New Bill Creates Incentives for Development
June 20, 2013
By Michael Bedenbaugh
Executive Director
Palmetto Trust for Historic Preservation
June 17, 2013
On Tuesday June 11, Governor Haley signed into law the Abandoned Buildings Revitalization Act (ABRA) creating tremendous opportunity for towns, cities and counties in thestate that have been blighted by empty and under-utilized buildings.
Here is how ABRA works.
Any commercial building that has at least 66% vacancy for more than 5years qualifies for a 25% state income tax credit earned against thecosts of rehabilitation.
The benefits of ABRA impact both rural and the larger cities andcounties with a stepped approach to qualifying redevelopment projects.For those abandoned places in municipalities of less than 1000 persons,the minimum project investment that triggers the tax credit is only$75,000. For towns and counties with populations of 1,000 to 25,000, the minimum project size must be $150,000, and for any communities whosepopulations exceed 25,000, the project minimum is $250,000.
ABRA applies to any abandoned building site. It covers anything fromold strip malls to manufacturing facilities as well as historicbuildings. The 66% abandoned formula was developed so as to capture the hundreds of three storied buildings that have a ground floor retailspace but are empty on the second and third floor (or basement). Theselocal white elephants are all over the state in small towns and havebeen too risky in the past for local developers and property owners toinvest in. This tax credit will help close that gap and help attract the investment capital it requires to make these places work.
In traveling thousands of miles across South Carolina, we at the Palmetto Trust for Historic Preservation have seen many places standing empty and seemingly forgotten. Townsthat were once thriving and full of commerce two generations ago are now faced with dilapidated buildings and empty storefronts with theinevitability of lower tax revenue. It is almost impossible to savehistoric buildings unless there is economic incentive to invest, and itis evident that all the passionate advocacy in the world cannot changethe tide of capital draining away from South Carolina’s cash-strappedcommunities.
The Abandoned Buildings Revitalization Act was developed outof a meeting over three years ago between the Palmetto Trust forHistoric Preservation and Representative James Smith of Columbia.Representative Smith soon built a bipartisan coalition of support forthe bill in the House, while Senator Creighton Coleman led the charge in the Senate. Through the efforts of focused legislative leadership,statewide support from the grassroots level, assistance from organizedadvocacy groups and our partner organizations, the bipartisan billfinally passed both sides of the State House: 111-2 in the House and aunanimous vote in the Senate. It was this bill that the Governor signedstanding beside us at the State Preservations Awards at the Capitol onJune 11th.
Though ABRA isn’t aimed at historic sites, they will benefittremendously. In fact, the 25% tax credit allowed by ABRA can beutilized alongside the 30% Historic Preservation tax credit if thebuilding qualifies for the National Register of Historic Places. Thiswill allow up to 55% of rehabilitation costs to be recaptured throughtax credits; a game changer for hundreds of historic downtowns.
The effects of ABRA will deliver far more impact to the state’s economy than just the revitalization of empty buildings.
In order to determine the impact of ABRA’s 25% SC income tax credit onthe state’s budget, the Palmetto Trust for Historic Preservationcommissioned a fiscal impact study three years ago with Clemson’s StromThurmond Institute. The Institute’s Regional Dynamics & EconomicModeling Laboratory confirmed that this act will create more wealth inSC. It found that every dollar of tax credit spent will generate anadditional $19-$21 dollars in South Carolina’s economic output. Forevery $500,000 of tax credits earned by developers, between 100 to 150new jobs will be created.
The Abandoned Buildings Revitalization Act will create new development opportunities in those places of South Carolina that need it the most.
Michael Bedenbaugh
Executive Director
Palmetto Trust for Historic Preservation
[email protected]
803-896-6234
