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Preservation tax credit bill may falter in Senate

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A bill to revive the state historic preservation tax credit faces possible death in the N.C. Senate despite Gov. Pat McCrory’s support. Locally, the state’s tax credits encourage preservation of historic buildings, one of the missions of the nonprofit Historic Wilmington Foundation

Although the tax credits passed 98-15 in the N.C. House in March, a powerful Senate leader said they won’t take up the bill, which would provide a more limited tax credit than the program that lawmakers allowed to expire in December.

Gov. Pat McCrory actively promoted the legislation, which would provide a 15 percent tax credit for work on income-producing property costing up to $10 million. He and Secretary of Cultural Resources Susan Kluttz have been crossing the state to rally support for the revised tax credits. The pair made a stop in New Bern last week, and Kluttz made a pitch in Wilmington last month.

Proposed legislation provides renovations of $10 million to $20 million eligibility for a 10 percent credit. McCrory has supported credits that help increase the value of revenue-producing properties, as opposed to private homes. However, House Bill 152 would provide a small tax credit for those structures too. Under the previous legislation, property owners could seek a credit of up to 30 percent.

All of New Hanover County’s House delegation supported the House bill. It was sent March 30 to the Senate Ways and Means Committee. The chairman of that committee, Sen. Tom Apodaca, R-Henderson, has the power to sideline the bill.

In an interview with The Raleigh News & Observer, Apodaca referred to Ways and Means as “a graveyard” and said the bill does not have Senate support. Instead, he told the Raleigh paper he is more likely to back a Senate bill allowing local governments to make grants and loans to encourage preservation efforts.

“Going to the Senate is going to be a tall order,” admitted George Edwards, executive director of the Historic Wilmington Foundation. But Edwards was optimistic backers of the bill might succeed in pushing it to passage.

State Sen. Michael Lee, R-New Hanover, said he hasn’t decided whether to support the bill. He said he worries the legislation may hurt approval of an expanded film grant program.

“I am somewhat concerned about how it might impact the film incentive debate,” he wrote in an email. “There is some concern that it could negatively impact our efforts to increase funding to the film incentive. If I am working on prioritizing what I feel and hear is most important to New Hanover County, it is the film incentive.”

As proof of the tax credit’s value, supporters point to the more than $1.6 billion invested in historic buildings in 90 counties since 1998. From small towns to cities, the state tax credit has helped revive stagnant business districts and repurpose deteriorating buildings. Residents and business owners in Wilmington have made generous use of the credit, resulting in investments of more than  $18.5 million.

Among the sites renovated using the tax credit is the Bear-Munson building on North Front Street — home to the Hot Pink Cake Stand. Building owner/architect Chuck Dietsche said the state and federal historic preservation tax credits were important in restoring much of the building’s architectural character.

“It allowed us to treat the building the way we would have wanted to treat the building, as architects,” Dietsche said.

The tax credits also helped renovate the Efird and Murchison buildings on North Front.

One potential problem with any proposal that may emerge, Edwards said, is some lawmakers are likely to insist local governments have a financial stake such as the grant program Apodaca was touting. But as the General Assembly has whittled away at revenue sources for cities, in particular, those communities have less money to invest, Edwards said.

The legislature severely limited cities’ abilities to annex developed areas outside their borders and eliminated the business franchise fees that provided significant revenue. Lawmakers also are considering redistributing sales tax proceeds to benefit rural areas, a prospect that would hurt urban areas, includingWilmington and New Hanover County.

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