UpThink: Historic Tax Credits & Why They Matter

 

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UpThink is an email series by GenerationWV, a statewide organization dedicated to attracting, retaining, and advancing young talent in the Mountain State.

By Nicole Marrocco / WV Community Development Hub

Little excites me more than a community finding a modern use for a historic building.

Nerdy, I know.

But just check out this church turned indoor rock gymgas station turned restaurant, and bank turned grocery store, and I guarantee you’ll be geeking out over the untapped potential of abandoned and underperforming historic buildings alongside me.

Historic tax credits make it possible to revitalize historic properties that have a financing gap between what banks will lend and the total cost of rehabilitation.

Developers restoring income-producing (i.e. commercial, industrial, agricultural, or rental-residential) buildings listed on the National Register of Historic Places or certified by the National Parks Service can apply for personal or corporate net income tax credits from West Virginia worth 10 percent of rehabilitation expenses.

Unfortunately, West Virginia’s 10 percent rate just isn’t cutting it — especially considering all of our neighboring states have either a 20 or 25 percent historic tax credit rate. Developers are wary of rehabbing buildings here because the risk is so much higher compared to places just across the state border.

Over the last few months, the Revitalize West Virginia’s Downtowns Coalition (including Generation West Virginia) has been advocating to increase the rate to 25 percent to make our state’s historic districts more attractive to developers and spur private investment.

Read the full UpThink to find out why — as a young person living in West Virginia — I believe an increased historic tax credit rate is a game-changer.

WV Public Broadcasting: House Standing its Ground on Tax Reform in New Bill

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House Speaker Tim Armstead and Finance Chair Eric Nelson speak before a House floor session. Photo by Perry Bennett / WV Legislative Photography

By Ashton Marra / WV Public Broadcasting

Members of the House are standing their ground when it comes to tax reform. At least, that’s what House Speaker Tim Armstead said Friday after a vote in the chamber on its own version of a revenue bill.

The bill does not include any of the changes to the personal income tax Senate Republicans and Gov. Jim Justice have agreed to, but Armstead said that doesn’t mean his chamber isn’t still willing to work on a compromise.

Members of the House voted 74 to 17 in favor of the tax bill negotiated between House Democrats and Republicans.

It brings in an estimated $100 million in additional revenue to close a budget gap in the 2018 fiscal year, which isn’t enough according to members of the chamber, but is a start.

Read the full story, including more about the historic tax credit, at wvpublic.org. 

The Intelligencer: House Passes Revenue Bill that Includes Historic Tax Credit

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West Virginia Delegate Pat McGeehan, R-Hancock, delivers a speech about the historic tax credit Friday on the House floor. Photo by Perry Bennett / WV Legislative Photography.

By Joselyn King / The Intelligencer

WHEELING — The West Virginia House of Delegates passed its version of a revenue bill Friday on what was the sixth day of a special legislative session in Charleston called for setting the state’s 2018 budget.

Despite a long agenda of proposed amendments, House Bill 107 was approved with few changes from the measure passed Thursday by the House Finance Committee. It would maintain West Virginia’s consumer sales tax at 6 percent, but would eliminate sales tax exemptions on cellphone services. It also would make no changes to the state’s coal and gas severance tax rates, but would gradually eliminate all taxation of Social Security within the next three years.

Read the full story, including more about the historic tax credit, at theintelligencer.net.

Charleston Gazette-Mail: Increased Credit Would Make Developers Say “Yes” to West Virginia

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Tighe Bullock stands inside a first-floor entry of the Staats Hospital Building in 2014. Ric Cavender, of Charleston Main Streets, touted Bullock’s West Side work as one of the success stories of tax credits for historic renovations. Credit: Gazette-Mail file photo

By Ali Schmitz / Charleston Gazette-Mail

A measure to increase tax credits available to developers restoring historic buildings remains alive during the special session of the state Legislature.

