A new tax reform proposal passed recently by the U.S. House of Representatives would cut a much-loved program for rural development and renovation and severely curtail economic development, according to Halifax County officials.
The House bill, that also must gain Senate approval, would eliminate the federal Historic Tax Credit program (HTC) that encourages the redevelopment of historic and abandoned buildings.
According to analysis from the National Trust for Historic Preservation, the program has been used to renovate more than 40,000 structures and channel $117 billion in private investment since being enacted by the Reagan administration in 1981.
The program provides a 20 percent tax credit that is paid out over five years, and it is only provided once the project is complete.
A National Park Service/Rutgers University Economic Impact reports that for every dollar in tax credits, the program created $1.20 in construction activity, business taxes, income taxes and property taxes. The research found the program generated 86,000 jobs in 2015 alone.
The town of South Boston today would look entirely different without the use of historic tax credits in developing the building that houses Bistro 1888 and redeveloping former historic buildings into the Southern Virginia Higher Education Center, The Prizery, Taylor Lofts, New Brick Historic Lofts and Imperial Lofts.
Now the town is seeking historic tax credits to aid in redevelopment of the John Randolph Hotel, according to South Boston Town Manager Tom Raab.
Without the historic tax credit program, those projects wouldn’t have happened, according to Raab.
The town is seeking approximately $2 million in tax credits to help in construction of Imperial Lofts and from $1.5 million to $2 million for the John Randolph Hotel project, Raab explained.
If the bill cutting the historic tax credit program becomes law, then it would jeopardize the program on the state level, Raab pointed out.
Raab suggested that instead of eliminating the program entirely, lawmakers could set a limit of $2 million or $3 million for a project.
“That would still help the smaller communities, because that’s all we usually ask for,” Raab said. “That would be one way to do it.”
Halifax County Administrator Jim Halasz agreed with Raab in that economic development in rural communities would be adversely affected.
“It’s been a great resource to redevelop older properties and buildings for future use, and clearly projects like Halifax Lofts would not have occurred,” said Halasz.
Halasz thinks that without historic tax credits, developers would seek land further out from the urban core for residential and commercial construction.
“You’re going to have to have development of some kind, and if you can’t have it in current built-up areas or existing structures, you’ll have it on the fringes, and you’ll have more urban sprawl.”
The use of historic tax credits is a key component for continued redevelopment efforts in the town of Halifax, according to Halifax Town Manager Carl Espy.
“Having projects initiated in our community which qualify for historic tax credits not only ensures the highest standard of architectural compatibility is achieved, the net benefit to the localities is increased private investment, additional jobs and the higher valuation rehabilitated buildings bring to the local tax base versus the burden placed on taxpayers as derelict buildings languish and property values decline.”
The Halifax Lofts project, estimated to be a $2.7 million to $3 million investment, was recently featured as part of the Hooray for Halifax workshop for the Virginia Rural Planning Caucus annual conference in October, according to Espy.
“The town supports preserving, protecting and enhancing the character of significant historic, architectural or cultural properties located in historic districts by recommending the design compatibility and appropriateness of new construction and alterations,” said Espy.
Barbara Bass, president of the Halifax County Historical Society, agreed that the loss of historic tax credits would affect historic preservation in both larger communities and small.
“I do believe that the tax credits have allowed rural areas in particular to save historic properties that otherwise could not have been saved and restored into types of properties such as community arts centers and even higher education centers,” said Bass.
Bass pointed to the historic tax credits that have made numerous projects possible in South Boston, such as the Southern Virginia Higher Education Center that help educate the community and others that create cultural opportunities.
“It’s very difficult in small communities to raise large amounts of money. To us, it’s priceless,” she concluded.