DOWNTOWN FLORENCE H1 HISTORIC DISTRICT INCENTIVE PROGRAMS This document is intended to provide a brief overview of the various incentive programs. Complete details are available from the City of Florence Downtown Development Office City of Florence Downtown Development Office 324 W. Evans Street Second Floor Florence, SC 29501 (843) 678-5913 Email: progress@florencedowntown.com
DOWNTOWN FLORENCE INCENTIVES Revised 8/2017 The City of Florence desires to encourage appropriate redevelopment work within the City s Historic Overlay District (H1) as well as the W1 Artisan and Warehouse District and other specified adjacent areas (see map below). To be eligible for the financial incentives the property must be in the designated area and must be fully compatible with, and meet all Design Guidelines and other requirements of the overlay district. Incentive funding is limited and the incentives shall be suspended when funding has been depleted. Upon the availability of additional funding, the incentives shall be restored. Be advised that if you are approved for a grant, the City may be required to issue you an IRS Form 1099-G for the grant payments you receive from the City, depending upon the federal tax classification status marked on the IRS Form W-9 that you will be required to complete as a condition of obtaining this grant. Map of H1 District boundaries
Available incentives shall include the following: Façade Grant Program: Grants of up to $10,000 shall be provided to property owners or tenants to improve the exterior appearance and functionality of the facades of buildings. Grants require a minimum of a 50% match by the property owners. Sign Grant Program: A grant of up to $500 to provide business signage on the exterior of buildings. All signs must be approved by the Design Review Board and be compatible with the historic character of the overlay district. No match is required. Design Assistance Grant: Grants up to $500 will be provided for architectural work required to create scope of work or design services for building facades. No match is required. Low Interest Loan Pool Program: Low interest loans of up to $250,000 are available for property purchase or building renovations. The program is in partnership with local financial institutions and borrowers must meet the loan credit and underwriting requirements of the participating bank. 40% of the loan will be at a fixed 2% per annum rate with 15 year amortization, 50% shall be at 1% under prime with a floor of 4%. The remaining 10% will be the required equity by the borrower. The terms of this program are subject to change. Micro-Enterprise Loan Program (MELP) A micro-loan program providing loans up to $15,000. The loan can be used for building renovations or for operational purposes. USDA Loan Programs: USDA Rural Development has several different low interest loan programs available. The Downtown Development Office will work with property owners and developers in assessing if a USDA loan is appropriate for their project. USDA programs include: Business & Industry (B&I) Guaranteed Loan Programs Rural Economic Development Loan Program (REDL)
Federal & State Historic Preservation Tax Credits: The National Park Service in cooperation with the IRS provides financial incentives in the form of tax credits for the renovation of qualifying historic properties. A Federal income tax credit equal to 20% of rehabilitation costs and a SC State tax credit equal to 25%, of the rehabilitation costs is available for work on qualifying buildings. In general, each dollar of tax credit earned reduces the amount of federal and state income taxes owed by the investor by one dollar. The Downtown Development Office will work with property owners and developers in assessing if tax credits are appropriate for their project and assist them in working with qualified architects and tax credit consultants. SC Abandoned Buildings Revitalization Act The General Assembly passed legislation at the end of the 2013 session that gives cities a new economic development tool that incentivizes private investment in downtowns for the rehabilitation, renovation and redevelopment of empty storefronts. Abandoned buildings are routinely safety hazards that cost cities and towns precious resources by using additional fire and police services, while decreasing area property values. Definition of an abandoned building at least 66 percent vacant for the past five years nonoperational for income-producing purposes may not be a single-family residence a building listed on the National Register for Historic Places when used solely for storage or warehousing investor using the tax credit may not be the owner at the time of the abandonment Investment threshold to use tax credit The amount of the credit is equal to twenty-five percent of the actual rehabilitation expenses incurred at the building site. The entire credit is earned in the taxable year in which the applicable phase or portion of the building site is placed in service but must be taken in equal installments over a three-year period beginning with the tax year in which the applicable phase or portion of the building site is placed in service. Unused credit may be carried forward for the succeeding five years. The entire credit earned pursuant to this subsection may not exceed five hundred thousand dollars for any taxpayer in a tax year for each abandoned building site. The limitation provided in this sub-item applies to each unit or parcel deemed to be an abandoned building site. For complete information, please reference the SC Code SECTION 12-67-100
