The historic rehabilitation tax credit was cut from the latest North Carolina budget during the final round of budget approval last week.

The provision offered state tax credits to property owners rehabilitating historic structures. While it was included in Gov. Pat McCrory’s budget and the budget put forward by House legislators, it was left out of the final budget.

“It was confusing. I was having a hard time figuring out what was going on, but it’s now officially out,” said Jennifer Brennan, Washington’s community development planner. “It’s just unfortunate because North Carolina had such a great tax credit program. … The unfortunate thing is the residential aspect of it — the fact that we won’t have a tax credit for residential property owners is bad.”

Previously, a 20-percent tax credit for residential and commercial properties at the state level and commercial properties at the federal level gave incentive to property owners to rehabilitate historic buildings. Without the state credits in place, commercial properties still qualify for the federal tax credit, but residential property owners no longer have that option.

According to Brennan, the lack of tax credit may have a chilling effect on restoring properties.

“It definitely has the potential to, but I think it will depend, project by project,” Brennan said. “That’s typically what they (property owners) see as making a project feasible. I think it will definitely make people stop and look for other financing, slowing things down.”

In North Carolina, the historic rehabilitation tax credit plan has been in place for several decades and has been highly utilized, Brennan said.

“It wasn’t a new program — it’s a proven successful program in the state. … Out of 100 counties in North Carolina, almost every county has taken advantage of it,” Brennan said.

While Washington property owners have made less use of the tax credit than larger cities like Greenville, Raleigh and Durham, the most noticeable local rehabilitation was that of the early 20^th century Turnage Theater, when the defunct theater was completely renovated over a several year period. The theater is now home to the Beaufort County Arts Council.

In Wisconsin, a moratorium of a similar tax credit this year caused a public outcry and ultimately the tax credit being reinstated by Wisconsin Gov. Scott Walker.

Going forward, North Carolina legislators are looking to replace the tax credit with grant funding, though measures do so have not been put in place.