The Role of the NC Historic Rehabilitation Tax Credit in a Development Project

<p>Last week, both the Senate and House of the North Carolina General Assembly included an extension of the state’s Historic Rehabilitation Tax Credit (HTC) in their budget bills, allowing the credit to continue until January 1, 2024. The fact that both chambers included the extension in their budgets means it is highly likely that the extension will appear in the final budget to be approved by both chambers and delivered to the Governor for signature. This budget development was important enough that a national accounting firm included it in their news feed. Without the legislative extension, the tax credit would sunset on January 1, 2020—in other words, the state credit would be eliminated.</p> <p>Why is the HTC’s extension newsworthy? Why might some local governments care about the state HTC even though the credit can only be used by private taxpayers? One way to evaluate those questions is to look at a DFI project from 2014, which was the last time that the state HTC was allowed to sunset. The withdrawal of the credit that year, even temporarily, changed the fate of a historic building.</p> <p>As background, the CED Blog contains multiple blog posts about the North Carolina HTC and the federal HTC (https://ced.sog.unc.edu/a-primer-on-applying-for-historic-tax-credits-an... and https://ced.sog.unc.edu/new-rules-on-historic-rehabilitation-tax-credits...). These credits are critical tools to finance community economic development projects, but they also increase the complexity of development. HTCs can be leveraged with other tax credit programs including low-income housing tax credits and new markets tax credits.</p> <p>The Prince Charles Hotel is centrally located in downtown Fayetteville, just across from City Hall. [...]</p>