Business Redevelopment & Historic Building Grant Program Because the demand for this grant exceeds the available funding, this is a competitive grant and after a staff review of the application the final selection shall be made by City Council. Available Grants: Historic Building Maintenance Grant: This Grant opportunity is directed at existing buildings located within the H-1 Florence Historic District. The Grant is to be used only for repairs that will stop the intrusion of water into a historic building. All buildings within the H-1 District are eligible, however, priority will be given to those buildings either listed as a contributing member to the National Register boundary within the Downtown Area or individually listed on the National Historic Register. The grant shall not be used as a match for the City s façade grant program or used to comply with the City s maintenance and appearance codes. The Grant is specifically designed to provide funding to include items such as roof repair or the replacement or repair of other exterior elements (non-architectural) that are allowing rain to enter the building and damage the interior structure of the building. Therefore, a proposed project should eliminate the deficiency causing the deterioration of the interior of the building. Interior Up-fit and Maintenance Grants: This Grant opportunity is directed at existing or new businesses located within the H-1 Florence Historic District. The Grant is to be used only for repairs or up-fits to the interior of a building that will either repair or restore original architectural or structural elements of the building or up-fits that cause the building to be retail ready. Generally, all up-fits must be permanent improvements to the building and may include but not be limited to display windows; new construction such as bathrooms or changing areas; certain electrical, mechanical and plumbing work; and interior repairs to walls, windows and flooring. In determining priority among grant applicants emphasis shall be given to the degree the project preserves or establishes historic or other like architectural features in the interior of the building. Rent Subsidy Grants: This Grant opportunity is directed at supporting business activities within the H-1 Florence Historic District. To be eligible for this Grant a tenant must be in one of the following categories: (a) a tenant which was located in the H-1 District as of January 1, 2015 in a building where significant renovation * occurred resulting in at least a 50% increase in the rent being charged; (b) a tenant that is a business start-up originating out of the North Dargan Innovation Center. Rent Subsidy Grants shall not be greater than fifty (50%) percent of the rent payment and are limited to the first two years of operation. The total Subsidy Grant may not exceed the maximum grant amount.
*See Resolution Number 2015-03 for complete details on qualifying renovations. Maximum Grant: The maximum grant amount received shall be Thirty Thousand Dollars ($30,000). No business location will be eligible to receive a grant award more than once every three years. New Market Tax Credits (NMTC) Unlike the Historic Preservation Tax Credits, this Federal tax credit program is a competitive program with more demand for the credits each year than the amount allocated to the participating entities. It is a very complicated program and requires the assistance of a consultant that is experienced in the field. The NMTC Program provides tax credit incentives to investors for equity investments in qualified census tracts. Your NMTC advisor can determine whether your downtown Florence project is eligible to apply for New Market Tax Credits. Parts of the Florence area qualify and other areas do not. The credit equals 39% of the investment paid out (5% in each of the first three years, then 6% in the final four years, for a total of 39%) over seven years. The Community Development Financial Institutions (CDFI) Fund in the Department of the Treasury administers the program. Community Development Entities (CDEs) apply to the CDFI Fund each year not for tax credits directly, but for an award of "allocation authority" that is, the authority to raise a certain amount of capital, or Qualified Equity Investments (QEIs) from investors. Business License Credit Businesses locating in the H1 District will receive a $300.00 credit towards their first year business license fees. If their first year liability is less than $300.00, any remaining credit balance will be carried forward to the second year. Legal Work Incentive Palmetto Propeller is a free legal service offered by the Turner Padget Law Firm whereby they offer free legal services to business start-ups and small businesses. No cost work includes leases, purchase agreements, non-disclosure agreements, employment agreements, corporate or LLC entity formation, contract review, general business counseling, licensing, collections, tax planning and other legal issues. Contact the Downtown Development office for more details.
UTILITY INCENTIVES: Waiving of all commercial municipal solid waste charges for services: For five years, from the date of the certificate of occupancy for the new or renovated building, the City will waive all commercial municipal solid waste charges (trash removal) for services. The following utility incentives shall be made available to projects involving the renovation of a historic structure where the renovation investment is equal to, or greater than, 30% of the value of the renovated building. The incentives for those qualifying projects shall be as follows: Reduction in initial water and sewer connection fees: The City of Florence shall provide a 50% reduction in initial water and sewer connection fees (physical tap and unit contributory loading fees). Reimbursement for costs to connect building to the City s water, sanitary sewer or storm sewer system: This incentive shall provide a direct reimbursement for actual construction costs (not connection fees discussed above) necessary to connect the new or renovated building to the City s water, sanitary sewer or storm sewer system, not to exceed $25,000. Reimbursement will be available to the developer when the certificate of occupancy is issued. Note: Except for sanitation fees, no other monthly fees (water, sewer or storm drainage) will be waived or discounted.
