and other historical buildings from grinding to a halt.
“Unless Congress, through the Ways and Means Committee, makes a pronouncement now about transition rules, those projects that are positioning themselves, getting ready to go ahead, will come to a standstill,” predicted Mitchell Davis, senior vice president of Sybedon Corp., a New York firm that hopes to find investors for the Mission Inn’s face-lift.
Can’t Raise a Dime
“I can’t go out into the marketplace and raise a dime,” Davis said Wednesday. “And I can’t because no investor is going to get involved, invest his money in a project, unless he is sure that he is going to be protected by current tax law.”
In the last three years, McAvey said, other tax-reform bills with a major effect on the real estate industry have included provisions to protect projects already under way.