Preservation Pays Incentives for restoring old buildings

Preservation Pays Incentives for restoring old buildings

By Reba Hull Campbell

Richard Burts, Robert Lewis, and Bob McConnell bought 701 Whaley in Olympia in 2006. Over the course of the next two years, they restored the building so it could be used as an event space and as office space. Photography by Clark Berry

The charm and personality of a city often grow from its architecture and the design of its structures. Restored old buildings can frequently be the anchors in local efforts that give communities their unique sense of place.

Jenny Boulware, manager of the Municipal Association of South Carolina’s Main Street SC program, describes the idea of placemaking as “specific projects that enhance the symbolic center of a community as a welcoming, desirable environment.” In many cases, these projects are restored or rehabilitated old buildings. They may be buildings that have historical significance as indicated by their designation on the National Register of Historic Places. Or, they may just be old buildings that have interesting stories or features. Either way, historic preservation can offer the investor the opportunity both to turn a profit with a business venture as well as make a contribution to the overall sense of place in a community.

“We encourage communities to think creatively about their unique physical spaces – especially those that are unused or underutilized. These spaces all have a compelling story to tell and are prime for cultivating a sense of community,” Jenny says. “At first sight we might simply recall a building’s earlier, original use and declare it unfit for today’s needs. Take a historic 1910 bank building, for example. That structure may no longer be used as a bank. However, its majestic architecture and distinctive physical details can be reimagined as a great space with a new purpose. That seasoned bank building could become a really cool wine bar and music venue.”

An undated photo of 701 Whaley, erected in 1903.
An undated photo of 701 Whaley, erected in 1903.

The Congaree Vista near Main Street was Columbia’s first commercial historic district. Abby Naas, executive director of the Congaree Vista Guild, believes that preserving historic buildings is key in keeping Columbia unique. “We take pride in the preservation of these buildings because they are helpful to keep the character of our great city,” she explains. “Through creativity of design, businesses of all kinds are now able to be housed in historic buildings with rich history and character.” For example, the popular seafood restaurant Blue Marlin has long resided in the original Seaboard Railroad Station on the cobbled pavement of Lincoln Street; Motor Supply, known for original cocktails and creative Southern cuisine, has spent the last three decades in a renovated engine supply building; and City Art Gallery sells original local art and art supplies, as well as hosting art classes and serving as a wedding venue, in a former warehouse.

This shot of 701 Whaley was taken around 2006. Debris was removed from the roof and second floor that had collapsed. The view is from the second floor offices at the front of the building looking towards the back of the building and shows some of the original columns still standing as well as the turnbuckle truss system on the ceiling. Photography by Lee Ann Kornegay
This shot of 701 Whaley was taken around 2006. Debris was removed from the roof and second floor that had collapsed. The view is from the second floor offices at the front of the building looking towards the back of the building and shows some of the original columns still standing as well as the turnbuckle truss system on the ceiling. Photography by Lee Ann Kornegay

Gretchen Lambert, an architect who is vice president with Studio 2LR in Columbia, recognizes that historic places and historic districts mean something for a community. She has worked on a wide variety of projects involving old buildings and building owners during her career, including the historic Brennen Building on Main Street owned by First Citizens Bank. The Brennen Building, rumored to have housed a brothel at one time, kept its historic value during the renovation, but the interior, including all the mechanical systems, was upgraded while maintaining the charm of the building. Historic Columbia recognized the building in 2016 with an adaptive use award.

Owners of these older buildings typically fall into two categories, according to Robert Lewis, an attorney with Rogers Lewis in Columbia who specializes in helping developers wade through the complexities of preserving old buildings. First are the investors, who understand the dollars and cents of getting a return on one of these older buildings. Second are the people who have a passion for saving an older building, often regardless of whether it is in an area that typically draws growth.

In many cases, federal and state tax credits and other financial incentives are what encourage owners of older buildings to rehab or renovate them, often for drastically different purposes from their original use.

Robert says, “Several major incentives in South Carolina make the deals work better.” Both federal and state tax credits give building owners or investors a dollar-for-dollar credit against the owners’ state and federal tax bill. The building owners can use the credits for their own tax purposes, or they can sell the credits to investors who bring cash to the deal in exchange for the use of the tax credits.

Robert points to an example of a million-dollar rehab project. “If you spend a million dollars, you get a 20 percent credit, or $200,000, in income tax credits. Using a process called syndication, the owner can bring in investors as a partner. Say they bring $140,000 in investment to the project; they get the $200,000 in tax credits. It’s a win for everyone.”

Similar state income tax credits then piggyback off the federal credits. “This is one of the state’s strongest incentives,” Robert says.

