Katherine Hall renovations need more funds; town eyes tax credits
WARE SHOALS — Katherine Hall was unique among mill buildings.
It served as the heart of Ware Shoals for years, and was home to a theater that served as the town’s gathering place.
Although nearly $3.4 million in Capital Project Sales Tax funds are on their way to help the town renovate the 15,637-square-foot building, it might take more than that to bring the 109-year-old building to its former glory.
On Thursday, Ware Shoals Town Council met to hear preservation consultant Kyle Campbell’s plan to bring in extra funds that will supplement the CPST millions. Campbell helped the town prepare the 2015 conditions report on Katherine Hall, and is working to get the town registered as a national historic district.
“Since we did the conditions report, some of the things that were going to be addressed in the intervening seven years have not been,” Campbell said. “Specifically the porch leaks — those have gotten significantly worse, pushing water into the building.”
Because of the water damage over time and increased labor and material costs, he expects the cost of renovating Katherine Hall has outgrown the $3,397,273 coming in from the penny sales tax.
A solution? Tax credits.
Campbell proposed applying for state historic tax credits, a state textile credit and a federal historic tax credit, which together could cover 70% of qualifying rehabilitation expenses to fix the now-collapsed porch roof and the subsequent damage to the porch itself.
In total, those credits would amount to about $2.3 million — the town has little use for tax credits, however. The plan, instead, is to sell the tax credits using a tax credit syndicator — a business that helps people sell tax credits, often to corporations.
“What those syndication forms do is large corporations like Exxon, they will buy those credits to put against their tax liability,” he said. “They buy it at, say, 80 cents on the dollar. So they’re saving themselves 20% on their taxes by buying tax credits generated by a project like, say, Katherine Hall.”
Even if the credits are sold at 70 cents on the dollar, Campbell said it would generate more than $1.6 million to be applied to the project. He said he worked with Josh Skinner, the county’s CPST coordinator, to ensure that selling tax credits wasn’t in conflict with the legal apparatus of the penny sales tax, and said they appeared to be in the clear.
Because the town isn’t a nonprofit, council will have to set up a development corporation to own the building for a five-year period. In the meantime, Campbell said the town should move to nominate the building for the national historic register, develop renovation plans that meet the secretary of the interior’s standards and submit those plans to the relevant state agencies.
While CPST funds don’t come in until 2024, Campbell urged council to take action sooner rather than later when it comes to fixing the porch. Water is continuing to pour into the building, damaging flooring joists and damaging plaster and tile in the basement level. Funds spent to fix the porch now can be reimbursed from those CPST dollars later, he said.
“We’ve had seven years of letting it deteriorate, if we could cut out these last two years it would be really beneficial to this whole project,” Campbell said.
Council member Patty Walters said she was concerned the penny sales tax funds wouldn’t be a drop in the bucket to get the building fixed. Campbell disagreed, saying he’d worked on projects on similarly sized buildings; the total funds with the estimated tax credit earnings will give the town about $5 million to work with.
Digging up discussion from last year, council member George Leagans asked if the town didn’t have enough money to restore the building, where would they find money to tear it down? Other members of council were confused, and emphasized that removing the current building is not an option.
In 2021, Leagans suggested the town’s best path forward would be to tear Katherine Hall down, with fellow council member Kent Boles saying the building should have been torn down decades ago.
The town submitted its application in 2016 for the Capital Project Sales Tax seeking funds to restore the building, not demolish it. The $3.4 million coming from the penny tax is only applicable to the planned restoration.
Council was eager Thursday to move forward with Campbell’s plan, disagreeing only on when to do it. Council member and mayor-elect Bryan Ross said he wanted to hold off on a vote to move forward with this plan until the town has a project manager contracted for the restoration project. Council member Micheal Powell wanted to show that council was on board with this plan, though, and council voted 4-3 to proceed with the plan.
First steps will be to hire a project manager, then work with this person to form the development corporation that will eventually take ownership of Katherine Hall for five years.
Originally Published by Index-Journal on:Dec 3, 2022
By DAMIAN DOMINGUEZ ddominguez@indexjournal.com