Manufacturer of custom wood windows and doors for historic buildings.Wood window consultation services, Wood window off-premise refurbishment and restoration
Virginia’s historic rehabilitation tax credit program — a proven economic engine generating more than $2.6 billion in rehabilitation expenditures that have revitalized urban cores and neighborhoods and “main street” downtowns, while spawning thousands of jobs throughout the state since its inception in 1996 — is under siege.
A recent ruling of the U.S. 4th Circuit Court has created a firestorm here in Virginia and around the country in the business and preservation communities. The decision is already adversely affecting a key and steady sector in the state’s economy — construction projects involving the rehabilitation of older buildings.
"This decision is devastating to anyone associated with the historic preservation construction industry from small contractors to architects, engineers and the building supply industry," in the words of William T. Frazier, a principal in Frazier Associates, located in Staunton, Virginia. "The current economic challenges have already slowed projects in historic districts. This decision will virtually halt the possibility of any construction rebound in most downtowns in the Commonwealth,” Frazier adds.
Background:
The state tax credit program, managed by the Department of Historic Resources, was created by the State to encourage investment in historic properties.
The program has been instrumental in saving and repurposing some 2,000 Virginia landmark buildings. These buildings represent a wide spectrum of Virginia’s historic fabric and traditions — from 19th-century mills and railroad depots, to warehouses and factories, to courthouses, former schools, and firehouses, among many other building types.
Additionally, historic rehabilitation through tax incentives has revitalized many urban cores by bringing residents back into downtowns and older, once blighted neighborhoods. It has bolstered sustainable development by recycling building stocks and focusing reinvestment on already developed sites and in areas with existing infrastructure and established schools, public parks, and retail pockets.
The key to this sustainable and revitalizing activity, benefitting Virginians economically, socially, and environmentally is founded on developers and their partners receiving state tax credits equal to 25 percent of eligible expenses incurred in the rehabilitation of a historic building.Since the cost of sensitively rehabbing historic buildings usually exceeds the market value of the completed project, by design, rehabilitation tax credits offset project costs and close this gap. (State credits are typically combined with a federal tax credit of 20 percent; thus, a project in Virginia may achieve 45 percent in combined credits.) The credits help attract investors to these projects through partnerships that raise capital through the planned allocation of tax credits to the partners.
What is at stake now, in light of the court decision, is the delivery of these credits through partnerships — the very mechanism that makes rehabilitation projects attractive to both developers and their partners. In a decision that overturned a 2009 lower court ruling, the 4th Circuit Court re-characterized these allocations as “sales” and stated they should be taxed as income.
FULL REPORT LINK HERE
custom wood windows & doors architectural restoration window restoration millwork replication consulting services
