A Few Things to Consider When Applying for Historic Building Tax Credits
May 1, 2018
One of the most important things to realize about historic tax credits is that they may apply to a broader group of buildings and organizations than one might assume.
A firm with experience in the Standards for historic rehabilitation tax credits is able assess a building and justify its listing in the National Register, the first step in the process of qualifying the building for tax credits.
For example, we recently completed two projects involving Mid-Century Modern structures built in the late 1960s. The Professional Plaza building in Detroit (built in 1968) was adapted for residential use and rebranded as The Plaza, while the Fiberglas Tower in Toledo, Ohio (built 1969) was rehabbed as a mixed-use building with residential and office uses, and rebranded as the Tower on the Maumee.
To the untrained eye, both of these buildings were “modern,” so they were clearly not “historic.” However, because of our knowledge of the buildings’ architectural and historical context, we were able to get them both listed in the National Register. Doing so was the first step in qualifying them for historic tax credits, which in turn opened up options for the funding needed to move the projects forward. The key takeaway here is that first impressions of a building are not necessarily the final determinant of whether they can be considered historic for the purpose of securing tax credits.
Another surprising and even counterintuitive fact is that non-profit organizations can benefit from historic tax credits as well, even though they pay no taxes. The City Opera House in Traverse City, Michigan, is an excellent case in point. The grand structure, built in 1892, was added to the National Register in 1972. The structure was donated to the city by descendants of one of its original owners, and the city then granted a 75-year lease of the property to a local non-profit group of arts supporters.
The non-profit created a for-profit subsidiary to manage the building’s redevelopment, and brought in an outside investor that benefited from the tax credits. The arrangement allowed the group to develop the building, including infrastructure and functional upgrades, restoration of the interior’s rich décor, and enhancements to the grand entrance.
Just as importantly, the reopened structure is now in use more than 200 nights per year for a variety of audiences and functions. Even though the group doesn’t pay taxes, the strategic use of tax credits attracted financial backing, which in turn allowed its stewards to restore and transform a neglected cultural resource into a vibrant cultural hub.
Lastly, the importance of using a design team that understands the Rehabilitation Standards is paramount, for several reasons. Working with professionals who have a deep understanding of the Standards, and how they are interpreted by the NPS, provides greater flexibility in design. Just as importantly, an experienced team will help you avoid prolonged review periods that can result if the NPS rejects proposed design features that do not meet the Standards. Finally, a development team skilled in applying the Standards will work to optimize the reuse strategy to meet critical development goals — functionally, aesthetically, and financially.
For recommendations on how to determine whether your building is eligible for the program, how to apply, and how to ensure you receive the credits, download the guide here