Historic buildings are community assets.
By Rachel Patton
Historic preservation is an essential part of community and economic development. Arkansas’s historic buildings tell stories about commerce, government, transportation, education, agriculture, recreation, social norms and more. Their preservation and reuse create distinctive places where people want to live, and it’s good for the environment, conserving materials and embodied energy.
Since 1976, the U.S. government has encouraged the rehabilitation and reuse of historic buildings through its Federal Historic Preservation Tax Incentives program. This program provides a 20% income tax credit, taken ratably over a five-year period, to owners of income-producing property who complete a certified historic rehabilitation. According to the “Annual Report on the Economic Impact of the Federal Historic Tax Credits for Fiscal Year 2022” published this year by the National Park Service in cooperation with Rutgers University, the Federal Historic Tax Credit (HTC) program “remains the Federal government’s largest and most effective program supporting historic preservation and community revitalization,” incentivizing private investment in communities nationwide and yielding a net benefit to the U.S. Treasury.1 According to the report, in FFY22 alone, federal HTC projects in Arkansas supported 585 jobs resulting in $19.7 million in earned income, $29.3 million in GDP and $52.2 million in economic output. These projects also generated a total of $6.3 million in federal, state and local taxes.
Recognizing the economic potential of a companion state HTC, the Arkansas General Assembly created the Arkansas State Historic Rehabilitation Tax Credit Program in 2009. Improvements to the credit were instituted in the past four regular legislative sessions, the most recent of which took place in spring 2023. The Arkansas State HTC Program provides a credit on state income tax or insurance premium tax for the certified historic rehabilitation of owner-occupied and income-producing properties. There is a program-wide annual cap of $8 million per fiscal year as well as per project caps for owner-occupied and income-producing properties, respectively. The cap on qualified rehabilitation expenses for owner-occupied properties is $100,000, while the cap for income-producing properties is $1.6 million. The credit percentage is tiered based on the population of the municipality in which the project takes place, providing a significant incentive for the rehabilitation of historic properties in small cities and towns. Beginning in July 2023, projects in municipalities with a population of less than 10,000 may receive a 40% credit; projects in municipalities with a population between 10,000 and 50,000 may receive a 35% credit; and projects in municipalities with a population greater than 50,000 may receive a 30% credit. Regardless of location, every HTC project in the state benefits from this change, as the credit percentage was previously set at 25% across the board. The Arkansas State HTC is fully transferable. It is also important to note that income-producing projects that qualify may take advantage of both the federal and state HTC, potentially receiving a 60% tax credit on a project in a city of fewer than 10,000 people.
Before and after views of the River View Inn, originally completed in 1923 and recently restored by sisters Tracy Owens and Cathy Beard. - courtesy Tracy Owens and Cathy Beard
The vast majority of Arkansas municipalities are small cities and towns. According to the 2020 U.S. Census, 463 (or 93%) of Arkansas’s 500 municipalities have a population of 10,000 or less. The new tiered percentage can produce transformative results, saving places that matter and reactivating often vacant or underused spaces, making them valuable community assets. Take the River View Inn at Calico Rock (population 888) and the St. Charles Building at Pocahontas (population 7,371) as recently completed examples.
Located on the north bank of the White River in Izard County, Calico Rock is a charming city with native stone buildings and picturesque views of calico-colored river bluffs. Calico Rock is known for its trout fishing and has long been an attractive location for tourists and retirees. Situated on a hill overlooking Main Street and the White River, the aptly-named River View Inn was completed in 1923. The building was constructed using ornamental concrete block, a popular building material during the early 20th century that could be substituted for any use of brick or stone. The concrete blocks on the River View Inn were made with a rock face to resemble cut stone. Over the years, the building operated pretty consistently as a hotel or bed and breakfast but sat vacant and overgrown before this project. Sisters Tracy Owens and Cathy Beard purchased the hotel and began work in January 2022 to address decades of deferred maintenance and update the building’s interior spaces, plumbing and electrical systems to make it a viable business once again. Additional family members got involved to help rehabilitate historic wood windows and doors, paint and stencil the concrete floors. The project was completed in summer 2023 and received a 40% state HTC and 20% federal HTC. Now known as the Calico Riverview Inn Bed and Breakfast, the building offers nine guest rooms with unique amenities and homemade breakfast served daily. The reopened Calico is already making a positive impact on the region’s tourism economy. According to Owens and Beard, 2024 occupancy is up 66% with a revenue increase of 113% over last year already.
The historic St. Charles Building, built in 1859, underwent a complete rehabilitation by Dr. Patrick Carroll, bringing new life to its vacant spaces with retail, office and residential units. - Courtesy Dr. Patrick Carroll
Pocahontas, the Randolph County seat of government, sits along the Black River where the Delta meets the Ozarks. The city is an educational and agricultural center in the area and is home to Black River Technical College. Located on the courthouse square in downtown Pocahontas, the St. Charles Building was constructed in 1859 to serve as an annex for the St. Charles Hotel. It is now the oldest extant building in the city. The St. Charles Hotel was known for its hospitality and good food. After the older part of the hotel burned in the 1920s, the annex continued to house the Pocahontas Star Herald and a barber shop, while the upstairs offered rooms for rent. In the intervening years, a variety of businesses occupied the first floor of the building until about 2005, but the upstairs was vacant for more than 50 years.
When Dr. Patrick Carroll purchased the St. Charles Building in 2011, it was vacant. Several years later, he began a full rehabilitation of the building, which was completed in fall 2023 and received a 40% state HTC and 20% federal HTC. The project included a new roof (including the installation of a solar array), masonry repair, restoration of the original storefront configuration, all new systems and interior finishes, restoration of windows and doors, and more. The building’s first floor now offers retail or office space for lease, while the second floor houses one short-term rental unit and a larger apartment unit for long-term lease. The rehabilitation of the St. Charles Building is a beautiful project that put a prominently located, historically significant property back into active use.
Rachel Patton is executive director of Preserve Arkansas, the only statewide nonprofit advocate for the preservation of Arkansas’s historic places. Contact her at rpatton@preservearkansas.org.
1 Technical Preservation Services, National Park Service, U.S. Department of the Interior and Edward J. Bloustein School of Planning and Public Policy, Rutgers, The State University of New Jersey, “Annual Report on the Economic Impact of the Federal Historic Tax Credits for Fiscal Year 2022,” February 2024.