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.

Update: House Passes Historic Rehab Tax Credit Increase

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On Thursday, the proposal to increase the State Historic Tax Credit from 10 percent to 25 percent  passed the House with 90 votes! SB 238 was set to be read a second time when the House suspended the constitutional rule that requires a bill to be read on three separate days. The House then took the bill up for immediate consideration and passed it, as amended by House Finance. 

However, the amendments made by the House Finance Committee earlier this week are not ideal. The House Finance Committee Substitute would cap the funding for the State Historic Tax Credit program at $5 million dollars per year, increase the credit from 10 percent to 25 percent incrementally over the next three years, and limit the carryback and carryforward terms of the credit.

The $5 million dollar cap is unlikely to spark the redevelopment that is needed to revitalize West Virginia’s downtowns. Currently, in West Virginia if a developer completes a historic rehab project according to the state’s standards, their project then qualifies for the State Historic Rehabilitation Tax Credit. However, the $5 million dollar annual cap changes the very nature of the program in that it destroys the certainty that if a developer complies with standards set forth by the state, they will receive the credit. This lack of certainty as to the outcome will discourage historic redevelopment projects that absolutely require the credit to be financially feasible.

Imposing a credit cap can produce an adverse result in terms of incentivizing projects that could have moved forward regardless of the tax credit while excluding those which are not financially viable without the state incentive.  Projects that require the credit to become viable may choose not to participate, because of the lack of certainty as to the outcome, the cost and time required to complete a competitive application that may not be rewarded, and the difficulties of arranging financing while working through an unpredictable process with the state. States without a program cap have been substantially more successful in attracting private investment to older areas that need it most than those states that have capped the credit.

As the committee substitute is currently written, the credit will increase to 15 percent on July 1, 2018. One year later, the credit will increase to 20 percent and in 2020, the credit would increase to 25 percent, which means that West Virginia’s State Historic Tax Credit will remain uncompetitive through June 30, 2020. To spur redevelopment and drive investment in our downtowns, the credit must be competitive with our neighboring states- Pennsylvania, Ohio and Virginia, all of which currently have 25% Historic Rehabilitation Tax Credits.

Lastly, the amendment to limit any unused portion of the credit from being carried back to any prior taxable year, or carried forward for a minimum of five years would negatively impact West Virginia’s small scale developers. Small scale developers often opt to spread the tax credit out over multiple years, rather than selling or syndicating it. The limits set forth in the substitute will hinder the ability of local property owners in the business of rehabbing small projects to utilize the full value of the State Historic Tax Credit. To incentivize small scale, main street type projects, taxpayers need the ability to carry the credit forward for at least 10 years, or ideally, 20 years.

For a bill to become law, an identical version must pass through both chambers. After passage in the Senate, the aforementioned amendments were made in the House Finance Committee, as a result, the bill will now be referred to a conference committee. Conference committees are typically comprised of three members from both chambers, selected by the Senate President and the Speaker of the House. Once the differences in both versions of the bill have been resolved by the conference committee, the bill will be sent to both chambers for an up or down vote.

The Intelligencer: Moving and Shaking in the West Virginia Senate

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By Joselyn King / The Intelligencer

…The Senate on Wednesday also advanced a bill that would increase the amount of a tax credit available for rehabilitating certified historic structures.

Senate Bill 238, introduced by Ferns, would raise the tax credit from 10 percent to 25 percent for improving qualified properties for commercial use. As currently written, the tax credits would be available for qualified rehabilitation expenditures made after Dec. 31.

The measure unanimously passed the Senate Wednesday, and will move on to the House for the final week of the regular session.

Jake Dougherty, executive director of Wheeling Heritage, termed the measure “critical” for communities such as Wheeling with many older structures. With renovations, these properties could become useful and tax-producing, he said.

He said there are several significant and important commercial structures in downtown Wheeling that could benefit from the increase in the historic tax credit. Among these are the former Wheeling-Pittsburgh Steel building, and the Marsh Stogie building.

“Without this credit, these buildings are not viable and we need an incentive to make them viable,”Dougherty said. “The tax credit would allow these buildings to be viable again, while creating construction jobs and converting vacant buildings to their potential. It would also increase the amount of their property taxes as they become productive again.”

Read the full story at www.theintelligencer.net.

Update: Full Senate Unanimously Passes Historic Rehab Tax Credit Increase

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This morning, the full Senate unanimously passed Com. Sub. for SB 238, which will increase the rate of West Virginia’s historic rehabilitation tax credit from 10% to 25%!

Over the course of the next week and a half, the Revitalize West Virginia Downtowns Coalition will be hard at work to get the bill through committee in the House and voted on by the full House of Delegates by midnight on April 8th.

If you’d like to see this bill pass, consider reaching out to your Delegates about SB 238. (OSAY is a handy new tool that empowers you to do just that!)

The State Journal: ‘The Past and Future City’ Ties Preservation to Development

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By Brooks McCabe / The State Journal

Stephanie Meeks has written a timely book espousing the importance of historic preservation as it relates to future urban redevelopment. “The Past and Future City: How Historic Preservation Is Reviving America’s Communities,” is worth reading by anyone who has an interest in revitalizing our main streets and downtowns.

This is particularly appropriate for West Virginia as Huntington, Charleston, Clarksburg and Wheeling grapple with how to preserve the unique features and character of their downtowns. The book does an excellent job of presenting the case for an urban renaissance, bringing older buildings back to life through adaptive reuse. Multiple examples are provided showing how the young and old are finding the vibrancy of historic neighborhoods both invigorating and nurturing.

In their lives, working and playing come together in mixed-use communities built upon repurposing older structures that merge the past with the present in a way residents can envision a lifestyle that meets their 21st-century expectations. It is one where there is a real sense of identity, a sense of place, that’s speaks loud and clear that this is not “anywhere USA.” It is our town, our community and we are proud of our unique identity.

