By TED CARTER
Competition for Mississippi’s historic preservation tax credits could become more intense in the years ahead as owners of historic properties vie for a limited supply of credits.
Mississippi legislators showed their support for the preservation tax credits last week by passing House and Senate bills to replenish a supply that ran out in early 2015. The new supply, however, may not come close to meeting the expectations of developers and other property owners eager to do restoration projects.
A Senate bill authored by Finance Committee Chairman Joey Fillingane that specified $100 million in new credits left the floor at $50 million. A bill Speaker Philip Gunn introduced proposed $120 million but went to the Senate minus a specific figure for the credits.
Supporters of establishing a new supply say they are not entirely downcast about the uncertainty of funding levels and note the important step of getting bills through both houses has been achieved. “We’re just thrilled this is what they are talking about,” said Lolly Barnes, executive director of the Mississippi Heritage Trust, a non-profit organization that seeks to restore and save properties that have historic value.
The Heritage Trust does not have a paid lobbyist working the House and Senate bills, but Hayes Dent of Dent Strategies is handling some work on behalf of the group. As with the organization he represents, Dent is unsure what level of tax credits legislators will settle on.
“These things will ultimately end up in a conference committee,” Dent said, and noted a strong belief among supporters, especially developers, that a final amount will be adequate.
“I am comfortable, and a lot of people in the business community are comfortable, based on what we know.”
Some of that confidence comes from the willingness of the Senate’s leader, Lt. Gov. Tate Reeves, and Speaker Gunn to work with the Mississippi Department of Archives to determine the scope of the need, Dent said.
What is of concern is the prospect for legislators to reinstate a provision of Fillingane’s Senate bill that limited allocations of the credits to $8 million annually. The Senate struck the provision before passing Fillingane’s bill and sending it to the House.
“This can create uncertainty from a developer’s standpoint of whether they will be eligible” in the following years, Barnes of the Heritage Trust said.
Such limits “would probably stop $50 million to $100 of economic activity just overnight,” Dent said.
Developers look fondly on the tax credits. And for good reason. When combined, the state historic preservation tax credits and federal credits can cover up to 45 percent of a preservation project’s cost, primarily for construction, with 25 percent coming from the state credits and the remaining from the federal credits. A provision especially attractive to investors who don’t have large tax liabilities in Mississippi provides cash rebates of up to 75 percent of a credit’s worth.
Restoration and conversion of the buildings to commercial use has helped to juice local economies across Mississippi, Dent said. Accordingly, he attributes a lot of the support the credits get from lawmakers to the stimulus they provide. “These have a positive impact on the Mississippi economy,” he said.
Projects across Mississippi are awaiting renewal of the preservation credits, including restoration and conversation of Jackson’s Central Business District properties such as the unused Eastland Federal Courthouse, the Regions Building and Walthall Hotel.
In Gulfport, developers want the credits to help cover costs of converting the long-closed Department of Veterans Affairs hospital into a Holiday Inn Resort surrounded by a community of apartments, shops, restaurants and offices.
In Greenville, businessman Bill Boykin is counting on the credits to help pay for restoring the circa 1940s Sears building, a three-story structure that anchors downtown and stayed vacant for 20 years until Boykin bought it from the city three years ago. In Water Valley, the city’s Mississippi Main Street chapter hopes the credits will be available to entice investors to continue a series of a half dozen downtown restorations.
Going into the sessions, estimates were that just the projects already in line for the credits would consume all or nearly all of a supply of $100 million or so. Competition could be fierce if the amount falls short of credits already certified.
Dent acknowledged that a lot of projects are in line for credit awards. But how any imbalance in supply-and-demand shakes out “is a bridge you cross when you get to it,” he said.
There is always hope, he said, that if successful projects around the state begin showing a clear economic impact, lawmakers may be willing to add to the supply of credits.
With the credits, vacant properties are restored and returned to the tax rolls, Dent noted. He emphasized the value of the money generated during construction and afterward when the properties become revenue generators.
Barnes, meanwhile, is keeping her fingers crossed that preservation credits for restoring historically valuable homes will be put into the final legislation. The Senate version made no provision for residential credits, instead limiting the credits to “revenue producing” properties.
Residential restoration credits have helped with many of the homes preserved in Belhaven and Belhaven Heights, two neighborhoods the Belhaven Neighborhood Foundation says are among the most historically intact in the nation.
As part of a designated historic district and placement on the national historic registry, homes can’t be demolished without approval of the City of Jackson Historic Preservation Board. That leaves people who own the homes to either leave them as they are or restore them.
Owning a home in Greater Belhaven “is a commitment not without challenges and costs,” said Virgi Lindsay, Belhaven Neighborhood Foundation executive director. “This historic preservation tax credit just makes it much more feasible,” she added.
Homes in Belhaven and Belhaven Heights are eligible for federal preservation tax credits but will lose eligibly for state credits if residential credits don’t make it into the final bill.
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