The measure, which is part of the wide-ranging revenue bill currently going through the Legislature, would increase the tax credit rate for restoring historic buildings from 10 percent to 25 percent of the total cost of renovations.

The measure also includes a tax credit cap of $3.75 million for each building.

The credit is available for residential and non-residential buildings statewide that are defined as certified historic structures.

Officials statewide have advocated for the change, saying it could encourage developers to revive historic buildings that remain empty.

Read the full story at wvgazettemail.com.

The Intelligencer: Don’t Throw the Baby Out with the Bath Water

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By The Intelligencer

Here in the Mountain State, we have a saying relevant to what could happen to a proposal that is important for Wheeling and several other communities in West Virginia: Don’t throw the baby out with the bath water.

In other words, don’t let a good idea die just because it is embroiled in a bad one.

One avenue of development in older communities such as ours is redeveloping old buildings that are attractive because of their architecture. In Wheeling, that involves dozens of Victorian-era structures.

A state tax credit exists to encourage developers to renovate and repurpose such buildings — but some adjacent states have much higher credits. It was suggested earlier this year that legislators increase the West Virginia credit to make redevelopment here more attractive.

Lawmakers seem receptive to the idea, but it fell through one of those cracks that swallow up so many pieces of worthwhile legislation. It was given a second chance at life when Gov. Jim Justice and state senators included it in a comprehensive tax policy bill.

Read the full editorial at theintelligencer.net.

The Herald-Dispatch: Historic Tax Credit in Play During Special Session

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The Herald-Dispatch Photo Archive

By Lacie Pierson / The Herald-Dispatch

HUNTINGTON – Although it seemed to die quietly at the end of the regular legislative session, a measure to increase the rate of tax credits available to developers restoring historic buildings remains alive in the special session of the West Virginia Legislature.

While lawmakers took a break from legislating last week amid negotiations for the state’s 2018 budget, the tax credit proposal became a little-noticed part of the special session call from Gov. Jim Justice. But it is a measure proponents contend could spawn development throughout the state at what appears to be little cost to the state. Officials in Huntington have advocated for the change, saying a bigger tax credit could spark renovation of currently little-used buildings in the downtown.

Currently, those who do construction work restoring historic buildings receive a tax credit of 10 percent of the total cost of working on the building.

Under a measure that was part of the tax revenue bills in the Senate and the House of Delegates two weeks ago, the tax credit rate would be increased to 25 percent of the total cost of the project. The measure also included a tax credit cap of $3.75 million per building.

Read the full story at herald-dispatch.com.

The Exponent Telegram: Shinnston City Council Supports Historic Tax Credit Increase

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By Kirsten Reneau / The Exponent Telegram

Council members also unanimously approved a resolution in support of increasing the West Virginia Historic Tax Credit. Kovalck explained that in West Virginia there is a 10 percent tax credit if an individual or business takes on a historic building and rehabilitates it for another use.

“All our surrounding states have 25 percent tax credit to do the same thing, so developers would get a better tax break going to Ohio or Virginia to go revamp and build, and we want to support West Virginia to give it some competition with surrounding states,” Kovalck said. “A lot of our downtown, older buildings, we’re always talking about demolition, and anything we can do to combat that will be positive for the state and individual community.”

Read the full story at theet.com.

The Herald-Dispatch: Historic building tax credit worth revisiting

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Photo by Lori Wolfe / The Herald – Dispatch

By Les Smith / The Herald-Dispatch

West Virginia’s lawmakers, looking squarely at a $500 million budget deficit, spent plenty of time during the recent legislative session talking about how sparking economic activity is the longer-term answer to the state’s financial struggles. There’s no question they are correct about that; lack of economic growth and the decline in the coal industry in particular has hurt the state’s revenue picture.

So it was disappointing to see that the legislature was unable to make one change in state law that might have fueled more business investment, created more jobs and added to the state’s coffers to some degree – with no significant cost.

