UPDATE: The House Finance Committee on Wednesday afternoon amended a Senate bill to include historic preservation program language.
Rep. David Lewis (R-Harnett) said Senate Bill 763, “An act to make technical and clarifying changes to various revenue laws,” now includes a historic preservation tax credit proposal worth 15 percent of renovation expenses up to $10 million; and 10 percent for expenses between $10- and $20 million.
“These are projects that preserve, and place back into service, properties that otherwise would decay away,” Lewis said of rehabilitations the credits would support.
It’s the same language approved in the prior House budget plan and similar to an earlier proposal from the governor’s office; the current historic tax credit is set to expire at the end of this year.
The amendment was a quick followup to Tuesday’s announcement of a budget compromise that did not include any historic preservation tax credit language. House Speaker Thom Tillis (R-Mecklenburg) said such tax credits were out of spirit with the state’s tax reform of last year. It meant to balance financial needs by letting tax credits expire when scheduled.
“What we’re seeing now is the death of tax reform,” said Rep. Edgar Starnes (R-Caldwell) during Wednesday’s Finance Committee meeting.
Wilmington’s Rep. Susi Hamilton (D) saw it differently.
“We’re finally making some compromises for what’s good for the economy of the state,” she said.
It remains a proposal until approved and signed into law.
Further description and background is in the below story, published this morning, about the state’s new budget compromise that lacked historic preservation tax credit language.
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North Carolina’s historic preservation tax credits, which local leaders say are essential to keeping Wilmington’s old town charm intact, are not continued in the budget compromise House and Senate leaders announced Tuesday.
That’s despite a plan earlier this year from the governor for a new preservation credit program, and after debate in June that led lawmakers to include it in their budget plans.
“Supporters were completely blindsided by this extremely vital program, with a very clear positive return on investment for both large and small communities, being completely axed,” said Tony McEwen, who oversees legislative affairs in the Wilmington city manager’s office.
The state put the income tax credits in play in 1998 to double-up with federal tax credits offered for the renovations of historic properties.
But House Speaker Thom Tillis (R-Mecklenburg) on Tuesday said they clash with the legislature’s current budget philosophy.
“It’s inconsistent with the principles of tax reform,” Tillis said at a press conference in Raleigh, referring to the legislature’s 2013 overhaul of the state tax code. It dropped income taxes and broadened the sales tax base; to make the math work, it meant for tax credits to expire without renewal when scheduled.
Tillis did, however, note the credits bring a “well documented” return on investment.
Story: House committee backs historic preservation credits
The state currently offers a 20 percent credit on the cost of restoring income-producing properties. Only taxpayers eligible for the federal historic preservation tax credit are eligible for the state’s, but combined it’s a 40 percent break.
The state also gives a 30 percent credit (without a federal counterpart) for the restorations of historic living spaces. Each project must be worth at least $25,000 and completed within a 24-month period.
Without extension, the state credits will expire at year’s end.
A revamped version discussed this session sought to reduce the state’s credit for income-producing properties to 15 percent of expenses up to $10 million and 10 percent for expenses between $10- and $20 million, as Gov. Pat McCrory had proposed.
For historic homes, the base credit would be 15 to 20 percent of expenses up to $200,000.
“When the issue was voted on by the entire House, it received very strong bipartisan support, only to see it cut completely, behind closed doors, by budget negotiators,” McEwen said Wednesday morning.
He emphasized that renovations of historic properties are pricey. “If downtown Wilmington is going to remain a vibrant and essential part of our region, then we have to fight to get a historic preservation tax credit program reinstated in the budget.”
Story: City, homeowners hail historic preservation credits, call for extension
The Historic Wilmington Foundation in April said more than $8.4 million had gone into 51 residential rehabs in Wilmington between 2001-2014 with support from the tax credit. For income-producing properties, HWF measured from 1979-2012 and tallied $38 million invested in 160 local projects (partially accounting for a period of time in which only the federal credits existed).
According to the N.C. Department of Commerce, the credits contribute $124.5 million annually to the state gross domestic product and nearly 2,200 jobs.
A planned renovation of the recently purchased, century-old Murchison Building on Front Street downtown eyed tax credit help, buyer Thomas Simpson told Port City Daily in May.
The budget framework Tillis and Senate President Pro Tem Phil Berger (R-Rockingham) discussed Tuesday still must go through the voting circuit to become effective.
Tillis did offer a glint of hope for some version of the program, though.
“I think there’s openness next year to structure that as a part of a grant program, and I’m optimistic we can get to something that makes sense,” he said.
Past story: Effort underway to save historic preservation tax credits
Ben Brown is a news reporter at Port City Daily. Reach him at ben.b@hometownwilmington.com or (910) 772-6335. On Twitter: @benbrownmedia
