By TAYLOR STUCK
HUNTINGTON, W.Va. — The tax reform legislation being considered in the U.S. House of Representatives would more than wipe out a recent boost in West Virginia for rehabilitating historic buildings, putting development of those structures in jeopardy.
The West Virginia Legislature last month voted to increase the state’s historic rehabilitation tax credit from 10 to 25 percent, effective Jan. 1, 2018. That credit, combined with a 20 percent federal tax credit on qualified projects, meant that projects could receive tax credits of up to 45 percent of eligible expenditures. That compares with a combined 30 percent previously.
However, the tax reform legislation pushed by Republican leaders would eliminate the federal historic tax credit. So that would leave only the state’s 25 percent credit, which is lower than what was available to developers prior to the state’s actions.
The founders of Retire Huntington – Childers, John Hankins, Alex Vence and Jeff Barnes – envision fueling the renovation of 425,000 square feet of space in multiple downtown buildings that would be eligible for tax credits because of their historic nature. Among the buildings they have identified are the Coal Exchange, Prichard, West Virginia Building and The Frederick. The goal is to attract retirees to the city. The plan was hinging on the state increasing its historic tax credit, but then the U.S. House tax reform bill threw a curve ball.
Without the 20 percent federal credit, those projects no longer make economic sense, Childers said.
“The state could come back and increase it, maybe to 35 percent, but that’s unprecedented,” he said.
The Federal Historic Tax Credit has been in place since 1978 and was made permanent in the Reagan Tax Reform of 1986. Since its creation, the credit has generated $29.8 billion in federal tax revenue for a return of $1.18 for every $1 in federal tax expenditures, according to Rutgers Center for Urban Policy Research.
“I joined with Rep. David McKinley in asking the House Ways and Means Committee to include the Federal Historic Tax Credit in the final tax legislation,” said U.S. Rep. Evan Jenkins, R-W.Va., in a statement. “This tax credit generates more revenue than it costs, all while preserving and repurposing historic landmarks across West Virginia. It is my hope that this credit will be included in the bill brought to the House floor soon.”
U.S. Sen. Joe Manchin, D-W.Va., expressed his support for the tax credit, saying Tuesday during a press conference with West Virginia press about the House legislation he is fighting for it.
A spokesperson for U.S. Sen. Shelley Moore Capito, R-W.Va., declined comment until the Senate version is introduced.
The legislation will be up for a vote in the House on Thursday, Nov. 9. The Senate version of the bill is expected next week.
Follow reporter Taylor Stuck on Twitter and Facebook @TaylorStuckHD.
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