Arlene Smith looked at the old Chicora Elementary School from her home and missed the sound of children on its playground.
Smith has lived across from the school, at the corner of Success Street and Chicora Avenue in North Charleston, for 24 years. Her children went there and she recognizes nearly every car and person that comes through.
A couple of years ago, the Charleston County School Board created a new school down the road, and the old brick building was left to decay.
How soon it comes back to life likely hinges on the nation's tax reform debate.
Metanoia, a nonprofit with a community-oriented focus on revitalizing the neighborhood, has a $14 million plan to rehabilitate the school and create nonprofit office space, a performing arts center and an early childhood education program. Metanoia's efforts, however, hinge upon two types of federal tax credits: historic and new market. The GOP tax plans put both credits — and by extension, Metanoia's project — on the chopping block.
"I look at the building and the life is gone," Smith said.
Many Americans are eyeing the federal tax debate and wondering how it will affect them. The possible demise of revitalization projects in neighborhoods like Chicora-Cherokee provides, literally, a concrete example, said Metanoia CEO Bill Stanfield.
"You can't necessarily do that with a scalpel," Stanfield said of tax reform. "There are going to be some casualties."
These credits are a drop in the bucket relative to the larger debate over the national debt, corporate and individual tax rates, mortgage deductions, health care mandates and other big-ticket items. For South Carolina's development of historic sites, they are essential.
What are these credits?
Since 1986, the historic tax credit has paid for 20 percent of a project. Because the credit has been an instrumental tool in local revitalization, S.C. preservationists have been hard at work to save it.
On a statewide level, rehabilitation of the decaying textile mills in the Midlands and Upstate have relied on this credit, said Richard Sidebottom, who works in the Southeastern office of MacRostie Historic Advisors.
"If we didn’t have the historic tax credit program, it becomes easier to demolish a historic building and build something new," Sidebottom said.
The new market tax credit pays for 28 percent of a project's value as long as developers can convince the government the project will spur growth through jobs and educational opportunities. This is a competitive credit that Stanfield felt confident the Chicora project could attain.
The tax credits fared differently in the U.S. House of Representatives than in the Senate, and it's unclear how they will look after their bills are reconciled.
U.S. Sen. Tim Scott, R-S.C., is on the Senate Finance Committee and has been a staunch champion of retaining the historic tax credit. During the next two weeks, he will continue to fight for keeping these credits in the final bill, and is also a supporter of the new market credit.
“He also secured the inclusion of his Investing in Opportunity Act, which encourages long-term investment in distressed communities and could possibly aid a project such as this,” spokeswoman Michele Exner said on Monday.
Historic credit is not 'easy money'
The credit isn't "easy money," Sidebottom said. Developers have to pay the costs up front and follow through on a rigorous three-step process before seeing a penny from the federal government:
- First, they must ensure they're eligible for the credit. Chicora Elementary School, one of several all-white schools to receive state equalization funding during the 1950s, is on its way to joining the National Register of Historic Places.
- Next, developers must describe the planned work in detail and submit plans to ensure the work meets national historic preservation standards. This can take three to four months. "They go through the project with a fine-toothed comb," Sidebottom said.
- Finally, after the project is completed, the developer sends in photographs for regulators to consider in their final decision. "It's all or nothing, there is no partial credit," Sidebottom said.
Local examples of projects that have succeeded in rehabilitating historic buildings while maintaining the historic components include the revitalization of the Charleston Cigar Factory and the ongoing transformation of North Charleston's Garco manufacturing mill.
Since it was written into the tax law, the historic tax credit has leveraged $131 billion in private investment, created more than 2.4 million jobs and adapted 42,293 buildings.
What's next for Chicora?
Today, the old brick Chicora school is owned by the city of North Charleston and is in decay, Stanfield said. With the help of these tax credits, he hopes to rehabilitate the building in a way that will benefit the neighborhood.
Mayor Keith Summey has supported the plan. In August, the city gave Metanoia an 18-month deadline to propose a budget. With roughly 40 to 50 percent of its $14 million budget at risk through the federal tax rewrite, Metanoia could face difficult options: raising millions more from investors, scaling back the project or simply giving up.
Stanfield has considered what it would take to to continue the development at the expense of some community-oriented aspects. Instead of providing the early childhood education program, for example, Metanoia could try to sell that area of the building as commercial office space.
"If those tax credits go away, do we give up? Not necessarily, but our job gets a whole lot harder," he said.
If Metanoia can secure the credits, financing will be in place by next summer, and the building could reopen as early as fall 2019.