Read the full story at www.theet.com.

Update: Senate Finance Passes Committee Substitute for SB 238

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After being removed from the Senate Finance agenda earlier in the week, a committee substitute for SB 238 passed the Senate Finance Committee Friday afternoon!

Com. Sub. SB 238 is essentially the same as the original bill with the addition of a December 31, 2017, effective date. This addition ensures that no historic tax credits will be applied to taxpayers personal or corporate net income tax liability until at least January 1, 2019.

House Finance had HB 2545 on their agenda on Friday as well. However, due to the number of bills on the agenda and the time the committee spent on each, Delegate Nelson pulled HB 2545 from the agenda after learning Com. Sub. SB 238 had passed Senate Finance earlier in the afternoon.

Because HB 2545 did not pass out of committee in its chamber of origin prior to March 26th, that bill is effectively “dead” — as are the other historic tax credit bills that were introduced but did not move.

Com. Sub. SB 238 is now the only historic tax credit bill left standing.

From here, Com. Sub. SB 238 will be read on the Senate floor three times (Monday, Tuesday, Wednesday) before being put to a vote before the full Senate on Wednesday. Wednesday the 29th also happens to be the last possible day the bill can pass out of the Senate.

If the bill passes the full Senate on Wednesday, Com. Sub. SB 238 will be read on the House floor on Thursday and referred to its House committees. We’ll then have to work to get the bill through the House committees before the last day of session, April 8th (next Saturday!).

Don’t hesitate to get in touch should you have any questions or comments.

Update: Finance Committee to Consider Historic Tax Credit Rate Increase

Thanks to everyone for your calls and emails! As a result of all your efforts, Senator Hall has placed the historic tax credit increase on the agenda for the next Finance Committee meeting Monday, March 20th, at 3:00 p.m.

If everything goes as planned and SB 238 passes out of Senate Finance without a hitch, the bill will be read three times on the floor — Tuesday through Thursday of this week — prior to being put to a vote by the full Senate on Thursday. After passage in the Senate, the bill will then crossover to the House to complete the full process again in that chamber.

If you’d like to show your support for SB 238, join us during the Finance Committee meeting in Room 451-M or follow along at home with the Legislature’s website. And consider contacting your Senators to request their support of SB 238 when it goes before the full Senate!

Historic Tax Credit Bills Stalled: Please Call Today!

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Photo by Travel Throne

If you want to help reduce the number of abandoned properties in West Virginia and spark historic redevelopment in our communities, there’s something you can do right this minute.

It’s do or die time for Senate Bill 238 and House Bill 2545, both of which would increase the rate of West Virginia’s historic rehabilitation tax credit from 10% to 25%.

Both bills must pass out of their respective Finance Committees in the next two weeks (by March 26th!) to even have a chance of continuing on the path to becoming law.

The competition to be taken up by one of the Finance Committees is fierce. The Senate currently has 64 bills pending in Finance, while the House has 96 — these numbers are sure to multiply as the Legislature gets closer to March 26th.

If you care about downtown redevelopment and reducing the number of abandoned properties in West Virginia, please contact the Senate and House Finance Committee Chairs and tell them to make proposals to increase the historic tax credit a priority in their committees!

Contact Senator Mike Hall at 304-357-7901 or mike.hall@wvsenate.gov to discuss SB 238, and contact Delegate Eric Nelson at 304-340-3230 or eric.nelson@wvhouse.gov to discuss HB 2545.

While you’re encouraged to share your thoughts in your own words, here’s one suggestion that’s short and to the point:

“Hello, my name is […], and I support an increased historic rehabilitation tax credit rate. I’m calling to find out when [SB 238 / HB 2545] will be placed on the finance committee agenda.”

Increasing the state historic tax credit would spark the redevelopment of West Virginia’s abandoned historic buildings.

The historic rehabilitation tax credit is one of the few tax credits where the state’s investment is directly recouped via state and local taxes for as long as the rehabbed building is occupied.

At a time when West Virginia needs to kickstart its economy, it is critical that this proposal pass. West Virginia communities and taxpayers stand to benefit.

Enhanced local revenue. Historic rehab increases property value, which in turn increases local property tax revenue.

Jobs. Rehab projects create more jobs in the construction industry than new construction.

Downtown revitalization. The historic rehab tax credit is one of the most effective tools to encourage downtown revitalization and redevelopment.

Catalyst effect. The rehab of a single prominent building is in some cases sufficient to stimulate the revitalization of an entire area. In other cases, a series of smaller rehabs can result in the critical mass necessary to bring a neighborhood back to prosperity.

Improved & affordable housing stock. The conversion of former factories, warehouses, and other buildings into apartments and condos leads to the increased availability of housing, including low- and moderate-income housing.

Business & retail activity. Historic rehabilitation in downtown areas results in enhanced retail and business activity.

Efficient development. Historic rehabilitation makes use of existing infrastructure reducing the need for taxpayer dollars to construct new roads, water and sewer lines and gas, electrical, and telephone lines. In addition, especially if demolition costs are figured in, the cost of rehabilitation is often less than new construction, resulting in more efficient development.

Tourism. Through the use of the rehabilitation tax credits, heritage destination attractions are supported by revitalized historic neighborhoods where visitors can stay in bed-and-breakfast inns, shop in restored commercial areas, dine in creatively adapted buildings, and stroll through living neighborhoods showcasing a wealth of historic architecture

Without an increased historic rehabilitation tax credit rate of 25%, West Virginia is missing out on all of the above and more.

If you want West Virginia to make better use of its historic buildings, and create jobs and economic activity, please contact Senator Hall and Delegate Nelson!

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