Abby points to tax credit incentives for attracting preservation projects like Garvin Design Group’s City Market complex, which contains three of the oldest surviving buildings in downtown Columbia. The venerable structures found on the 700 block of Gervais Street were constructed in the latter half of the 19th century as a byproduct of the railways that once rolled through the Vista. In 2016, they were rehabilitated as a mixed-use commercial development.

State law also allows for state income tax credits if a building has been empty or abandoned for a specific period of time. An incentive called the Bailey Bill allows a historic building to be put on the property tax rolls for 20 years at the original value before renovation. Using all of these incentives in a single project is called layering. “Because of incentives, we can save a building that may not have otherwise been saved,” Robert says.

Husband and wife duo Matt and Erin Montgomery of Montgomery Construction have specialized in restoring historic buildings as part of their overall commercial building and design business. They point to the 20 percent federal tax credit, 25 percent state historic tax credit, and 25 percent abandoned building tax credit as major financial incentives for renovating a historic building. However, the value of these redevelopments in spurring life back into American downtowns goes far beyond the monetary investment.

“We work with local government officials, local historical societies, the state historical society, the federal historical society, tax credit consultants, tax credit attorneys, and accountants to complete an entire historic renovation process,” says Erin. “When updating a historic property, it is imperative to maintain the integrity of the building. You have to be intentional and strategic about what you change.”

Robert points to 701 Whaley as a good example of leveraging tax credits to create both a financial and historic preservation win. Richard Burts, Robert Lewis, and Bob McConnell bought the building at 701 Whaley Street in Olympia in 2006. Over the course of the next two years, they restored the building so it could be used as an event space and as office space. To say the building was in disrepair when they bought it would be an understatement.

“The previous owner had bought the building with plans for it to be an arts community. However, 15,000 of the 30,000 square feet of roof collapsed in 2000, hampering any use of the building. The city condemned it. Once the roof goes, it’s difficult to put it back into good use,” Richard says.

In 1903, the building at 701 Whaley Street was a mill store for the people who lived and worked in the mill district. It later transitioned into a community center. A pool was added in 1918 and a gym in 1923.

Richard says, “It wasn’t uncommon for mill ownership to have the local YMCA run the community centers. A lot of mills ran those independently as part of their operation. The building served that purpose until shortly after Olympia School was built. That gym became the shiny coin, and basketball and other programming shifted to the new gym.”

The address of 701 Whaley also had a life as a shirt factory and specialty building warehouse. Richard says, “It had some other uses too. Mr. Dixie, who owned Dixie Home Stores, (who later teamed with Mr. Winn to form Winn-Dixie Grocery stores) had their bakery there that served all the local Dixie Home Stores.”

Richard believes any owner is just a small part of a building’s timeline. “I think that gets lost so often. Things happen before you, and things happen after you. I hate to see anything get torn down that has historical and/or social significance to our community.”

Historical significance can be more than just being on the National Register of Historic Places. Sometimes building owners rehab old spaces for reasons that go beyond the building itself.

Barbara and Levi Wright are a mother-and-son team who have brought new life to an old building on State Street in Cayce. The building was originally a church and then a storage building.

Today the building is home to the recently opened Piecewise Coffee and State of the Art Gallery and Pottery Studio. “Part of the impetus was to help Levi fulfill a dream of having a studio and gallery,” Barbara says. “It’s entwined in a dream of an art district in Cayce. It’s much more than just doing a building. Seeing something that was abandoned come back to life is exciting. Plus, so many artists want an art district here.”

Barbara points to local government financial support from the city of Cayce that helped make the project possible. A facade grant from the city helped fund the building’s exterior work. “The mayor told us at the building’s opening that this strip of buildings was part of the original Cayce,” Barbara says.

As with most renovations of old properties, this one had its share of surprises to discover. One of the tales had to do with the tile floors in the building. Barbara says, “The story goes that years ago a woman was renting the space and wanted to tile the floor but didn’t want to get the business permit necessary. She supposedly blocked in the windows and worked at night to install this floor.” The floors remained when the Wrights bought the building. “We just had to do a little cosmetic work when we inherited that piece of the building.”

Jenny points to this building as a perfect example of the sense of place she promotes with her work in the Main Street program. “When you walk in, you immediately feel relaxed. The coffee bar features clever details. Even the condiment table is creatively appointed. The attention to detail and comfortable layout for ordering and seating allow customers to feel at home. It’s as if you have entered a cozy living room with your closest friends,” she says.

Even more importantly, Jenny says, “Historic preservation doesn’t have to involve a building of nationally recognized historical significance. What’s often seen as a nondescript box of a building has colorful local stories and tremendous potential for new uses. Downtown Cayce’s coffee shop and gallery is just one great example of quality placemaking with impact and innovation.”

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