Developers, lawmakers push for historic tax credits to redevelop rural Tennessee


    A view of the Johnson City sign over King Commons Park from the window of a soon-to-be revitalized building<p>{/p}

    JOHNSON CITY, Tenn. --- Momentum is growing from developers and lawmakers for Tennessee to join 35 other states in providing tax credits for redeveloping historic buildings.

    Companion bills in the Tennessee General Assembly would establish a tiered system for accessing the historic tax credits, with rural areas, like the Tri-Cities, receiving the most relief.

    "The cost to build or renovate in Johnson City is almost no different than Nashville," said Grant Summers, president of the construction company Summers-Taylor Inc. "Nashville's rent rates are 3-4 times what they are here, so the economics of deals are quite different here."

    Historic tax breaks are already offered at the federal level, but paired with state credits can cover around a third of construction costs.

    Every state bordering Tennessee offers state historic tax credits. Previous attempts to add Tennessee to the list have failed.

    Tennessee is one of 15 states in the U.S. that does not offer historic tax credits

    Some believe the election of Gov. Bill Lee is the best shot yet given his emphasis on rural Tennessee.

    "The bigger markets like Nashville are only going to be able to qualify for a 10 percent tax credit," said Robert Williams, chair of the Johnson City Development Authority. "Memphis, Chattanooga and Knoxville will be in that 20 percent range. But the other communities throughout Tennessee are going to be 30 percent."

    Advocates say its small communities like Elizabethton that stand to gain the most. With rents low, developers don't have enough room to make a profit after shouldering the high cost of redeveloping an old building.

    "We have an active downtown but we're not fooling anybody by saying our buildings don't need some improvement," said Jon Hartman, director of planning and economic developing for the City of Elizabethton. "I think (state historic tax credits) are a great way that we can really get that improvement and really incentivize the future development of rural Tennessee."

    Projects like The Bristol Hotel and The Sessions Hotel both took advantage of historic tax credits from Virginia and the federal government.

    "I think that everybody thinks that renovating old buildings is a good thing but it comes with a lot of increased cost," Summers said.

    Since Tennessee does not collect income tax, and has no plans to, funding for state historic tax credits would have to come from another sources. The current proposal pulls from the franchise and excise tax on businesses to fund the credits.

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