RALEIGH — Spurred on by Gov. Pat McCrory, who has assembled a coalition to restore discontinued historic preservation tax credits, state Cultural Resources Secretary Susan Kluttz on Thursday directed her statewide whistle-stop tour to Eden, home of Senate leader Phil Berger.
The push for legislation giving new life to the historic preservation tax credits that were sunset Dec. 31 is expected to be riddled with politics.
While in Eden, Kluttz “had a great conversation with the mayor, his planning staff, and some Main Street committee members about the economic benefits of historic tax credits and their local value to these communities,” said Cary Cox, spokesman at the Department of Cultural Resources.
“Our plan is to go to most communities over the next few months throughout the state to highlight the tax credit projects,” Cox said.
Berger’s office did not respond to a question asking if the Eden Republican saw any political motives in Kluttz’s early choice of his hometown in her tour promoting the tax credit. Eden accounted for less than one-half of 1 percent of all private investment generated statewide by projects using the incentive.
Berger spokeswoman Shelly Carver said the Senate leader’s position on the tax credit has not changed since he and newly installed House Speaker Tim Moore, R-Cleveland, discussed it during a Wednesday news conference.
“The decision was made in the context of tax reform” to end the historic preservation tax credit in the last session, Berger said, acknowledging some lawmakers would like to revisit that and other decisions to terminate or reduce various incentives and carve-outs.
“Let’s let the session move forward and see what kinds of proposals are out there,” Berger said.
“There’s talk about a grant program” to fund a second life for historic preservation incentives rather than allowing a tax credit to be deducted from personal income taxes, “so there might be some discussions about that,” Moore said.
Berger and Moore acknowledged the state budget is between $190 million and $200 million short of revenue projections, and part of that is due to personal income tax rate reductions to 5.75 percent in 2015 from a range of 6.0 to 7.75 percent in 2013.
“As an Appropriations [Committee] chair, predictability in budget is an important thing, and one of the things with tax credits is it gives you unpredictability of what it’s going to cost,” said Senate Majority Leader Harry Brown, R-Onslow.
“So that’s why grant programs are being looked at instead of tax incentives more. I think you’ll continue to see that approach maybe because it does create predictability when it comes to budgeting,” Brown said.
McCrory has made no secret of his displeasure with the General Assembly’s refusal to extend the life of the historic preservation tax credit in the last session. After lawmakers finalized the budget in August he held a news conference in which he said he was “very disappointed.”
“We are going to come back and pass historical tax credits” in the long session, McCrory vowed at the time. He also hinted on several occasions that he might recall lawmakers for a special lame-duck session to consider restoring tax credits for historic preservation and film production costs.
The governor guaranteed he would conduct another study to show the historic preservation tax credit produces a good return on investments, and said it “has nothing to do with tax reform. There is no connection to impacting the tax reform policy.”
Since then he has drawn together a coalition comprising the Metropolitan Mayors Coalition, North Carolina League of Municipalities, Preservation North Carolina, architects, bankers, and developers. He designated Kluttz, whose department includes the State Historic Preservation Office, as the administration’s point person.
Kluttz did not respond to requests for an interview. But in a televised interview last week on Time Warner Cable News’ “Capital Tonight” program, she called the tax credit “an economic tool” that is “critical to the Carolina Comeback.”
Touting a motto of “Old Buildings Equal New Jobs,” and a website at historictaxcredits.org where a petition to reinstate the program had drawn nearly 3,500 signatures by late Friday, Kluttz said she is touring the state on “an awareness campaign.”
She is visiting sites that have benefited from the tax credit, seeking venues that could be aided by extending the program, and hoping to stir grass-roots energy to pressure lawmakers to bring the program back, she said on the televised interview.
The 2,484 projects using the state and federal historic preservation tax credits in 90 of North Carolina’s 100 counties have generated $1.69 billion in private investment since 1998, according to the Cultural Resources Department.
Many historic buildings sit vacant, and will continue deteriorating without financial incentives such as the historic preservation tax credit, according to Scott Mooneyham, spokesman for the North Carolina League of Municipalities.
“They become a blight. Sometimes they are areas that attract crime because they are abandoned,” Mooneyham said. State incentives that encourage private investment, jobs, and economic development, and at the same time preserve parts of history, should be encouraged, he said.
“Vital vibrant downtowns make for vital, vibrant cities, and vibrant cities make for a vibrant state economy, so we just think it’s almost really a no-brainer to do something in this regard,” Mooneyham said.
“Oh my God, yes” state Rep. Susi Hamilton, D-New Hanover, said when asked if historic preservation tax credits aided her district. According to the Cultural Resources Department, where she worked when the state tax credits were created in the late 1990s, 155 projects have generated $36.6 million in private investment.
One marquee project was the old Masonic Temple on Wilmington’s Front Street, where a popular rooftop bar and community theater now operate.
“If we would have lost that Masonic building in downtown Wilmington it would have just wiped out the entire block, and we were headed down that direction,” Hamilton said, “and now it’s a huge income-producing property.”
Tarboro has created “an economy … as a result of historic preservation tax credits. That’s probably as fine an example as anywhere in the state,” she said.
Whether it’s Wilmington, Asheville, Todd, or Selma, communities of all sizes benefited from the tax credit, said Hamilton, a former downtown development director in Wilmington.
“I believe that is why the governor shifted his position, because the rural communities want historic preservation tax credits as bad as the urban areas do,” she said.
State Rep. Rick Catlin, R-New Hanover, said he has “a real problem” with the way incentives are dished out in North Carolina, but said he would keep an open mind on the historic preservation tax credit debate that he expects to resurface in the current session.
“I have not done a return on investment analysis on that yet, but it is something I’m going to look at,” Catlin said. He recognizes the cost of preserving or restoring a historical building is high, and saving them without the tax credit is a challenge.
“I don’t want to create a situation where people just bulldoze down old houses and old buildings to build something new,” Catlin said.
Dan E. Way (@danway_carolina) is an associate editor of Carolina Journal.