The S&W Building in downtown Asheville. James Harrison/Carolina Public Press

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Reinstating or revamping program said to be a ‘top priority’

Offered since 1998, the state’s Historic Rehabilitation Investment Program expired New Year’s Eve. The program’s end removed a key incentive used by developers and preservationists for restoring old structures—a practice espoused for the Grove Arcade and nearly 100 other projects in Buncombe County alone since its introduction. James Harrison/Carolina Public Press

Once considered a leader in offering state-sponsored tax credits for historic rehabilitation, North Carolina will send its lawmakers back to Raleigh next week with no program for encouraging historic preservation in place.

The affects could be particularly felt in Asheville, where a wealth of historic, pre-Depression architecture has afforded the city’s downtown and certain neighborhoods to be described as “a history museum with sidewalks.”

Offered since 1998, the state’s Historic Rehabilitation Investment Program expired New Year’s Eve. The program’s end removed a key incentive used by developers and preservationists for restoring old structures—a practice espoused for nearly 100 projects in Buncombe County since its introduction.

In Asheville, locations to have benefited from the program include the Grove Arcade, the Flatiron Building, the Kress Building, the Jackson Building, Pack’s Tavern and the King James Apartments. Several properties owned by The Biltmore Company and the Omni Grove Park Inn have also benefited from the program, which offered a 20-to-30 percent tax credit for completed, income-generating properties listed on the National Register of Historic Places.

Along with non-income-generating, typically residential properties, the program has yielded an investment of more than $17 million in Buncombe County since its introduction. Combined with a federal tax credit offered since 1976, the amount of investment in the county exceeds $155 million.

Across North Carolina, historic rehabilitation projects have represented $1.5 billion in private investment in nearly all 100 counties since the state expanded the program in 1998. More than 2,300 projects have benefited from the program, according to the state Department of Cultural Resources.

Jack W. L. Thompson, executive director the Preservation Society of Asheville and Buncombe County, said the credit was an integral component to the vibrant downtown enjoyed by residents and tourists alike today.

“The bottom line for Asheville is that the historic rehabilitation tax credit combined with the federal tax credit is the primary reason our downtown saw the renaissance that it did,” Thompson said in an interview with Carolina Public Press. “Without the credit, so many of the downtown properties would not have been rehabilitated. It just would not have been feasible, with the popularity of downtown back then being nowhere near what it is today.”

As part of their 2013 tax overhaul, Republican lawmakers opted to do away with the credit, along with dozens of other tax breaks characterized as loopholes. But as they return to Raleigh, a coalition wrangled by Gov. Pat McCrory is hoping to pressure legislators to reinstate the program, or perhaps a new version.

“It’s our number one priority,” said Cary Cox, director of marketing and communications for the state Department of Cultural Resources, in an interview with Carolina Public Press. “I think it got hurt because it had ‘tax’ in the name. [Lawmakers] may have done a great job with tax reform, but but unfortunately everything with ‘tax’ in it got thrown into the same bucket.”

Cox said Secretary Susan Kluttz, who heads the department, planned to embark on three-weeks of travel across the state beginning this week, meeting with local officials, community leaders, architects, bankers and real estate professionals to garner support. Stops on the tour will include Asheville.

“This is a priority of the governor’s office,” she said. “[McCrory] understands the economic driver a historic tax credit can be … and the ripple effect they can have on communities where abandoned buildings are given new life.”

During last year’s short session, McCrory included a revised version of the credit in his budget proposal. The plan would have limited the amount of credit percentages and capped total tax credit offered to $20 million a year.

House lawmakers approved the program, but it was not taken up in the Senate. Leading into the upcoming session, approval from Senate Republicans is largely expected to be the biggest hurdle for a new program.

The office for state Sen. Tom Apodaca did not return requests from Carolina Public Press for comment on the program. Making recent remarks to a coalition of state mayors gathered in Asheville last October, Apodaca said senators had begun “discussions to restore” the program, but stopped short of promising a resurrection of it, according to a Mountain Xpress report on Oct. 23.

Whether the credit returns may hinge on how big a void it leaves.

With no state-offered incentives for historic rehabilitation, developers may opt for locations in other states when seeking to capitalize on opportunities involving old properties. Along with existing programs in all of North Carolina’s neighboring states, Texas, Alabama, Wisconsin and Ohio all introduced or renewed programs involving historic tax credits in recent years.

Thompson said that without the state credit, developers would be less eager to pursue historic rehabilitation projects across the state.

“Without this incentive, developers will start to walk away,” Thompson said. “The federal credit is just not enough. And because the state credit had a homeowner component and there’s no federal component for homeowners, we will likely see more deferred maintenance on residential projects.”

Cox echoed the sentiment, saying the state may lose a potential advantage.

“Other states were mimicking our tax cuts and getting great benefit from it, but now that we’ve lost it, developers may go to where their dollars work,” Cox said. “I don’t think they’ll work as well here, that’s what frightens me.”

The state House and Senate are set to reconvene Jan. 14.

James Harrison

James Harrison is a contributing reporter with Carolina Public Press. Reach him at

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