Sources of Financial Assistance for Preserving Historical Buildings

Sources of Financial Assistance for Preserving Historical Buildings

Preston's Station Historic District along the Lincoln Highway National Heritage Byway in Belle Plaine, Iowa.

Many property owners are eager to find financial assistance for rehabilitating, preserving, or maintaining their structures, whether it is for a modest private residence or a large commercial building. Tax incentives may be available at the federal, state, or local level to support historically sensitive work on recognized historic properties. Finding the right opportunity for your project can be complicated, but your local city government or historic preservation commission may help advise you. Because tax codes change frequently, consultation with a qualified tax attorney, accountant, or the Internal Revenue Service is recommended.

Here are some sources of financial assistance to consider :

GRANTS

Historical Resource Development Program (HRDP): This competitive grant program can be used to fund the rehabilitation of buildings listed on the National Register of Historic Places (NRHP). Grants are made annually for up to $50,000. Details can be found at Historical Resource Development Program | IDCA (iowa.gov).

TAX CREDITS

State Historic Tax Credit:  Property owners can get credit for up to 25% of their qualified rehabilitation costs (basically anything attached to the building; however, site work does not qualify). The building must be eligible for the National Register of Historic Places but does not actually have to be listed. Qualifying properties include private residences, barns, commercial properties, and properties owned by nonprofits, including houses of worship. The project must be a substantial rehabilitation, which is defined based on a formula that involves comparing the adjusted basis of the property to the cost of the qualified rehabilitation expenditures.

Maple Grove Schoolhouse along the Iowa Valley Scenic Byway in Marengo, Iowa.
The Lincoln Hotel in Lowden, Iowa as it stands today.

The formula is different depending on whether the building is commercial or noncommercial. The rehabilitation work must be done according to guidelines that are used in historic preservation work across the country and are the reference point for tax credit and grant programs in addition to being best practices. These are called the Secretary of the Interior’s Standards for Rehabilitation. Credits may be fully refundable and are transferable if sold to a new owner. You can find more information about the state tax credit at Historic Preservation Tax Credit | Iowa Economic Development Authority (iowaeda.com)

Federal Historic Tax Credit: Property owners can get credit for up to 20% of qualified rehabilitation costs. This credit is intended for depreciable, income-producing properties. Many of the same requirements for the state tax credit program apply to the federal credit, thus the groundwork laid for one can be reused for the other. The building must be listed on the National Register of Historic Places or be eligible for listing (the property must be listed within 30 months after taking the credit). Credit is not refundable, but it can be carried forward and used for over 20 years. The rehabilitation work must follow the Secretary of the Interior’s Standards for Rehabilitation.

When used together with the state credit, the federal historic tax credit can equal a total credit of 45% of the rehabilitation costs. Public Law No: 115-97 made a change stating that the 20 percent credit can be claimed so that those who qualify for the tax credit would receive 4 percent per year for five years rather than 20 percent for one year. For more information, visit National Park Service Historic Property Tax Incentives.

Historic building along the Lincoln Highway National Heritage Byway in Jefferson, Iowa.

GUIDELINES for REHABILITATION

If you would like to know more about the guidelines for the treatment of historic buildings, please see the Secretary of the Interior’s Standards on the Treatment of Historic Properties of the National Park Service.

ADDITIONAL USEFUL LINKS

A source of practical information is the National Park Service’s technical preservation services publications Technical Preservation Services Publications – Technical Preservation Services (U.S. National Park Service) (nps.gov)

Preservation Briefs can be a helpful starting place for specific building issues: Preservation Briefs – Technical Preservation Services (U.S. National Park Service) (nps.gov)

 

Appreciation for this information goes to Allison Archambo, Certified Local Government Coordinator, State Historic Preservation Office of Iowa, and Michael M. Belding, State Historic Preservation Office of Nebraska.

The National Register of Historic Places

The National Register of Historic Places

The National Register of Historic Places, or NRHP, is a federal program administered by the US National Parks Service (NPS).  It was created in 1966 as part of the National Historic Preservation Act (NHPA) to recognize cultural resources that, whether intentionally or accidentally, had withstood the tests of time and human action.  No legal obligations – for owners – are imposed by being listed on the NRHP.  For them, it is an honorific program.

The NRHP places nominations and listings into one of five categories: buildings, structures, objects, sites, and districts.  The most common listings are buildings and districts, or groups of buildings (more on structures, objects, and sites below).

National Register of Historic Places Plaque

The NRHP recognizes four kinds of historic value: association with significant events, association with significant people, outstanding exemplars of architecture, and/or the potential to yield important historical or prehistorical information.

