Mill Madness

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Mills Mill
Mills Mill

Once the historic centers of economic activity, textile mills are finding new life in the Upstate

 

When talking about real estate revitalization projects in the Upstate, most conversations eventually come around to old textile mills.

These massive buildings stood abandoned for years after the outsourcing of jobs overseas transformed the textile industry in the late 1900s. Once a catalyst for the communities that stood in their shadows, the mills that once helped write an important chapter in the Upstate’s history sank into dilapidation and disrepair. They needed to be transformed.

“Textile manufacturing began in South Carolina before the Civil War, but it became important to the economy of the state after the war,” wrote Paul A. Horne Jr. in “South Carolina: The History of an American State.

“By 1880, the industry was producing almost $3 million worth of goods a year,” he wrote. “For many years, textile manufacturing was measured by the number of spindles, or rods on which thread was gathered, in a mill. In 1880, South Carolina had 18 textile mills operating with 95,983 spindles. About one-half of those spindles were located in Aiken County. Most of the remaining spindles were in the upper Piedmont counties of Anderson, Greenville, Oconee and Spartanburg.”

 

Spinning the Future

 

Rehabbing these properties is an expensive undertaking, costing about 30 to 40 percent more than traditional construction, said Pace Burt, a Georgia-based developer who has already rehabbed several mills in the Upstate.

Luckily, several state and federal programs exist to aid developers as they take on the massive effort involved in transforming these pieces of textile history.

Some property transformations have already taken place. In Greenville County, properties such as Mills Mill on Church Street in Greenville and the Woodside Cotton Mill in Simpsonville have been converted to high-end condos. Monaghan Mill in Greenville and the Arcadia Mill in Spartanburg have been turned unto loft-style apartments. The Spartan Mill in Spartanburg now serves as the home of the Edward Via Virginia College of Osteopathic Medicine (VCOM).

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Monaghan Mill
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Monaghan Mill
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Monaghan Mill

Other former mills have been converted to offices, such as the Southern Bleachery, a.k.a. Taylors Mill, which houses small businesses, entrepreneurs and craftsmen, according to its website.

Still others remain true to their roots, purchased by companies for similar uses. Safety Component Fabric Technologies, a maker of high-tech, high-performance fabric for first responders, the military and outdoor use, has been manufacturing textile fabrics for more than 100 years at the Dunean textile mill in Greenville. The Judson Mill, also in Greenville, is now owned by Milliken and Company, and is still operational, spinning raw cotton into yarn.

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Brandon Mill
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SteelHeddle

The latest mill revitalization projects announced include Drayton Mill in Spartanburg by Pacolet Milliken Enterprises, the Brandon Mill redevelopment in Greenville by Pace Burt, and Conestee Mill in Mauldin owned by Hyman Brand. Developer Bogue Wallin, a partner with Good Wall Properties, also recently filed paperwork with the city of Greenville to redevelop the former Steel Heddle textile factory on McBee Avenue.

 

Breathing Life Into Drayton Mill

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Drayton Mill

John Montgomery, vice president of real estate with Pacolet Milliken Enterprises, said that of the 13 closed textile plants the company inherited, “Drayton Mill was the only one we saw for re-use.”

The 16-acre property consists of five separate buildings and 550,000 square feet of space. Pacolet Milliken also owns the 230 acres surrounding Drayton Mill.

“It’s a very well-located property and community that has stood still for many years,” said Montgomery. “We really want to breathe some life into this community.”

The former spinning mill will become 123 apartments – mainly two-bedroom flats – lofted with exposed brick. The former weaving mill, just north of the spinning building, will become 166 apartments, most with one bedroom, Montgomery said.

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For the old warehouse building, he said that while they won’t drive any specific users into the space, he would love to see “a coffee shop, business office space and maybe a restaurant/bar.” Montgomery also hopes to see the former company store building turned into either event space or a restaurant.

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“It’s important to take these existing buildings and to repurpose them,” said Montgomery. “South Carolina is very fortunate in that we have the textile revitalization credits. People are really starting to understand the benefit.”

Montgomery is hoping to begin construction on the two-year project at Drayton Mill by the end of the summer. Pacolet Milliken has teamed up with Tara Sherbert, managing member of the Sherbert Group, a Charlotte-based CPA, tax and investment firm. Sherbert will act as the developer for Drayton Mill.

