One recently enhanced economic development tool in West Virginia already seems to be making a difference. Meanwhile, officials also are touting the possibilities of another program at the federal level that may open up other opportunities.
Taken together, that adds up to some good news for the Mountain State, which is striving to break out of the economic stagnation of the past several years.
The program already paying dividends is the historic rehabilitation tax credit for commercial income-producing properties. During a special session last October, the West Virginia legislature voted to increase that tax credit from 10 percent of a project's qualified costs to 25 percent. That increase was billed as making projects involving historic structures much more feasible financially.
The change, which went into effect Jan. 1, seems to be working. The West Virginia State Historic Preservation Office reported this week that it already has received the same number of applications in the first few months of 2018 as it typically received in a full year previously. The office has received six applications since Jan. 1 requesting tax credits totaling $9.9 million. Those applications represent total investment in those projects of $39 million in project costs. In addition to those applications, 12 other entities have indicated they intend to apply.
The requests come from around the state, representing projects in Huntington, Wheeling, Hinton, Franklin and Fort Gay.
The response indicates that several developers were serious when they said prior to the change's passage that it would help spawn new investment. In Huntington, for example, a group of Huntington developers announced in early 2017 that they envisioned up to $50 million could be spent to upgrade up to 11 downtown structures, but the key was a larger tax credit.
Some lawmakers were hesitant to back the higher credit, saying the state couldn't afford to forego so much tax money. However, if substantially more is invested on such projects across West Virginia, the state stands to gain more tax revenues as well as more economic vitality.
The other economic tool springs from the Tax Cuts and Jobs Act of 2017 approved by Congress and signed by President Donald Trump in December. Among other things, the act included a program called Opportunity Zones, which are economically distressed communities where investors can support economic development and receive preferential tax treatment.
Last week, Gov. Jim Justice and U.S. Sen. Shelley Moore Capito, R-W.Va., announced that the U.S. Treasury Department had certified 55 locations across West Virginia as Opportunity Zones. Included were three areas in Huntington; four census tracts in the city of Charleston; one tract in Boone County at a former mine site with mountain top development opportunities; one tract in the city of Williamson in the centralized downtown business district; one tract in the town of Gilbert; one tract in Mason County at Apple Grove; and one tract in Wyoming County for development opportunities that include the John D. Rockefeller IV Industrial Park.
Not all the rules and regulations pertaining to this new investment vehicle have been finalized and released yet, but officials see the program as valuable for improving the state's economy. Let's hope the response from investors in that program will match the enthusiasm for the increased historic tax credit.