Incentives could help restore Beaufort homes

info@islandpacket.comNovember 22, 2013 

A tax incentive for property owners to fix up their homes in Beaufort's Downtown Historic District won't be a cure-all for the dilapidated buildings that pock some areas, including swaths of the Northwest Quadrant neighborhood.

But it might cure a little. As such, the city of Beaufort needs this in its medicine chest.

The S.C. Special Property Tax Assessment for Rehabilitated Historic Buildings program has been around since the early 2000s and allows municipalities to freeze property assessments at their pre-repair value for as long as 20 years after a home is renovated. The program requires that the renovations be equal to at least 20 percent of the property's fair-market value, but Beaufort can bump that requirement to as much as 100 percent of the property's value.

As with any tax incentive or exemption, the system could be gamed a bit. For instance, the city could expect a spate of applications when reassessment rolls around again in five years, particularly if real estate values rise between now and then. Owners of commercial and rental properties also are allowed to participate, possibly creating the perception that government is subsidizing a money-making venture.

But keep in mind the ultimate goal -- maintaining structures with historical significance, reversing blight and ensuring a healthy tax base for the long term. If buildings rot where they stand, which is too often the case right now, these goals are not achieved.

City planner Libby Anderson made this point to City Council at its meeting Tuesday, and it is a point that should be repeated to Beaufort County, which must participate in the program, as well, if the tax break is to be large enough to encourage action.

But the city need not stop at this program. Mayor Billy Keyserling asked what could be done to help homeowners get money for the actual renovations, noting that many properties in greatest need of repair are owned by people who cannot afford to make them.

Tax credits won't mean much to such owners, Keyserling correctly argued. Neither will tax breaks do much to entice those with homestead exemptions who already get significant property tax breaks.

However, the incentive could make such property attractive to buyers, allowing current owners to cash out of their homes and new owners to enjoy the exemption after upgrading the property.

This makes gentrification a risk. But that is blunted by a greater incentive: Those in all but the most dire of financial circumstances benefit most when they make repairs, then remain in their homes while the assessed value is frozen.

There will be other kinks. For example, the longer the assessment is frozen, the more abrupt the tax increase on those cycling out of the program. However, with forethought, such problems are manageable.

So long as the city focuses on making neighborhoods better -- not perfect -- the tax incentive program will prove useful.

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