The new Republican tax bill would eliminate historic tax credits that helped build the Vista and redevelop Columbia’s Main Street.
The 40-year-old tax credits, placed in the U.S. tax code by Republican president Ronald Reagan, help make it financially feasible for developers to renovate and reuse historic buildings rather than tear them down and build anew. The credit allows the owner a 20 percent income tax credit after the project is finished.
The credits have been used in national landmarks such as Boston’s Fenway Park baseball stadium and Asheville, N.C.’s Biltmore Estates. In Columbia, the credits have been used to help restore the Palmetto Compress warehouse, 701 Whaley, the Olympia Mills and Confederate Printing Plant, among dozens of other projects.
“Nobody saw this coming,” said Matt Kennell, president and CEO of Center City Partnership, which encourages and guides investment in the central business district. “All of the things that have changed downtown Columbia wouldn’t have been possible without historic tax credits – things like the Barringer Building, AGAPE and Mast General Store.”
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Should the credits be axed, Kennell said, one of the biggest impacts for Columbia is BullStreet – the largest land deal in modern Columbia history. The most visible symbol of that redevelopment project is the effort to turn the Babcock Buildng, with its distinctive red cupola, into a massive apartment complex.
“I worry about the Babcock Building,” he said. “It’s the most important project to the revitalization of BullStreet, and I can’t imagine it getting done without historic tax credits.”
Fred Delk, executive director of the Columbia Development Corporation, which encourages and guides investment in the Vista and other areas of downtown, agreed.
“Columbia has had several hundred million dollars in projects using historic preservation tax credits, and those projects have created a renewal of the city center and areas around the city center like Olympia,” he said. “And states like South Carolina have really stepped up to take advantage of them and add local and state incentives as well, such as the Bailey Bill.”
The state Bailey Bill allows local governments to lock in for 20 years an historic property tax assessment prior to rehabilitation.
U. S. Rep. Tom Rice, R-Myrtle Beach., told McClatchy’s Washington Bureau that in his 25-year career as a tax attorney, he took advantage of the historic preservation tax credit, and knew others in South Carolina who did as well.
He cautioned, however, that sacrifices would have to be made in crafting a final product, and not every credit can be spared. The committee spent a second day Tuesday writing the tax legislation. It’s expected to approve the bill later in the week, with a House floor vote likely next week.
Repeal of the historic tax credit is likely to make it into the Senate version of the tax bill, which could be released this week.
“It’s a billion dollars, so I think we’re looking at it right now, and I would imagine it makes it through the cut,” said U.S. Sen. Tim Scott of South Carolina, who is playing a leading role in negotiating the Senate GOP tax bill. “We’re going to try to be ... strategic, in a broad brush, on the largest expenditures that provide the most revenue so as not to have the simple fight over little things.”
Though Charleston has become a model of historic preservation, Michael Bedenbaugh, executive director of Preservation South Carolina, told McClatchy the federal tax credit program benefits smaller towns with once-bustling Main Streets that were emptied out by businesses moving closer to highways. Charleston has no problems attracting capital, he said, but smaller and rural towns do.
“The majority of banking and financial institutions tend to aim at the new and mistrust the old,” Bedenbaugh said.
He found the tax credit has created a class of developers who are “bringing money back to places that were empty, abandoned and rotting. Now they are filled, alive and contributing.”
McClatchy’s Washington Bureau contributed to this story.