Gov. David Paterson visited Western New York on Wednesday to sign legislation strengthening the state’s Historic Preservation Tax Credit, a move that will have a direct benefit on numerous projects planned for Niagara Falls.

Paterson held a ceremonial bill signing at the Buffalo and Erie County Historical Society and was joined by state and city leaders and other community stakeholders, including Niagara Falls Mayor Paul Dyster and city historian Thomas Yots. The tax credit program is designed to stimulate investment in urban neighborhoods, create jobs, increase property values and revitalize historic areas.

“Niagara Falls and Buffalo are the big winners in this legislation,” Dyster said after the announcement.

The program provides incentives to developers, municipalities, businesses and residents to make investments in distressed areas by rehabilitating historic properties that are listed on the State and National Registers of Historic Places.

“New York has a wealth of historic properties, particularly in our small cities, that are falling into disrepair or are underutilized,” the governor said. “As we move forward toward the new economy, it is critical that we continue to use our state resources to leverage private investment dollars to take our distressed historic areas and return them to vibrant centers of commerce and culture.”

In Niagara Falls, the program has the potential to facilitate numerous restoration projects, including a proposal to convert the former South Junior High School into “Niagara City Lofts.”

“This will make Niagara City Lofts more feasible and more affordable,” architect Clinton Brown said. “It puts cash into the project so we need to borrow less and we can reduce the monthly payment for the residents.”

Brown, who is partnering with Port City Preservation founder Murray Gould, is looking to purchase the vacant South Junior building from the Niagara Falls School District and transform it into market-rate lofts — an investment that’s estimated to be up to $15 million and will help fill a need for quality housing in the center city area.

To help with the cost of transforming the deteriorating building, Brown and Gould have already applied for the Restore New York grant program. Brown said an announcement on the application should be made soon. In the meantime, he said the new tax credit program will significantly help fill a financial gap.

Previous proposals made by others to purchase and restore the long-vacant South Junior property never came to fruition due to funding issues.

“(The tax credit program) is a very important piece of the overall picture — a critical piece that older proposals didn’t have,” Brown said.

While New York’s preservation tax credit was adopted in 2006, the program did not provide adequate incentives to attract sufficient investment to struggling municipalities, particularly those in Upstate New York. The enhancements signed by Paterson will provide the following tax incentives for qualified historic properties:

• Gradually increase over five years the cap on the commercial credit value from $100,000 to $5 million and the residential credit value from $25,000 to $50,000.

• Target the credit in “distressed” areas, those located within a Census tract identified at or below 100 percent of the median family income.

• Increase the share of qualified rehabilitation costs that commercial property owners can claim for the credit from 6 percent to 20 percent.

• Offer the Preservation Tax Credit as a rebate for lower income homeowners to provide them with a stronger financial incentive with relatively smaller tax liability.

The program will apply to taxable years beginning January 1, 2010, and will sunset in five years on December 31, 2014.

In the past year, Niagara Falls lawmakers have bestowed local landmark status upon a handful of shuttered churches, preventing the structures from being significantly altered and making them eligible for the state and national registries. Once added to those lists, the property owners could benefit from the tax credit program for any restoration projects.

“This is a huge step for historical preservation for the state and especially in our city,” Yots said. “The benefits are tied to income levels, and relative to the rest of the state, our income level is low.”

Yots is hoping the revamped credit incentives will entice more people in the community to apply for historic status. Apart from a small group of activists and community leaders, there currently isn’t much of a push to preserve properties and neighborhoods through restoration.

“There’s a demolition mentality in our community that frightens me,” Yots said.