Tax credits for preservation help renovate houses, commercial property

Editorial by Wilmington Star-News, June 6, 2014.

The fate of state tax credits that encourage historic preservation is in the hands of the N.C. House of Representatives, which has yet to roll out its answer to the Senate's budget plan for the next fiscal year. The credits have been important in efforts to revitalize both residential and commercial property of historic value, and North Carolina would lose if the tax credits are allowed to expire at the end of this year.

Although Gov. Pat McCrory proposed continuing the credits in a modified and less generous form, he emphasized their importance in a state that is full of historic homes, storefronts and even industrial buildings. In unveiling his proposal, which would reduce the value of the credits but pay them out more quickly, the governor made it clear that he supports efforts that help preserve those pieces of our history.

The credits were first approved in 1998 and offer owners of historic residential and commercial properties incentive to restore and maintain the character of those structures. Homeowners may claim up to 30 percent of the value of approved renovations. Owners of commercial buildings may take 20 percent in addition to a 20 percent federal tax credit that is available only for income-producing property, for a total of 40 percent.

Since the state credits were approved, owners in Wilmington have invested about $9 million in improvements that were eligible for the credit. That may not seem high, but not all projects require huge investments. Sometimes minor improvements such as painting, better insulation, making windows more energy-efficient, or putting in a modern heating and air conditioning system may be enough to persuade an owner to rehabilitate rather than raze a structure.

But over the past couple of years the uncertainty about the future of the tax credit has put a damper on applications, says George Edwards, executive director of the Historic Wilmington Foundation.

Now preservationists, officials of North Carolina cities and towns, and business groups are hanging their hopes on the state House to put the credits back into the budget. The Cape Fear region's legislative delegation should realize the economic value of restoring older homes to their former glory.

These tax credits do not just target the grand antebellum Historic District that is a centerpiece of Wilmington's tourist activity, but also more modest 20th-century neighborhoods such as Sunset Park and the cottages and bungalows of the Westbrook-Ardmore and Carolina Place neighborhoods off South 17th Street.

In addition to preserving a piece of history, restoration also increases property tax value in these older neighborhoods where homes often have been neglected.

In that regard, the credits have the potential to pay for themselves.

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