The NRHP places nominations and listings into one of five categories: buildings, structures, objects, sites, and districts.  The most common listings are buildings and districts, or groups of buildings (more on structures, objects, and sites below).

Nominations to the NRHP document many aspects of a place, including its current condition, remaining design features that indicate that it is historic, its own history (in the case of a building, for example, documentation of expansions or renovations), and its historic context.  Nominations provide this information textually and with images such as maps and photographs.  They are written using a wide variety of historic resources – fire insurance maps, newspapers, Census and other genealogical records, any available historic images, archival collections, secondary sources produced by historians, and even other nominations.

The NRHP places nominations and listings into one of five categories: buildings, structures, objects, sites, and districts.  The most common listings are buildings and districts, or groups of buildings (more on structures, objects, and sites below).

Brick Street Historic District Woodbine, Iowa

Youngville Cafe

Youngville Cafe Watkins, Iowa

Lincoln Highway Bridge

Lincoln Highway Bridge Tama, Iowa

Lincoln Hotel Lowden Iowa

Lincoln Hotel Lowden, Iowa

The NRHP requires that nominated properties have integrity – that they themselves convey their historic character and significance themselves.  The NPS breaks integrity down into seven elements: location, design, setting, materials, workmanship, feeling, and association.  Some of these elements are more subjective than others, but over the years the NPS has written many National Register Bulletins now available online, which explain their meaning, the procedure for preparing nominations, and other questions related to historic preservation.

In addition to recognizing historicity, the NHRP provides a framework for how public resources and regulations are allowed to affect the United States’ cultural resources.  Whether a place is listed or eligible for listing informs the federal government’s actions, as do the professional and work standards set forth by the Secretary of the Interior, who oversees the NPS.  The Secretary of the Interior’s Standards guide projects that preserve, rehabilitate, restore, and/or reconstruct historic cultural resources.  As with the National Register Bulletins, these are available online.

A private owner of a place listed on the NHRP is most likely to encounter regulation when they obtain or try to obtain a financial benefit from the federal, state, or local government.  At the federal level, a 20% federal income tax credit is available to recoup up to 20% of the money spent on a certified project to rehabilitate an income-producing building that is certified as historic by being listed individually on the NRHP or by being in an NRHP historic district.  The State of Iowa offers a 25% tax credit for “qualified rehabilitation expenditures” to preserve historic buildings’ architectural elements that give them their historic character.  Counties also may offer exemptions from a few years of property tax increases that result from the value added to historic properties by performing rehabilitation projects.  In all cases, these benefits must be applied for through an officially designated procedure.  The projects they support must be “sensitive” according to the Secretary of the Interior’s Standards.  And the affected places must be recognized as historic.

The NHPA imposes similar obligations on the federal government itself – and the spending of federal money or issuing of federal permits.  According to Section 106 of the NHPA, federal “undertakings” – projects that spend federal money or use federal permits, including state, local, and private projects – must evaluate the effect of their proposed work on any places listed on the NRHP or that are eligible to be listed on it, and avoid or mitigate adverse effects.  Section 110 of the NHPA requires federal agencies to manage the historic preservation of their own resources using the guidelines of the NRHP.  Finally, section 402 of the NHPA requires the Department of State to care for the historic preservation of US-held sites abroad if they are either a UNESCO World Heritage Site or eligible for the NHRP equivalent of the country in which they exist.

The “structures” category is one of the harder ones to define.  It is essentially human-made things, some of their buildings or building-like, that were built for some function other than providing human shelter.  The NPS gives some helpful examples, including vehicles; agricultural infrastructure like irrigation systems, canals, and windmills; and, importantly for Prairie Rivers’ survey of historic resources in the Lincoln Highway Heritage Byway, bridges.  “Objects” is a similar category, but the things defined in this way have primarily aesthetic value.  They are artistic.  “Sites” are places that are historic whether a building associated with the important historical events that happened there exists or not, or whether it ever existed.  Commonly, these are archeological digs or places where archeologists would expect to find artifacts.

Author Michael Belding is the oral history program manager for the Iowa State University Special Collections and University Archives. He previously worked as an architectural historian for the City of Mobile, Alabama’s Historic Development Commission. Currently, Belding is a Ph.D. candidate in Rural, Agricultural, Technological, and Environmental History and is working with Prairie Rivers of Iowa to help assess the condition of the approximately 319 properties listed on the National Register of Historic Places along the Lincoln Highway Heritage Byway (LHHB) in Iowa.

Author Michael Belding