News Column

Fate of historic-preservation subsidy still up in air

July 31, 2014

By Ray Gronberg, The Herald-Sun, Durham, N.C.

July 31--DURHAM -- Staging a mini-revolt against the chamber's own leaders, the N.C. House Finance Committee agreed Wednesday to try once again to extend a state tax credit that subsidizes the renovation of historic buildings.

The panel's move came at the urging of Rep. David Lewis, R-Harnett, and came a day after House and Senate leaders announced a fiscal 2014-15 budget compromise that would allow the program to expire at the end of 2014.

Lewis, a farmer and farm-equipment dealer, told colleagues the preservation credits are "vitally important in each and every one of our districts."

By voice vote, the panel added them to a "technical corrections" bill to the state's revenue code that's moving independently of the budget.

The bill originated in the Senate, and if the addition survives House floor debate, legislators from the two chambers would have to reconcile the differences in the drafts before the end of the 2014 session of the General Assembly.

Wednesday's vote came even though House Speaker Pro Tem Paul Stam, R-Wake, and Majority Leader Edgar Starnes, R-Caldwell, voiced opposition to the extension.

Starnes said the credits have "benefited the state" but undermine a GOP-supported "tax reform" that in theory is supposed to eliminate hidden subsidies of business.

He added that the state "can't afford" to offer preservation credits.

But the extension received support from one of the chamber's most prominent conservatives, Rep. Tim Moore, R-Cleveland, who noted that Republican heroes like former President Ronald Reagan and former U.S. Rep. Jack Kemp once advocated similar kinds of tax incentives.

"The fact is, these things work," Moore said, noting they've underwritten the renovation of old textile mills in Gastonia and other North Carolina cities. "They're providing jobs and taking some of our blighted areas and making them productive again."

The Lewis amendment received bipartisan support. Rep. Paul Luebke, D-Durham, said the program "has been a great help to Durham" in years past and "continues to be helpful" even now.

He was alluding to the fact that the owners of the American Tobacco complex and other major downtown redevelopment projects relied on the tax credits to defray a portion of their renovation expenses.

Wednesday's move by the Finance Committee echoed the decision in June of another panel, the House Appropriations Committee, to add an extension of the program to the House's version of the state's fiscal 2014-15 budget.

The budget originated in the N.C. Senate, where the leadership has taken a harder line against extending the program. The Senate left it out of its draft of the budget, the first released by either chamber.

House Speaker Thom Tillis, R-Mecklenburg, said Tuesday that legislators would likely consider resurrecting rehabilitation subsidies next year as an outright grant, not as a tax credit.

The preservation credit is an attempt to counter market forces that favor cheaper forms of development. Renovation of major buildings is almost invariably more expensive than new construction, on a per-square-foot basis, and land prices are generally lower in the suburbs than in built-up, center-city districts.

Lewis and legislative aides said the extension mirrors last month's Appropriations Committee language, which in turn was drawn from a proposal from Gov. Pat McCrory.

The governor's proposal lowers payouts from the program but offers developers a quicker return on their money, a change advocacy groups like Preservation North Carolina have accepted.

McCrory's cultural resources secretary, Susan Kluttz, by at least one account was actively working in favor of the Lewis amendment.

Julie White, executive director of the N.C. Metropolitan Mayors Coalition, told Durham Mayor Bill Bell and other elected officials on Wednesday that Kluttz had asked that they tell legislators a failure to extend the program would be "devastating to our local economies."


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Source: Herald-Sun (Durham, NC)

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