Smithfield Herald

Johnston towns join state push to restore tax credits

Smithfield leaders think tax credits could spur renovation of the town’s older water plant.
Smithfield leaders think tax credits could spur renovation of the town’s older water plant. FILE PHOTO

What happens next to a rundown building in Clayton could hinge on whether state lawmakers bring back a tax credit for historic preservation.

The former ABC Plumbing building at 220 E. Main St. is a “contributing structure” to the town’s historic district and thus qualifies for federal tax credits designed to help developers bring new life to dying buildings. The building would also qualify for a state tax credit that expired in 2014.

The Town of Clayton bought the building earlier this month and might partner with a private developer to renovate it. However, before the town asks for proposals from developers, Town Manager Steve Biggs wants to know if the General Assembly will restore North Carolina’s tax credits for historic preservation.

Tax credits would provide more incentive for a developer to spend the hundreds of thousands of dollars needed to bring the building up to par. Without the state tax credits, the town would likely restore the building on its own and likely use it for a second library.

The Clayton Historic District formed in 2010 during the midst of the economic downturn, and few developers have applied to use the tax credits. But now, five years later, Clayton Downtown Development Coordinator Bruce Naegelen thinks the town is ripe for a flurry of renovation projects.

“The tax credit helps to make a re-use project more viable,” Naegelen said.

Clayton, which has adopted a resolution urging lawmakers to renew the state tax credits, is one of many North Carolina towns pushing for restoration of the credits.

In Benson, Town Manager Matt Zapp said several properties downtown could use some work and therefore benefit from the state credits.

Benson, like many towns, offers its own incentives, including facade-improvement grants, to developers and store owners looking to make repairs. Tax credits for historic preservation offer another “tool in the tool belt,” Zapp said.

“Every little bit helps when you are trying to rehabilitate a historic structure,” Zapp said.

The state tax credits have been available for residential and commercial properties since 1998 and for mill projects since 2006. The General Assembly let the credits expire at the end of last year.

This session, Gov. Pat McCrory has made restoring the state’s tax credits one of his top priorities.

At, nearly 5,000 people have signed a petition to restore the program. The website says projects using state and federal tax credits have spurred nearly $1.5 billion in private investment since 1998.

Chris Johnson, director of Johnston County Economic Development, said he knows several historic structures along Third Street in Smithfield that have used the state credits.

“When you are recruiting industry and taking them to places, they want to see the communities they are calling home,” said Johnson, a former director of the Downtown Smithfield Development Corp. “It’s important that your Main Streets look fabulous.”

Earlier this year, McCrory formed a coalition that will push for restoration of the state tax credits. Naegelen, who is also the president-elect of the N.C. Downtown Development Association, is a member of the coalition.

Naegelen said he understands why some lawmakers want to reshape the tax-credit program to have a better idea of what the state will spend each year. But ending the credits altogether makes no sense, he said.

“It helps provide a re-use for those properties, even the large ones and especially the large ones, that are just lying there, decaying without any real value for anything,” Naegelen said.

“It’s a tool beyond what the town can offer.”