Amanuel, the Institute’s Development Engineer, is currently back in the USA while his wife, Ribka is studying there for a year as part of a three year fellowship programme. Although he is on a sabbatical, he is still working part time for the SAISC and will be our American correspondent for Steel Construction.
While biking around North Carolina I pass a building that once hummed with the whir of more than a hundred people operating 10 000 spindles. Now dormant it is a relic of a time when cotton was king and trains were the lifeblood of Southern commerce.
More than a century old the 5 000 square metre spinning mill was closed in 1976. But two years ago its owners believed that it had some life in it yet. They hoped to turn the building and the surrounding land into a sports and retail complex with the help of the state mill rehabilitation tax incentive which would offset the cost of renovating this historic structure.
Over the past several years many other owners of cotton and tobacco mills around the state believed the same and the results are spectacular. The use of structural steel in these projects, using some steel reclaimed from the existing buildings but mostly new, allows for fascinating architectural expressions. The ease with which planning and construction can commence while preserving the historic character of the structures can’t be achieved any other way.
In 2004 the South African National Treasury launched an urban renewal tax incentive to encourage the refurbishment and construction of commercial and residential properties in South Africa’s 16 major cities. The incentive translates into considerable financial benefits for investors, especially for refurbishing existing buildings. Companies that redevelop buildings in the country’s inner cities get a 20% tax deduction from all income earned in the first five years after a building has been refurbished.
A developer must improve an entire building or at least a 1 000 square metre area. In order to qualify for the five-year write-off, investors must preserve a substantial part of the building’s existing structural or exterior framework, i.e., all four walls or all the steel frameworks of the existing building.
The US has similar building renovation tax incentives for investors. For instance, a federal tax incentive is available for renovation expenditures incurred for a qualified building or a certified historic structure. The amount of the incentive is 10% of the expenditure for work done on non-historic buildings built before 1936, and 20% of the expenditure for historic structures. State incentives can add another 30% to the federal incentive.
To qualify the building must be used in a business. In the US, rehabilitation includes renovation, restoration or reconstruction of a building, but it does not include an enlargement or new construction. For instance, one such incentive allowed the repurpose of a complex with an R80 000 tax value before its renovation. After it opened as a commercial and residential space in 2011 its tax value rose to R160 million.
Most renovations aren’t possible without the help of the incentives because the cost of preserving and repurposing a heritage building generally exceeds the amount of revenue the structure will generate while new tenants take root and build a customer base.
The only way to make a profit on these very large structures on many occasions is to invent a new enterprise and give it a new start. The incentives develop equity up front to help get the project done, and this turns it into a viable asset for the community.
With large urban areas that harbour old structures, and the fast pace of urbanisation, it is time for South African investors to engage local architects and structural engineers to evaluate the viability of such projects in their provinces. Technical competence to plan, design and erect renovations are available at very reasonable prices.
To aid this process the Institute has The Red Book that provides easy access to the relevant details and capacities of steel structures. Moreover the Green Book and the eToolkit
provide easy methods of connecting such members to each other and the existing brick or concrete walls and foundations.
Fabricator and structural engineer members of the Institute can make use of these tools to arrive at reasonable project costs and complete them within budget.
Until next time – it’s time to go biking again!