“We believe in Drayton Mill and we believe that it was beautifully maintained over the years,” said Sherbert. “We are very, very picky on what we put our ownership capital into and Drayton Mill was a top pick. It’s in a great market and great location.”

 

0411UBJMillsSteelHeddle2GregHelp From the State

 

Burt, who has tackled several mill redevelopments, including the Mayfair Lofts at the Arcadia Mill site in Spartanburg and The Lofts of Greenville at Monaghan Mill, said federal, local and state historical tax credits are vital to the process, since these properties are so expensive to renovate. Some credits can even be sold back to investors to offset their income taxes.

“The actual cash value of the tax credits [for Monaghan Mill] was around $6 million,” which was used to offset the extra cost of rehabbing the historical textile mill, Burt said. The property is currently 98 percent leased with only two apartments available. “Monaghan Mills’ [rehabilitation] wouldn’t have happened without the tax credits,” he said.

A major incentive in transforming these textile titans is the South Carolina Textiles Communities Revitalization Act, signed into law in 2004 and amended in 2008. The act provides financial incentives for the “rehabilitation, renovation and redevelopment of abandoned textile mill sites located in South Carolina,” according to the State Historic Preservation Office’s (SHPO) website. “Abandoned” is defined as when “at least 80 percent of the textile mill has been closed continuously to business or otherwise nonoperational as a textile mill for a period of at least one year immediately preceding the date on which the taxpayer files a ‘Notice of Intent to Rehabilitate.’”

According to the legislation, an eligible textile mill site offers two types of credit options: a 25 percent credit against real property taxes, or a 25 percent state income tax or corporate license fee credit. Both credits are calculated on rehabilitation expenses, which are “expenses or capital expenditures incurred in the rehabilitation, renovation or redevelopment of the textile mill site,” states the SHPO website. The credits are based on the final costs, which must fall within 80 to 120 percent of the estimate of the rehabilitation expenses.

“This tax credit is really more focused on mill sites in general and not necessarily a historic structure. You can take the building down,” said Sherbert.

The Textile Revitalization Act does not require properties to be on the National Register of Historic Places in order to be eligible for the program, but other programs do, said Brad Sauls, supervisor for surveys, grants and registration at SHPO.

Some tax credits stipulate that the property must operate as multifamily apartments for five years, after which they can be sold as condominiums. Because of this stipulation, “the historic tax credits work for apartments and retail, but they don’t necessarily work for condos,” said Sauls.

In addition to the South Carolina textile revitalization credits, a 20 percent federal rehabilitation of historic property credit may also be available under the Tax Reform Act of 1986. To qualify for this one, the property must be on the National Register of Historic Places.

In addition, a state historic tax credit for rehabilitation incentive allows a 10 percent state income tax credit for properties that qualify for the 20 percent federal income tax credit for the rehabilitation of historic income-producing properties.

The Abandoned Buildings Revitalization Act that went into law last year has a 25 percent state tax incentive that can be stacked with the federal and state rehabilitation credits, but cannot be stacked on top of the textile credit, according to SHPO officials.

There are definitely areas where these tax credits would overlap, said Sauls, as well as “the potential to layer multiple tax credits.”

 

0411UBJMillsMonaghanMill8Greg“You Take a Risk”

 

Another helpful incentive is the Bailey Bill, which local cities and municipalities must adopt via an ordinance that provides property tax abatement on the prehab-assessed value of the property for up to 20 years.

Simpsonville City Council just passed the first reading of this bill for the Woodside Cotton Mill apartments last week. Burt has used it for both the Monaghan and Arcadia mills projects and hopes to use it for the Brandon Mill project.

Sherbert said her company uses the textile and the state historic credits the most often. “They work the best together,” she said, and there is another New Market Federal Program that could be used in some cases. The New Market program is “really geared to bring in capital to low-income communities and most of these mills are often good candidates for the program.”

The most important thing is to “carefully coordinate” with local and state government and “get them on board early in the process,” Sherbert said.

Of the hundreds of mills across the state, only about five have been renovated, Burt said. “These mills are in blighted areas and they are a tremendous risk. I’ve had some sleepless nights – but you take a risk. Where else can you get 18-foot-high ceilings, 10-foot-high windows, exposed brick and a piece of history?”

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