— Proposed tax credits could boost job creation and tourism across the Mountain State.
A robust movement advocating for greater state tax credits for the rehabilitation of historic properties is spreading throughout West Virginia—and is picking up steam in the state’s legislature.
Officially dubbed ‘Revitalize West Virginia’s Downtowns,’ the goal of the organization is to have West Virginia’s state historic rehabilitation tax credit increase from 10 to 25 percent, bringing it into line with neighboring states like Virginia, Ohio, and Pennsylvania.
Revitalize West Virginia’s Downtowns bills itself as “a coalition of economic development professionals, architects, developers, community developers, city officials, and historic preservationists” with a mission statement to “increase West Virginia’s income-producing historic tax credit to make downtowns of all sizes desirable places to live and work.” The potential results of such an increase are detailed as “spurring private investment, creating jobs, repurposing vacant and underutilized buildings, and providing West Virginia with a positive return on investment.”
Two Eastern Panhandle municipalities are members, Martinsburg and Charles Town, and have joined cities and towns across the state. Also serving as stakeholders are the West Virginia Chapter of the American Institute of Architects, the National Trust for Historic Preservation, the Preservation Alliance of West Virginia, and the West Virginia Economic Development Council, among others.
“The group formed in September 2016 out of a working group of the Abandoned Property Coalition—a statewide coalition that develops policy solutions to abandoned and dilapidated property issues,” said Nicole Marrocco, coordinator of Abandoned Property Coalition.
The Legislative Road Map
According to Marrocco, two competing bills have been introduced in the West Virginia Senate, SB 238 and SB 323, which both “adjust the [tax] credit with respect to personal and corporate net income tax.” She notes the major difference is that SB 323 stipulates only projects started after July 1, 2017, will receive the 25 percent credit.
Two bills with the same end goal, but also with slight differences, have been introduced in the West Virginia House. HB 2416, which counts Jefferson County Delegate Jill Upson (R-65) as one of its co-sponsors, mirrors SB 238, providing the tax credits with no project state date. Competing with this effort is HB 2545, co-sponsored by another Jefferson County Delegate, Paul Espinosa (R-66). HB 2545 differs from both Senate counterparts. Marrocco explained that the credit will only be applicable to the corporate net income tax and not personal income tax. Further, additional requirements are included: the mandate that there not be a lien on the property, and the individual applying for the credit cannot be behind in their state income taxes.
Jefferson County’s third member of the WV House, Delegate Riley Moore (R-67), whose district includes the historic towns of Harpers Ferry, Bolivar, and Shepherdstown, said he “absolutely” supports the effort to increase the tax credit. Delegate Upson’s district includes the other two municipalities: Charles Town and Ranson.
Morracco believes each of the competing pieces of legislation “definitely falls in line with Governor Justice’s vision to grow West Virginia’s tourism industry.” She hopes he will ultimately sign the passed legislation into law.
All of the varying legislative proposals clearly define the type of project which will be eligible for the tax credit. Only improvements made to a structure listed on the National Register of Historic Places, or to a structure which contributes to a historic district, will be considered. Further, the property owner must make an application of the tax credit through the West Virginia State Historic Preservation Office prior to any work being started.
Potential Fuel for Continued Rehab(ing) in Charles Town
Charles Town’s City Council unanimously endorsed the Revitalize West Virginia’s Downtowns movement. City Councilwoman Ann Paonessa argues increasing the historic tax credit “provides greater incentive for investment in Charles Town’s historic structures, particularly in the Downtown Historic District.”
She further explained that, in addition to the Downtown Historic District, the city features two other historic districts: the Old Charles Town Historic District and the South Charles Town Historic District. Any of the “contributing properties within all three of these districts are eligible for state and federal tax credits for qualifying rehabilitation projects.”
Approximately 13 years ago, Paonessa and her business partners embarked on their own renovation of a structure in Charles Town’s Downtown Historic District. While the structures were not National Register properties, they were included in a National Register Historic District, and thus qualified for West Virginia’s 10 percent state tax credit. She does believe an increase in the tax credit will be of great help to those businesspeople who embark on similar ventures in the future.
“Owners who invest or re-invest in existing historic properties are, essentially, punished for their investments with increases in property taxes, based on increased assessment,” she said. “This historic tax credit program at the federal and state levels helps mitigate or offset those increased expenses, giving a project time to adjust to the market and generate sufficient revenue to manage the overhead of paying for such improvements.”
The Positive Economic Impact
Morracco highlighted a proposed project, the renovation of the Masonic Temple in Fairmont, WV, that will be a boon to the local economy, but can only move forward if the increased tax credit is put into place. According to Morracco, the developer estimated the renovation will cost approximately $4.3 million. While the project will carry a hefty price tag for the developer, the renovation phase will generate 75 construction jobs and $10.9 million in economic output. Once complete, the newly renovated building will provide 25 permanent jobs, generate $1.67 million in annual wages, and $4.7 million in annual economic output.
The positive economic impact to West Virginia has the potential to be quite large. According to Revitalize West Virginia’s Downtowns’ website, three neighboring states with a 25 percent historic rehabilitation tax credit—Pennsylvania, Ohio, and Virginia—have each created “more than 44,000 jobs in the redevelopment of historic buildings” since 2002. Further: “more than $3 billion in total income” has been generated for each state. For the same time period, they cite West Virginia as creating only 3,529 jobs and $170 million in total income for the same industry.
“Towns with historic districts, like Shepherdstown, Lewisburg, Fayetteville, and Thomas, draw folks from across West Virginia and out of state,” said Morracco. “With an increased historic rehab tax credit, more West Virginia downtowns could be great places to live and visit.”
Additional information can be found here.
— Editor’s note: At the time of publication, all four bills are in their respective chamber’s finance committee, and must be passed in committee to advance.