In an effort to stimulate development of abandoned buildings across the state, Gov. Nikki Haley signed the Abandoned Buildings Revitalization Act into law last month. Developers and individuals looking to rehabilitate abandoned buildings now have a 25 percent state tax incentive.
“In all of our communities throughout the Upstate we are faced with the dilemma of what to do with long-term vacant commercial buildings,” said Nancy Whitworth, director of economic development for the City of Greenville. “Not only do they dilute our tax base, but also lead to further deterioration and disinvestment. The Abandoned Buildings Revitalization Act can help provide a needed incentive to get these buildings back into productive life.”
The idea came from The Palmetto Trust for Historic Preservation to “attract capital back into locations where capital has left,” said Michael Bedenbaugh, the Palmetto Trust’s executive director. “Instead of trying to go out on the fringes of communities, this helps bring people back into towns to fill into the existing infrastructure.”
The bill passed unanimously in both the House and Senate.
The Palmetto Trust had commissioned a fiscal impact study from Clemson University’s Strom Thurmond Institute to ensure the idea was something that would create value.
“The numbers showed this would be a boon to create capital investments,” Bedenbaugh said. “For every dollar of tax credit, it will create $19-$21 in economic return. For every $500,000 in tax credit taken, it will create 100-150 new jobs.”
The new law allows a 25 percent state income tax credit on the rehabilitation of commercial buildings that have a minimum of 66 percent of their square footage empty and unused for five years or more. The bill was written this way to allow for those properties where maybe “there’s a three story building and only one floor is occupied,” Bedenbaugh said. Any commercial-use building qualifies, except owner-occupied, residential homes.
The law sets minimum investment thresholds to qualify for the funding to allow for scaling in smaller towns. For towns with populations of fewer than 1,000, the minimum investment is $75,000; for towns or counties with populations between 1,000-25,000, the minimum is $150,000; and for towns or counties over 25,000, the minimum investment is $250,000. The maximum tax credit allowed per project is $500,000.
Though the bill is not historic preservation-specific, renovations on historic properties will not only qualify for the existing 35 percent state historic preservation tax credit, but will now also be eligible for the 25 percent Abandoned Buildings Revitalization tax credit, Bedenbaugh said. This equates to a total 55 percent in tax credit, which in most cases “will pay for the renovations,” he said.
The tax credit is slated to expire after 2019, but Bedenbaugh is confident the Legislature will extend it.
“It will empower local developers and investors and save buildings that can still contribute,” he said.
