Bailey Bill tax incentive ‘helps make the math work’ for historic restoration projects

When Lucinda Statler bought her Earlewood home eight years ago, it was the windows that sealed the deal.

They cover nearly every side and wrap the corners of the house, inviting streams of natural light into the modest concrete brick home built in 1948. There are 12 of them, steel casement – a popular and inexpensive style for the period. And all but one of the windows are painted shut.

Statler, who works in Columbia’s planning department, will spend more than $20,000 to restore the windows while keeping their original character. But that investment will be eased by the fact that she could save thousands of dollars in taxes over the next 20 years, thanks to her home’s recent approval for a program that encourages rehabilitation of historic properties.

“The neighborhoods, as a group of people, have already come to the city and said, ‘We want to preserve the character of this neighborhood because it’s special in some way,’” Statler said. “The Bailey Bill (helps that).”

Statler is one of the increasing number of homeowners seeking city and county tax breaks under Bailey Bill ordinances, which are among a number of local, state and federal tax incentives aimed at encouraging preservation, restoration and adaptive reuse in a city where old buildings are the foundation of the city’s structural character.

While more than two-thirds of the city’s 55 properties with the special tax status serve commercial purposes, the number of individual homeowners seeking certification has been on the rise. More than twice as many residences have received approval so far in 2014 compared to each of the previous three years.

The Bailey Bill is a state law that allows local governments to grant special tax assessments to rehabilitated historic properties and low- and moderate-income rental properties. Columbia and Richland County have mirroring ordinances allowing historic buildings to be assessed at their pre-rehabiliation values for 20 years – granted that at least 20 percent of the building’s value is spent on the renovations.

Owners of 16 buildings have applied to the city for certification this year – about twice as many as each of the past three years – and of those, seven are residences.

While fewer tax dollars over a 20-year period cuts into city and county revenues, Richland County assessor John Cloyd said the program’s value makes up for it.

“A good public policy helps us to retain the best of the old, and hopefully it influences what we do with the new,” Cloyd said. “If we didn’t have the Bailey Bill, maybe that property would disappear from the tax rolls. ... What I think we’re seeing is we’re trying to adapt tax policy to make the quantity and quality of life in Columbia better. So what you suffer by loss of revenue, you gain in the long run by having a modernized building.”

Qualifications for local Bailey Bill certification include those listed on the National Register of Historic Buildings, having Columbia city landmark status, designated historic by the Richland County Conservation Commission or being at least 50 years old and demonstrating historic significance.

Until now, commercial properties have by far been the more frequent beneficiaries of the credits from the Bailey Bill, which was first enacted in the 1970s and has been revised over the years.

Among those currently under Bailey status in Columbia are the Publix grocery store on Gervais Street in the Vista; the Sheraton hotel on Columbia’s Main Street; 1601 Main St., the old Efird’s Department Store that now houses Mast General Store and Capitol Places’ Lofts at Lourie’s apartments; and the former AgFirst Farm Credit Bank building on Hampton Street, which is soon to be developed into luxury apartments.

“It really helps make the math work,” said Jeff Prioreschi, managing member of Painite Capital, a real estate advisory firm that has dealt with financing and tax credit applications for a number of local developments, including Capitol Places apartments. “Any time you renovate a historic building, there’s more cost. And that’s why there’re incentives to make that happen, to preserve these historic buildings, or else every city would look like Charlotte, where everything was wiped out.”

For a building like 1601 Main St., the Bailey credits amount to tens of thousands of dollars in tax savings each year, Prioreschi estimated.

While the Bailey Bill and other tax credits have had an important role in enticing developers to downtown business and entertainment districts – two dozen of the current 55 Bailey buildings are in the Vista or on Main Street – the incentive can be just as helpful for individual homeowners with their eyes on restoration.

Five houses in the Wales Garden community, for instance, have Bailey status, including a 1920-built, $300,000 home on Wateree Avenue, whose owners this month were granted Bailey certification and approval to make improvements, including repairs to windows, plumbing and insulation.

“A lot of the work that qualifies for the investment is basic work you’d have to do on an old home anyway ... to make it a functional and secure building,” said Amy Moore, a preservation planner for the city. “There’s a reason people buy in historic districts. A lot of people already like that sense of the neighborhoods and the feelings the old buildings give them. ...The incentive to rehabilitate is sort of icing on the cake.”

Statler would have rehabbed the windows on her Earlewood home with or without the Bailey Bill incentive, she said, because it’s a meaningful project for her.

The windows are “partly why I love the house so much and partly why I’m willing to make the investment,” Statler said.

Still, she said, the tax credits certainly are a bonus.

Projects like hers are not just a benefit for individual homeowners, Statler said, but for communities.

“I think for me and a lot of people in similar neighborhoods, there’s a character there that’s unique,” she said. “And I think for the most part, they don’t build things like they used to.”

This story was originally published September 21, 2014 at 10:48 PM with the headline "Bailey Bill tax incentive ‘helps make the math work’ for historic restoration projects."