Two state programs, and you may claim only one. On a qualifying mill the difference between them can be worth several million dollars of equity.
North Carolina runs two separate rehabilitation credits under two separate statutes. Each has its own guide below — and the election between them is the first thing to settle.
40% tier 1–2 / 30% tier 3 · no cap
Reenacted in 2021 and available today, despite what most published summaries say. 40% of qualified expenditures, uncapped, $3M minimum spend, placed in service before 2030.
Read the Guide15%–30% · $4.5M project cap
The general historic credit: 15% on the first $10M, 10% to $20M, plus 5% bonuses for tier, targeted investment and education. Capped at $4.5 million per project.
Read the GuideThis is the single decision that moves the most money on a North Carolina mill. G.S. 105-129.74 bars claiming the Article 3L historic credit with respect to the same activity for which the Article 3H mill credit is claimed. The two state programs are mutually exclusive.
| Article 3H — Mill Credit | Article 3L — Historic Credit |
|---|---|
| 40% (tier 1/2) or 30% (tier 3) | 15% to $10M, 10% to $20M, 0% above |
| No per-project cap | $4,500,000 cap per project |
| $3,000,000 minimum spend | No comparable minimum |
| 80% vacant 2 years; manufacturing or utility prior use | No prior-use test for the base credit |
| Placed in service before Jan 1, 2030 | QREs before Jan 1, 2030; in service by Jan 1, 2032 |
A qualifying mill of any real size generally elects Article 3H. Article 3L is the better answer where the project fails the mill or vacancy tests, where qualified spend is under roughly $3 million, or on a non-income-producing property in a tier three county. Between those poles it is a modelling exercise — and it must happen before the eligibility certification is filed.
Yes. Article 3H was reenacted by S.L. 2021-180 Section 42.7, signed November 18, 2021, retroactive to projects whose eligibility application was submitted on or after January 1, 2015. The old January 1, 2015 application deadline no longer exists. The current constraint is that the project must be completed and placed in service before January 1, 2030.
40% of qualified rehabilitation expenditures for an income-producing rehabilitation in a development tier one or two county, or 30% in a tier three county. Non-income-producing rehabilitations receive 40% in tier one and two counties only. Minimum spend is $3 million and there is no per-project dollar cap.
No. G.S. 105-129.74 bars claiming a credit under Article 3L with respect to the same activity for which the Article 3H mill credit is claimed. You elect one, and the election should be modelled before the eligibility certification is filed.
Yes. Both state programs are designed to sit on top of the 20% federal credit — the Article 3H income-producing credit actually requires the federal Section 47 credit as a condition.
North Carolina ranks all 100 counties annually by economic distress. Tier 1 is the most distressed. Tier 1 and 2 counties cover most of the state's small-town mill inventory, and for the mill credit the tier is locked as of the eligibility certification date.
From SHPO relationships to county tier maps to the 3H-versus-3L election, we work these credits from inside the state.
