Legislature should pass compromise on preservation tax credit
Published March 10, 2015
Editorial by Winston-Salem Journal, March 8, 2015.
Principle has been pitted against practicality as the N.C. House considers a compromise bill that would revive the state’s historic preservation tax credits. While it seems to have an uphill fight, we hope the bill will ultimately pass.
The bill, submitted Wednesday, would bring the popular tax credits back at a lower value, the Journal’s Richard Craver reported. It offers a 15 percent tax credit for up to $10 million in qualified expenditures, and a 10 percent tax credit for between $10 million and $20 million in qualified expenditures.
Previously, the state offered a 30 percent state tax credit for rehabilitating historic structures.
And the bill would offer a 5 percent bonus, not to exceed $20 million, for projects that take place in one of the state’s more distressed counties. Another 5 percent bonus – also not to exceed $20 million – would be available for qualified projects located on an eligible investment site. There also is a provision for historic non-income-producing projects worth up to $22,500, the Journal reported.
The bill would make tax credits available retroactive to Jan. 1 and keep them viable until Jan. 1, 2023. The bill requires applicants to also qualify for a federal tax credit. One good point is that it would allow qualified participants to get their credits sooner than the old program allowed.
The legislature allowed the tax credits to expire at the end of 2014 – along with state film incentives – as part of its philosophy of tax reform, working under the premise that lowering the overall tax rate is more beneficial to businesses and the economy than tax credits for selected projects.
Philosophically, there’s nothing wrong with that premise. But as a practical matter, the tax credits produced jobs, which the legislature says it would like to encourage.
Gov. Pat McCrory and downtown revitalizationists statewide have urged the continuation of the tax credits, which have been used widely to revive structures and facilities that have historical and architectural significance. In downtown Winston-Salem, the tax credits have been a bedrock of revitalization.
They have preserved important touchstones from our past. They’ve generated hundreds of millions of dollars in investment and created hundreds of jobs. This renovation is a much better alternative than leaving dilapidated buildings on our landscape, or having them torn down and replaced by newer, less costly structures.
At the tax-credit forum on Wednesday, Patrick Reilly, president of Rehab Development, Inc., pointed out that while new structures are cheaper to build, they don’t last as long. Reilly also said that many projects that N.C. cities and towns would like to take on wouldn’t get done without federal and state tax credits.
Even though projects using these tax credits may not meet the prevailing legislative winds, they’ve proved to be winners for local communities. The bill doesn’t include everything we’d like to see, but it’s a good compromise. We hope the full legislature approves it.
