‘South Carolina is eating our lunch,” quipped a legislator at a recent committee meeting about economic development. For a native Tar Heel, those are painful words.
First we lost the race for Volvo to South Carolina, and now we’re losing our advantage in the preservation of architectural and historic resources.
South Carolina Gov. Nikki Haley just signed a bill to expand her state’s credit for the rehabilitation of historic buildings from 10 percent to 25 percent. Even though South Carolina modeled its tax credit after ours, last summer North Carolina’s tax credit became a thing of the past, having been allowed to sunset.
This spring the N.C. House of Representatives voted overwhelmingly to enact a revised version, with strong support from Gov. Pat McCrory. Unfortunately, the bill was assigned to the Senate “graveyard,” an inactive committee where bills are sent to quietly die. The House, with the strong support of its leadership, recently included the credits in its budget, but the Senate didn’t.
South Carolina isn’t the only state to replicate our tax credits. Texas this year enacted a new tax credit program. Other states have been impressed with the remarkable impact that this incentive has had all across North Carolina – in large cities, small towns and the countryside.
The revival of downtown Durham, Raleigh, Winston-Salem, Asheville, Salisbury, Mount Airy, New Bern and Edenton, to name a few, hasn’t been coincidental. Nearly $2 billion have been spent by the private sector, stimulated by this statewide incentive. The impact has been tangible.
Studies show that the state actually makes money from the incentive. Properties must be renovated according to preservation standards. Only after all the work has been satisfactorily completed does the owner or developer get the incentive. Before the state puts out a penny, it gets taxes off of labor and materials. Local governments also benefit from property tax increases.
Historic rehabilitation is superb as a local jobs producer. You can’t outsource renovation jobs. Rehab requires more skilled jobs than new construction and returns much more money to local economies. Renovation also has a lower carbon footprint than even the “greenest” new construction.
Historic downtowns, mill villages, older neighborhoods, vacant industrial factories and even barns have been transformed by the tax credits. Places that were downright scary 20 years ago are now magnets for businesses, tourists and locals alike.
Heritage tourism, a major industry for North Carolina, used to focus mainly on museums. Now, entire communities are heritage destinations, thanks to the tax credits.
For example, this summer you might go to Asheville to visit Biltmore Estate, a wonderful attraction. Now, you’re likely to stay over a couple of days and enjoy the revitalized downtown, visiting shops, galleries, restaurants and breweries – just chilling out amid historic charm. You’ll quickly see why several new businesses have moved to Asheville, another spinoff from the tax credits. Twenty years ago, you wouldn’t have even ventured into downtown Asheville; it was pretty depressing. Now it rocks.
South Carolina figured it out: The tax credits are working in North Carolina, so let’s up the ante. If North Carolina is offering 20 percent, let’s go to 25 percent. And then the North Carolina legislature goes and shuts down a huge economic development success story. What a shame!
At first, the objection to the rehabilitation tax credits was: We don’t like tax credits, any tax credits, because that goes against tax reform. That argument didn’t get much traction. It’s hard to deny that these tax credits strongly enhance the economic vitality of our state.
So, a new objection was trotted out: Local governments need to have “skin in the game.” In reality, local governments have put a lot of skin in the game – expensive infrastructure updates, such as parking decks, roads, water, sewer and sidewalks, all necessary to make projects work.
Probably no tax incentive in North Carolina has generated a better return for the state in jobs, economic development and community livability and pride. Without this incentive, North Carolina is losing out; jobs and investors are leaving the state in droves. Buildings are sitting empty.
In the past, legislative support for these tax credits hasn’t just been bipartisan – it’s almost always been unanimous, bringing together liberals, conservatives and everyone in-between. We believe a majority of Senate members support the credits, and the House has already shown its overwhelming support. Let’s revive this important incentive.
Don’t let South Carolina eat our lunch once again. That would be devastating to Tar Heel pride – and to our rich heritage.
Myrick Howard is president of Preservation North Carolina.