DETAILS OF VARIOUS INCENTIVES Façade Grant Program Eligibility Requirements The Façade grant program is available to business and/or building owners that are located in the designated Municipal Redevelopment District of the City of Florence. Façade grant renovation can be used on an exterior portion of the building that is visible to the public. This can include the front, back and sides of the building. Façade grant money may not be used for interior renovations or roof repair. Application Requirements The grant application must include a recent price quote for the proposed project from either an architect or a licensed contractor. This quote shall be utilized only for the purpose of determining the amount of grant needed for the project and any costs incurred in obtaining the quote shall be the responsibility of the applicant, not the City of Florence. If the grant is awarded, three bids will need to be obtained and the project shall be awarded to the lowest bid. The Downtown Development Manager will assist the applicant in obtaining bids. All work must be completed within 180 days of the awarding of the grant or the City of Florence reserves the right to revoke the grant. All Downtown projects that involve exterior changes to a building must be approved by the Design Review Board and is subject to review by the SC Department of Archives and History. In the event that a grant is awarded and the project does not meet the design standards, the Grants Committee reserves the right to revoke the grant. Payment of grant funds shall be disbursed directly to the contractor, not to the applicant. Disbursement schedules will be determined based on the scope of the work. Any improvements completed under the Façade Grant program shall become permanent fixtures of the building. They may not be removed by the business owner or the building owner in the event of the closing or sale of the business or the sale of the building without the express written consent of the City of Florence. This provision shall not apply if a future change is made to the building for the purpose of further renovation that will enhance the redevelopment of the downtown area.
Downtown Business Redevelopment and Historic Building Grant Programs Available incentives shall include the following: Historic Building Maintenance Grant: This Grant opportunity is directed at existing buildings located within the H-1 Florence Historic District. The Grant is to be used only for repairs that will stop the intrusion of water into a historic building. All buildings within the H-1 District are eligible. However, priority will be given to those buildings either listed as contributing member to the National Register boundary within the Downtown Area or listed as a historic building by the South Carolina Department of Archives and History National Register. The grant shall not be used to comply with the City's facade grant program or used to comply with the City's maintenance and appearance codes. Interior Up-fit and Maintenance Grants: This Grant opportunity is directed at existing or new businesses located within the H-1 Florence Historic District. The Grant is to be used only for repairs or up-fits to the interior of a building that will either repair or restore original architectural or structural elements of the building or up-fits that cause the building to be "retail ready". Generally, all up-fits must be permanent improvements to the building and may include but not be limited to display windows; new construction such as bathrooms or changing areas; certain electrical, mechanical and plumbing work; and interior repairs to walls, windows and flooring. The grant is intended to cause interior spaces to become "retail ready" within the Historic District. In determining priority among grant applicants emphasis shall be given to the degree the project preserves or establishes "historic" or other like architectural features in the interior of the building. Rent Subsidy Grants: This Grant opportunity is directed at supporting business activities within the H-1 Florence Historic District. To be eligible for this Grant a tenant must fall into one of the following categories: (a) a tenant which was located in the H-1 District as of January 1, 2015 when "significant redevelopment activity"1 occurs at the location which results in at least a 50% increase in the rent being charged; (b) a tenant that is a business start-up originating out of the North Dargan Innovation Center. Rent Subsidy Grants shall not be greater than fifty (50%) percent of the rent payment and are limited to the first two years of operation. The total Subsidy Grant may not exceed the maximum grant amount. Maximum Grant: The maximum grant amount received shall be Thirty Thousand Dollars ($30,000). No business location will be eligible to receive a grant award more than once every three years. No match is required for any grant in this program, however, funding is limited and it is a competitive grant program with awards based on a scoring system.
