Expiration of tax credits could slow local development
Historic properties in Lenoir like the Center Theater and the old Blue Bell factory on College Avenue may be facing tougher paths to rehabilitation, as special tax credits that help property owners are set to expire at the end of the year.
If the state’s Historic Rehabilitation Tax Credits are allowed to expire at the end of this year as planned, it could put a damper on the development of historic buildings all over North Carolina, including Lenoir and Caldwell County.
“For downtown, it takes away a tool,” said Jenny Wheelock, Lenoir planning director, a tool that she says could be very important for Lenoir down the road.
The program allows those renovating historic properties to reduce their state tax bills by 20 percent if it’s an income-producing property or 30 percent if it’s not income-producing.
Also set to expire at the end of the year are the State Mill Rehabilitation Tax Credits for renovating old textile, tobacco or furniture plants. The amount of tax credit allowable varies according to how the county’s economy is rated by the N.C. Department of Commerce. Caldwell is designated as a Tier One county, the most economically distressed category, which means projects here can reduce their tax bills by 40 percent.
Several properties in Lenoir have used the credits to offset construction costs, including downtown buildings like the home of Carolina Distillery on West Avenue, said Kaye Reynolds, Lenoir’s communications and resources director.
Keith Nordan, owner of the distillery and building that houses it, said he is currently working to complete the tax credit applications for ongoing work at the building, which is designated as a historic structure, the promise of credits was not critical for his project. But Nordan said he has been to several conferences where people from all over the state said that the tax credits were “entirely what make their decision” to refurbish historic buildings.
To be eligible for the credits, buildings must be a certified historic structure, listed on the National Register of Historic Places or be part of a National Register historic district, like downtown Lenoir.
The opportunity to save that money played a large part in the work he’s done at the distillery building, Nordan said, and allowed him to keep the building’s historic character intact – which is also a requirement of the tax credits.
Reynolds said the credits have become one of the city’s first planning tools, and are especially useful because work that needs to be done to bring historic structures up to modern building codes is expensive.
Last spring, the downtown historical district was expanded by roughly a block, to include buildings such as the Center Theater. If the tax credits expire, that will just be another obstacle standing in the way of refurbishing the buildings.
Quite a few buildings in Lenoir and Caldwell County also fit the bill for the State Mill Rehabilitation Credits, like the old Blue Bell mill on College Avenue, now the Lenoir Trade Market.
Joel Kincaid, a Lenoir resident on North Main Street, used the credits to refurbish the Edgar Allan Poe House in the early 2000s, and he said that the tax credits allowed him to break even on the project.
“If it had not been for the tax credits, our project would not have been as successful,” said Kincaid. “It was a matter of really making a sacrifice. We had no guarantee that the house would ever sell.”
But developers and city officials are optimistic that the tax credits may be saved. Senate Bill 763, passed by the N.C. House and awaiting Senate approval, could extend the historic rehabilitation tax credits but with a few changes. The new credits would allow for 15 percent of rehabilitation expenses on projects up to $10 million, and 10 percent of projects greater than $10 million and up to $20 million. It would also allow for special 5-percent credits for projects in certain areas targeted for development or investment.