South Carolina Textiles Communities Revitalization Act

Textile manufacturing played a significant role in the history of South Carolina. It began with small water-powered mills. These soon gave place to large mills with a complete village around each mill for the workers. These, in turn, have given place to other advances in technology and economic changes that have left most of these as shuttered and abandoned buildings, which are slowly disappearing under a tide of kudzu.

In an effort to reclaim and repurpose some of these historical buildings, the South Carolina Legislature passed the Textiles Communities Revitalization Act in 2004, which was expanded and amended in 2008 and 2016 respectively.

The law provides financial incentives (i.e., tax credits) for the “rehabilitation, renovation and redevelopment of abandoned textile mill sites located in South Carolina.” The intent is to spur the rebirth of mill communities throughout the state as well as to enhance the tax bases of these communities.

These tax incentives apply to textile facilities that meet these definitions:

  • Abandoned—at least 80% of the mill has been “closed continuously to business or otherwise nonoperational as a textile mill” for at least 1 year prior to the date a taxpayer files a “Notice of Intent to Rehabilitate” the property.
  • Ancillary uses—activities related to and supporting the manufacturing of textiles. Sales, administration, distribution, storage, water and wastewater facilities, personnel facilities, security offices, employee parking areas, dining and recreation centers, and internal roadways and driveways are all considered ancillary uses.
  • Textile mill—facilities that were used for textile manufacturing, dying or finishing operations and for ancillary uses related to textile manufacturing.
  • Textile mill site—“the textile mill together with the land and other improvements on it which were used directly for textile manufacturing operations or ancillary uses.” The area of the “textile mill site” does not include land located outside the boundaries of the textile mill as defined above. It does include all structures and improvements reasonably understood to be part of the mill facility, not just the mill itself.

There are two options available for tax credit:

  • A 25% credit against real property taxes; or
  • A 25% credit against state income taxes, corporate license fees or insurance premium taxes.

(Either category of tax credit may transfer to lessees of the mill site or be allocated among members of the business partnership.)

To pursue the property tax credit, the taxpayer must file a “Notice of Intent to Rehabilitate” with the municipality in which the textile mill site is located or with the county if the mill site is in an unincorporated area. If approved by the local governing body, the taxpayer receives a tax credit equal to 25% of the actual expenses associated with the rehabilitation of the mill site, provided the actual expenses fall between 80% and 125% of the estimated expenses stated on the Notice. If actual expenses are greater than 125% of the estimated rehabilitation expenses, the taxpayer receives the 25% credit calculated against an amount equal to 125% of the estimated expenses. If actual expenses are less than 80% of the estimated rehabilitation expenses, the credit is not allowed. The taxpayer can claim the property tax credit in the tax year in which an applicable portion of the restored mill site is ready for its intended use. The credit may be taken against up to 75% of real property taxes due on the mill site each year for up to 8 years.

To pursue the credit against state income taxes, corporate license fees or insurance premium taxes, the taxpayer must file a “Notice of Intent to Rehabilitate” with the South Carolina Department of Revenue prior to receiving building permits for the rehabilitation work. The taxpayer receives a tax credit equal to 25% of the actual expenses associated with the rehabilitation of the mill site, provided the expenses do not exceed 125% of the estimated expenses stated on the Notice. If the actual expenses are greater than 125%, the taxpayer will receive the 25% credit against an amount equal to 125% of the estimated expenses. Note: Unlike the property tax credit, the income tax credit is still available even if actual rehabilitation expenses fall below 80% of the estimate. Originally, the total amount the taxpayer could claim in any year was capped at 50% of the taxpayer’s liability. The law amendment in 2016 removed the 50% cap. The entire credit is earned in the tax year during which an applicable portion of the restored mill site is ready for its intended use, however the credit must be taken in equal installments over a 5-year period. In addition to this category of tax credits, a qualifying taxpayer may also claim a state income tax credit related for the rehabilitation of historic structures (Section 12-6-3535).

Greenville and Spartanburg counties have both benefited from these textile mill rehabilitation incentives which helped spur mill redevelopment projects at Taylors Mill (Southern Bleachery—shops, coffee house, offices and brewery), Spartan Mill (college of osteopathic medicine), Drayton Mills (loft apartments, coffee house, restaurants) and Apalache Mill (apartments).

To misquote Mulberry Sellers, a character in Mark Twain’s 1892 novel The American Claimant, “There’s gold in them thar mills!”

Bradshaw, Gordon & Clinkscales, LLC