On June 11, 2013, the Governor signed into law the Abandoned Buildings Revitalization Act (the “Act”). The stated purpose of the Act is “to create an incentive for the rehabilitation, renovation, and redevelopment of abandoned buildings located in South Carolina.” With a structure very similar to that of the Textile Revitalization and Retail Facilities Revitalization Acts, the Act provides a tax credit equal to 25% of actual rehabilitation expenses for qualifying projects. Generally, a taxpayer may elect to apply the credit against (1) income taxes or (2) real property taxes, with the consent of affected local taxing entities. The credit against income taxes is limited to $500,000 per year. Further, the credit against income taxes may only be used in an amount no greater than 50% of the taxpayer’s state income tax liability for the taxable year. Any unused credit may be carried forward for five years. The credit against real property taxes only applies to the millage rates of affected taxing entities that consent to its application, and is limited to up to 75% of real property taxes due annually for up to eight years.
Under the Act, an abandoned building is generally a building or structure, 66% of which has been closed continuously to business for at least five years. The credits available under the Act only apply if the taxpayer incurs certain minimum rehabilitation expenses based on the population of the area surrounding the project. The Act defines rehabilitation expenses quite broadly to include “expenses or capital expenditures incurred in the rehabilitation, demolition, renovation, or development of the building site, including . . . environmental remediation, site improvements, and the construction of new buildings.” The statutory language setting forth the minimal rehabilitation expenses is not entirely clear, but one interpretation is that the taxpayer must incur rehabilitation expenses of (1) more than $250,000 for a project in a county with a population of 25,000 or more, (2) more than $150,000 for a project in a county with a population between 1,000 and 25,000, and (3) more than $75,000 for a project in a municipality with a population below 1,000. The taxpayer must comply with certain procedural and notice requirements in order to receive the credit.