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Centennial Plaza on Gulfport’s Beach Boulevard (top and above) will be anchored by a Holiday Inn Resort.

Hopeful signs for restoring state’s historic tax credits

By TED CARTER

Preservationists across Mississippi and the professionals who lend their expertise to saving the state’s past say they are encouraged by support key legislators have signaled for renewing historic preservation tax credits in the 2016 session.

That optimism is rooted in caution, however. The  Mississippi Heritage Trust in October put the tax credits tenth on the list of the state’s “most endangered” historic places, a symbolic designation the Trust says it intended as a statement.

The credits are like gold to property owners and developers who can use them to defray 25 percent of the cost, primarily for construction, of a historic preservation. They become especially attractive when combined with the 20 percent federal historic tax credits.

» READ MORE: Ready, set, wait – Developers eager to begin work on historic preservation projects

The state’s $60 million credits generated $269 million in building rehab expenditures since their inception in 2007 and a total economic output of $432.5 million, according to an economic impact report prepared by Mississippi State University’s Stennis Institute of Government and Community Development.

While the Mississippi Heritage Trust in October deemed the future of the credits doubtful enough to land them on the 2015 endangered list, 2016 is shaping up as a year of new life for the fund that ran out of money early in 2015. Legislators subsequently declined to replenish it.

Some lawmakers attributed the inaction to the lateness of the pleas for renewed funding. State Sen. Joey Fillingane acknowledged that the late arrival of the funding requests contributed, as did the tax-credit requests failing into a hopper already filled with tax legislation. But the main factor was that preservation lobbyists insisted on a $200 million replenishment “or nothing,” said Fillingane, who, as chairman of the Senate Finance Committee, declined to support such a huge increase.

This year, House Speaker Philip Gunn is proposing a $100 million historic tax-credit renewal to be allocated over a 15-year period. “There is definitely doing to be a historic tax credit bill this year,” Fillingane said.

He said he wants to avoid a repeat of what he saw as overreach by preservation lobbyists last year. “I hope that proponents recognize this is a cooperative effort” requiring some give-and-take, added Fillingane, a lawyer and Hattiesburg Republican.

“If you come to the table saying ‘It’s this or nothing,’ then chances are you get nothing.”

Todd Sanders, tax incentives coordinator for the state Department of Archives and History, said his department is hoping for a $120 million allocation, but will rely on the lobbying of preservation attorneys such as Steven Hendrix to seek the funding. Hendrix, formerly of Forman Watkins & Krutz and now with Butler Snow, did not respond to requests for an interview.

Speaker Gunn, a  Republican from Clinton, says the credits represent an investment in the state’s economy as well as in preserving its past, he said in a recent interview.

“It’s such a good deal. So many of our towns depend on it for economic development. We get such a good return on our investment,” Gunn said.

How far the $100 million would go is unclear, especially with the tax credits gaining popularity among property owners and developers in many of Mississippi’s small towns.

“It has proven its success, and people have started looking for great opportunities,” said architect Rob Farr, a member of the Heritage Trust and partner at Cooke Douglass Farr Lemons Architects + Engineers.

“Virtually every community in the state could complete a viable project,” he added.

However, just the projects now in the queue would nearly deplete a $100 million allocation, Farr said in an interview Monday. “The new capacity would be absorbed in just a few short months.”

The 15-year allocation period for the tax credits may set off a rush to get them before they run out. But, Farr said, the time span will give new projects an opportunity to vie for the credits.

“Even though the value being discussed is somewhat limited, the time frame is positive,” he said, and noted a typical restoration project runs 36 months to 48 months from inception to completion.

Recipients do not get the credits until the project is completed, but credits are designated as eligibility milestones are met.

Farr said another positive of a 15-year life for the credits is the likelihood that a showing of successful restorations around the state could help persuade legislators to replenish the fund before the end of the 15 years.

Architect Belinda Stewart, principal of Belinda Stewart Architects in Eupora and mayor of the nearby village of Walthall, said she hopes the 15-year lifespan remains in the new allocation. Having the credits on the books gives preservationists a better chance of getting legislators to approve new credits once current ones run out, Stewart said.

For much of small town Mississippi, historic tax credits are about the only economic development incentive available, she said. “They are a wonderful incentive to help encourage folks to restore or reuse historic buildings.”

The threshold of $5,000 for project eligibility makes them especially attractive to property owners who want to fix up buildings on small town main streets throughout Mississippi, and can include everything from roof replacements to new heating and air conditioning components, Stewart said. “It is really about economic development” and maintaining a community’s “character.”

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About Ted Carter

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