Senate Bill 238 called for increasing the tax credit for rehabilitating historic commercial buildings from the current 10 percent of qualified project costs to 25 percent starting next year. It was a change sought by various groups, including city officials and developers in Huntington.

Their reasoning was simple: A larger tax credit could be the difference in whether a project is considered financially feasible by people hoping to upgrade or give new life to an historic building. In short, its supporters saw it as a means to spark more economic activity.

Read the full story at herald-dispatch.com.

Down, but not out – Groundwork laid for passage in future session

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Waldo Hotel, Clarksburg / Photo by Amy Heiden

It is with mixed emotions that I share that SB 238, which would have increased the rate of West Virginia’s historic rehabilitation tax credit to 25%, did not complete legislation by midnight on Saturday, April 8th.

When the Revitalize West Virginia Downtowns Coalition first formed and announced its intentions last year, the group was met with heavy skepticism. Some doubted that the proposal would gain traction in the Legislature. Others feared that the Legislature would cut the historic tax credit program altogether.

In reality, increasing the rate of the historic rehab tax credit received widespread support and found strong advocates in both chambers.

SB 238 passed the Senate, 34 – 0, and passed the House with amendments introduced in House Finance, 90 – 8.

Unfortunately, the Senate and House were unable to resolve the differences between their respective versions of the bill during a conference committee.

The Senate refused to accept the House’s amendments as the provisions would have hindered redevelopment even more so than the current historic rehabilitation tax credit program’s 10% rate.

And the House refused to budge on its amendments, most notably a statewide program cap.

In a last-ditch effort to keep the bill alive and settle the dispute outside of the conference committee, the Senate recalled SB 238 from the House to amend the bill and send it back to the House for a vote.

Unfortunately, the House refused to return the bill to the Senate, effectively killing SB 238 for the 2017 legislative session.

From what the Revitalize West Virginia Downtowns Coalition understands, negotiations lasted off and on throughout the final day of session, making SB 238 one of the most buzzed about bills at the Capitol.

Even though the bill did not pass this session, the Revitalize West Virginia Downtowns Coalition — thanks in large part to your enthusiasm and assistance — has laid the groundwork to increase the historic rehab tax credit in the very near future.

And the Coalition intends to do just that.

Whether historic rehab tax credit legislation is introduced during a potential special session later this year or during the 2018 legislative session, I encourage you to reach out to your lawmakers today.

Please thank your Senators, Delegates, and the Governor’s Office for supporting SB 238, and consider asking them to continue advocating for historic rehab tax credits.

Many thanks for your interest and energy. If you have any questions or would just like to talk more, be sure to get in touch.

WV Living: The Importance of Heritage Tourism to West Virginia’s Economy

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By Nikki Bowman / WV Living

I have always loved old buildings. As a child, I thought the old Clay County Courthouse was the closest thing to a castle I’d ever seen. It was perched on the hill overlooking town like a golden sentry. After school, I’d go there to visit my grandmother Ella Braley, who worked for the county clerk, and I’d busy myself in the stacks of deeds and genealogy records. The heavy and dusty oversized books, the polished black and white checkered floors, the painted wooden banisters, and the thick doors that creaked open with authority were the catalyst of many stories I fabricated as I sat at a vacant desk with a typewriter. Someone along the way had told me the story of how locals tried to lynch the defendants of the Booger Hole trial at the courthouse in 1917. I vividly recall spending days pecking at the typewriter as if I were a tweed-wearing muckraker.

Historic buildings are not just the caretakers of our heritage; they are also essential to our state’s economic vitality. Heritage tourism is a billion-dollar industry. In West Virginia alone, $192 million in economic impact was generated from construction projects supported by the state’s historic incentive programs, according to The Economic Impact of Historic Rehabilitation in West Virginia, released by West Virginia University’s College of Business and Economics in 2015. Every dollar spent by the state in tax incentives or grants supported $11.45 of economic activity in the state economy.

Read the full editorial at wvliving.com.