News

City campaigns for historic tax credits

Developer Jim Hall and state Cultural Resources Secretary Susan Kluttz tour the historic Grey Hosiery Mill.

By Bill Moss, Published: January 22, 2015

Historic tax credits are a crucial part of the financing that makes renewal of historic properties possible, the state's top cultural resources official said Thursday as she launched a statewide public campaign to restore the tax credits.

"It's so important for what the governor is calling the Carolina comeback," Susan Kluttz, the secretary of the Department of Cultural Resources, said in Hendersonville, the first stop of a statewide tour to rally support for the tax credits. "The governor made it very clear that the department I was going to be in charge of was to promote economic development and jobs... We are having a crisis in Raleigh and we need everyone's voice."
Historic tax credits, the state says, have stimulated $1.65 billion worth of investment to rehabilitate everything from tobacco factories and warehouses to shuttered hospitals and hundred-year-old cotton mills.
The McCrory administration has formed a coalition of architects, bankers, small businesses, contractors and developers to push for the restoration of the tax credits, which the General Assembly repealed in its effort to create more revenue. (The website is historictaxcredits.org.) Thirty-six people turned out for a pep talk about the tax credits at City Hall and a tour of the Grey Hosiery Mill, a project that city officials say could become a landmark tax credit success. The city was able to get a letter last summer from the state that grandfathered the project in despite the tax credit repeal. The City Council last year gave the city-owned property to a development partnership that is trying to assemble the financing to build apartments.
The Hendersonville stop was Kluttz's first in a statewide campaign taking her to "any city that invites me" to raise awareness about the tax credits.
State Sen. Tom Apodaca and Rep. Chuck McGrady were invited but both were at work in the legislative session in Raleigh.
"I did have a message from Rep. McGrady that he very much supports historic tax credits and asking me to tell you that he is fully on board" with the governor's effort to restore them, Kluttz said. The governor's staff has drafted a compromise that will cost the state less than the tax credit the General Assembly repealed.
"Historic tax credits have greatly enhanced the ability of these older buildings to be renewed and rehabilitated," said Ted Alexander, who runs the western office of Preservation North Carolina, a nonprofit organization that helps guide historic rehab projects. "They're real crucial."
A $30 million project that was on the verge of breaking ground stalled when the tax credits disappeared, he said. Without the incentive, "that's going to be on hold and it may not come back." While acknowledged the opposition view that government incentives ought not be needed, "we're not living in a perfect world and we're competing with other states," he said. "Developers who are looking at projects — they can go anywhere."
The City Council highlighted the 100-year-old Grey Hosiery Mill as a prime example of an older building that can fall into disrepair. If the tax credits go away permanently, "you're going to have more buildings in this condition and worse around the state," City Manager John Connet said.
Jim Hall, a partner in the White Challis development group, said his group's loft apartments project would not be doable without the state tax credit.
"I will tell you, when you walk through this building, you have to focus on the big picture and it's not easy," Hall told the gathering before the mill tour. "The last time I was there, there was a lot of water."
The White Challis group, made up of developers, architects and investors from Daytona Beach, Greenville, S.C., and Hendersonville, proposes to build 34 loft apartments. They must be leased at an affordable rate for five years under terms of federal tax credits. After that they could be converted to "moderately priced" condos, Hall said.
Councilman Steve Caraker, a former building inspector and plumbing contractor who rehabilitated his own historic home in the Westside Historic District, led Kluttz and the rest of the gathering on a tour of the mill. Although structurally sound, the building needs a new roof and extensive work inside and out. The grandest part, Caraker said, is the 1915 section, which features clerestory windows and would be designed to open onto a courtyard. Built by Capt. James Grey as a knitting mill in 1915, with additions in 1919, 1947 and 1960s, the mill is listed on the National Register of Historic Places.