Historic Tax Credits 20% Federal Historic Rehabilitation Income Tax Credit: A Federal income tax credit equal to 20% of rehabilitation costs is available for work on qualifying buildings. In general, each dollar of tax credit earned reduces the amount of federal income taxes owed by the investor by one dollar. Eligible buildings: Buildings listed individually in the National Register of Historic Places or buildings that contribute to a National Register historic district. Eligible use: Income-producing use (such as offices, stores, or rental housing). Expenditure requirements: Costs must exceed the adjusted basis of the building (the purchase price, minus the cost of the land, plus the value if improvements made, minus depreciation already taken), or $5,000, whichever is greater. Review of work: The National Park Service must certify that the rehabilitation meets the Secretary of the Interior s Standards for Rehabilitation. Review begins with the State Historic Preservation Office (SHPO). Authorizing legislation: Tax Reform Act of 1986 (PL99-514; Internal Revenue Code Section 47). 25% State Historic Rehabilitation Tax Credit: Owners of historic buildings in South Carolina who meet the requirements for the 20% Federal Historic Rehabilitation Tax Credit may also qualify for a state income tax credit of 25%.. Taxpayers do not have to go through a separate State Historic Preservation Office (SHPO) application process. Successfully completing the federal application process qualifies them for the state credit. Incentive: State income or license tax credit equal to 25% of rehabilitation costs. In general, each dollar of tax credit earned reduces the amount of state income or license taxes owed by one dollar.
DOWNTOWN FLORENCE REVITALIZATION LOAN PROGRAM The Downtown Development Corporation and participating area financial institutions have established a Low Interest Loan Program to encourage development, redevelopment and general improvement to commercial and residential properties in the Florence H1 downtown business district. The loan proceeds cannot be used for operating capital. The program is for property acquisition and/or renovation. Any commercial or residential project in the eligible area qualifies under the program. The main objective of the program is to provide a strong financial incentive for the rehabilitation of the exterior and interior of building structures in downtown Florence and to help stimulate more business openings in the Downtown area.. Another goal is to insure that the proposed rehabilitation work is of a quality design and is sensitive to the architectural and historical qualities that make our downtown buildings distinctive. Up to Ninety percent (90%) of the project s costs or appraised value, whichever is less, will come from the loan pool. On each loan that is submitted for approval forty percent (40%), not exceeding $100,000 will be provided from the pooled funds via the Florence Downtown Development Corporation (FDDC). The FDDC funds shall be at a fixed two percent interest rate with a fifteen (15) year amortization. The participating bank provides 40% of the loan funding at one percent (1%) under prime with a floor of four percent (4%). FDDC MICRO-ENTERPRISE LOAN PROGRAM (MELP) MELP is designed to offer business owners and potential business owners, who do not qualify for a traditional bank loan, a vehicle to borrow money at a competitive rate. The program IS NOT a high risk loan fund. Borrowers must have a good credit history. The borrowers credit report should typically have less than two thirty day delinquencies in the last two years with a minimum credit score of 620 or higher. MELP loans can be up to $15,000 and are made by a local participating bank of your choice but are guaranteed by the FDDC. In general, eligible projects for loans can include any business venture that promotes job creation or retains jobs, promotes the revitalization of the downtown area through building rehabilitation and enables business owners to become property owners. Qualifying expenses will include buildings, land, fixed assets, machinery and equipment, building and façade improvements or rehab.
USDA Rural Development Loans Business and Industry (B&I) Guaranteed Loan Program: The purpose of the Business and Industry (B&I) Guaranteed Loan Program of Business and Cooperative Programs (B&CP) is to improve, develop, or finance business, industry and employment in an effort to favorably impact the economic and environmental climate of rural communities. The guarantee is a method whereby a local lender can extend its legal lending limits by the portion of B&CP's guarantees. B&CP can provide up to an 80 percent loan guarantee for loans of $5 million or less, 70 percent for loans between $5 million and $10 million, and 60 percent for loans exceeding $10 million. Guaranteed loans may exceed $10 million under certain conditions. Rural Economic Development Loan Program (REDL): A loan program from USDA that depends on the partnership of a utility coop. The loans are typically used for the following: Start up venture costs, including but not limited to financing fixed assets such as real estate, buildings (new or existing), equipment, or working capital, business expansions, business incubator projects, technical assistance, project feasibility studies, advanced telecommunications and computer networks for medical, educational, and job training services, community facilities projects. The maximum amount is $740,000 and the minimum is $10,000.