State Historic Preservation Office
The Economic Impact of the Rehabilitation Investment
Tax Credit Program in North Carolina

The tax incentives provided by the Tax Reform Act of 1986 and its predecessors have been important tools for historic preservation and economic development in North Carolina since 1976. Since then, 733 completed "certified rehabilitation" projects have been reviewed by the State Historic Preservation Office involving an estimated $315,741,927 in construction costs. At least 4,162 housing units have been created or rehabilitated - many of the units are for low to moderate income families. Using the ratio developed by the National Trust for Historic Preservation in a study of the rehabilitation investment tax credit program, it is estimated that North Carolina's rehabilitation expenditures have generated more than 12,630 new full-time jobs, increased retail sales by about $800,000,000, and generated $235,500,000 in new earnings. Since developers have indicated that the majority of projects completed under the tax credit program would not have been done otherwise, hundreds of National Register or Register-eligible buildings have been saved, rehabilitated, and returned to active use.

As might be expected, most of the rehabilitation investment tax credit activity in our state has occurred where historic resources are concentrated: in older settlements on the coast, in Piedmont cities, and in early 20th century growth towns of the western region. An important factor in these areas has been the presence of preservation groups and planners who have worked diligently at bringing an awareness of the benefits of the historic tax incentives to business people. Yet, despite this concentration, tax credit projects have taken place in 69 counties and in all twelve congressional districts, spreading the benefits across the state.

North Carolina has its own particular profile for rehabilitation investment tax credit projects. They tend to be smaller than those occurring in other states. The average estimated construction cost is $430,000. The smallest project totalled $6,000 (several) and the largest more than $12,700,000 (Holly Inn in Pinehurst). Only a few developers have done more than one building. In North Carolina, the tax credit program has been largely a program for small and moderate business people and investors. It should be noted, however, that more large projects have been done in the last few years, and the average size is increasing steadily. The type of project is overwhelmingly residential. Forty-one percent of the after-rehabilitation uses have been residential, 35 percent office and commercial, and 24 percent mixed-use or other uses.

The purpose of the rehabilitation investment tax credit program is to encourage the preservation of historic buildings by providing a 20% federal tax credit to taxpayers who rehabilitate income producing "certified historic buildings" (buildings listed in the National Register of Historic Places or contributing to a National Register historic district) that comply with the Secretary of the Interior's Standards for Rehabilitation. And as of January 1, 1998, taxpayers who qualify for the 20% federal rehabilitation tax credit will also qualify for an additional 20% state tax credit. The goal is not to preserve a structure as a museum, but to give old and historic buildings a place in the contemporary real estate market, guaranteeing their continued use and economic vitality.

See also Historic Preservation Investment Tax Credits Frequently Asked Questions, and North Carolina Preservation Tax Credits.

For further information and applications contact:
Tim E. Simmons, AIA
Senior Preservation Architect and Federal Tax Credit Coordinator
Restoration Branch
State Historic Preservation Office
North Carolina Office of Archives and History
4613 Mail Service Center
Raleigh, NC 27699-4613
Telephone: (919) 733-6547

December 31, 1999

* Reproduced for the City of Washington Department of Planning and Development Website
from the revision of this document posted at:
on the State Historic Preservation Office Website as of 12/11/01.
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