Tax incentives are better than demolition

I was glad to see an article in the Wilson Times about a proposal to provide property tax credits in exchange for renovations on downtown buildings. I had made the argument before that tax incentives could solve some of the city's more persistent problems while improving the overall tax base in the long run.

Now Lindsey deGuehery, a Wilson physician who has invested in some downtown property, is proposing that the city rebate some property taxes on the renovated properties' increased value. Those rebates would offset the costs of renovations and encourage rehabilitation of vacant or abandoned structures. If successful, the rebates could spark a renaissance in the downtown area.

Some years ago, I had argued in newspaper editorials that the city would be wiser to spend its money on a tax incentive program that would reward rehabilitation efforts than to spend taxpayer money demolishing vacant properties. A number of N.C. cities have successfully adopted this approach. At the time, Wilson's policy was to demolish properties that had been vacant for a certain period of time. A city ordinance required that vacant property had to be boarded up to discourage vagrants and criminal activity. The boarding-up made the property less appealing to potential buyers or renters and had the metastasizing effect of infecting nearby properties. The city persisted in appropriating large sums for razing boarded-up property and in issuing "repair or demolish" orders.

By investing in rehabilitation, in the form of tax credits or incentives, instead of demolition, the city could end up with renovated, occupied houses instead of snaggle-tooth blocks of declining structures punctuated by nearly valueless vacant lots where houses once stood. The tax incentives could take many forms, such as a five-year moratorium on increases in tax value (the property tax would be calculated on the previous, pre-renovation value), or as a rebate of the higher taxes so long as the renovated structure remains occupied.

The proposal from deGuehery and the Wilson Downtown Development Corp. is a hopeful development, but it depends on City Council's willingness to see its potential. Will council embrace a productive and effective new idea or stick with its love of the wrecking ball?