Historic Preservation a Major Opportunity in W.Va.

There is a renewed interest in increasing West Virginia's historic rehabilitation tax credit from 10 percent to 25 percent. The suggestion has considerable merit, even given the state's current dire financial situation.

The state is redefining itself as a diversified economy supported by a high quality of life rooted in the natural splendor of its mountains, streams and valleys, accentuated by historic downtowns with a size and scale of communities making it Almost Heaven. West Virginia is in the middle of learning to live within its means. The current fiscal crisis is front and center; it must be dealt with immediately, as painful as it might be. However, everyone also agrees the long-term solution to West Virginia's woes is to significantly grow a diversified economy and the jobs that go along with it. The end game is more and better jobs; the state's fiscal shortfalls will be lessened accordingly It is further agreed that state government's role is not to create jobs, but to provide a regulatory and tax structure that strongly encourages private-sector investment and job creation. This is exactly what a well-conceived historic rehabilitation tax credit program can and will do.

Revitalize West Virginia's Downtowns is a broad-based coalition including, among many others, the Preservation Alliance of West Virginia, the Abandoned Property Coalition and the West Virginia Economic Development Council. The goal of this group is to encourage the Legislature to increase the historic rehabilitation tax credit from 10 percent to a more competitive rate of 25 percent. The coalition believes this will spur private investment, create jobs, repurpose vacant and underutilized buildings and provide the state with a positive return on its investment. There is considerable data being developed that confirms these outcomes. Stephanie Meeks, president and chief executive officer of the National Trust for Historic Preservation, has written a book titled "The Past and Future City," which speaks directly to the opportunities and outcomes afforded from the rehabilitation of historic buildings. She documents real economic and job creation benefits from renovating and repurposing historic properties.

The framework is in place for West Virginia to make these suggested outcomes a reality There are 92 commercial and mixed-use registered historic districts in the state. Morgantown's Wharf District, the Wheeling National Heritage Area, Charleston's Village District, Fayetteville and Lewisburg are but a few of the successful illustrations of what historic preservation can do for tourism, economic development and jobs creation in general. But the potential is much more dramatic if the historic rehabilitation tax credit is brought into central focus. The Eastern Panhandle has been an engine of economic growth for the state. Historic properties and downtown redevelopment have been a significant part of the resurgence. But most of the growth has been in new construction and subdivisions dotting the rural landscape. This has created a division between those in favor of growth verses those desiring slower growth.

An opportunity almost everyone can agree upon is renovating existing structures into adaptive reuses. The cost of new construction is less than the cost to renovate older buildings. Developers go where the best financial opportunities are located. New housing developments in Jefferson and Berkeley counties have been driven by lower land prices and property taxes than in Maryland or Virginia. Yet for historic preservation, the tax credits are much more favorable in Maryland, with a 20 percent historic rehabilitation tax credit, and in Virginia, with a 25 percent credit. Raising the state's tax credit allocation to 25 percent would spur an increase in downtown redevelopment, whether it is financing the renovation of Charles Washington's home, Happy Retreat, or restoring parts of Ranson, Martinsburg or Harpers Ferry as historic neighborhoods. These are all important economic development initiatives that create jobs and expand the economy An important benefit is it keeps the development density in the urban areas, which is where it is best suited from an urban planning perspective.

A different example of how expanding the historic tax credit could be an economic engine is in Huntington. Local developer Bob Childers is spearheading an effort to make Huntington a retirement community with 11 historic buildings. These downtown buildings include such iconic names as the Chaim Building, the Coal Exchange Building, the Frederick Hotel and the Pritchard Hotel. They total 420,000 square feet and could provide over 400 new units of retirement housing entirely located in the central downtown. Those units could house up to 800 new residents, all with discretionary disposable income. What is this worth to the local economy? It is in the tens of millions of dollars annually and would be a major step in ensuring Huntington's renaissance.

Take a look at Clarksburg. The Waldo Hotel has been vacant for more than 15 years, and no developer has found a way to make the numbers work for its rehabilitation. Built in 1904 by Nathan Goff, it truly is a magnificent building. The problem is that the costs to renovate it are very high and it can only be done with the aid of historic tax credits. A 25 percent credit may well make it financially feasible to create an historic boutique hotel of 100 rooms, which is a perfect complement to the restoration of the Robinson Grand Theater. This is what downtown redevelopment is all about, and historic tax credits are a key component of success.

There is no doubt that a very credible case can be made for increasing West Virginia's historic rehabilitation tax credit. The problem is when the state can afford the cost of the credit, given the current budget crisis. As this balancing act is performed, consider the following possibility: Pass the increased tax credit this session, but make it effective for redevelopment projects in the 2019 or 2020 fiscal year. This would give the state time to rebalance its budget and recast programs necessary for future solvency The development process takes time, and the credit is not earned until the project is completed. If the credit is known to be available, developers could proceed with the necessary due diligence and move toward asset acquisition and construction. This starts the process in the near term but holds off the issuance of the credit for later fiscal years.

Historic preservation is not for the faint of heart. It is a difficult business, but the payoffs to the communities and their economies can be dramatic. In reality, historic preservation is all about accentuating the past and preparing for the future, which translates into more jobs and sustained economic development.