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Jan 20th
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Home Travel Preservation Rehabbing America's Old West Into a New West

Rehabbing America's Old West Into a New West

Federal Historic Rehabilitation Tax Credit Program, State Programs Giving West's Old Buildings a New Life

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Most of the early Old West, the wood frame boom towns and false front main streets where cowboys, gamblers and settlers crossed paths, is long gone, replaced by the next generation's desire for bigger and better cities.

While those first structures have been lost to us, an ever-dwindling number of the West's historic buildings from the late 1800s and early 1900s are still around, although sadly, many are run down, falling apart, and waiting for the bulldozer or wrecking ball.

Realizing the growing loss of history that the nation was facing, Congress in 1977 created the Federal Historic Rehabilitation Tax Credit Program, giving developers and owners a chance to have the government offer financial incentives to give these old buildings a new life, a second chance.

The program not only has been successful, in December 2007 a plan was announced to make it even easier and simpler for owners and developers to tap into the tax credit program.

The plan, entitled Making a Good Program Better, implements recommendations made by the National Park System Advisory Board following a two-year effort.

"The Federal Historic Rehabilitation Tax Credit Program is the largest and most successful federal program promoting the preservation and reuse of America's historic resources," said National Park Service (NPS) Director Mary Bomar. "I have every confidence that the plan will make the program even more successful."

Administered by the National Park Service and the Internal Revenue Service in partnership with the nationwide network of State Historic Preservation Offices, the program offers federal tax credits for the rehabilitation of income-producing historic buildings. Rehabilitated buildings must maintain their "historic character," and be approved by NPS.

The carrot that the program offers developers and owners is a 20 percent tax credit for the certified rehabilitation of certified historic structures. There's also a 10 percent tax credit for the rehabilitation of non-historic, non-residential buildings built before 1936.

For a project to tap into both credits, the rehabilitation must be a substantial one and must involve a depreciable building.

The overall numbers are impressive. Since it began 30 years ago, the tax credit program has helped preserve more than 30,000 historic buildings around the nation, and incentivized more than $40 billion in private investment-over $4 billion last year alone.

"We have saved some real historical jewels," Jon Smith, Assistant Director of the Heritage Preservation Assistance Programs, told OldWestNewWest.Com. "A lot of good things have come out of this program."

Smith explained the reason for freshening the program.

"The Federal Historic Rehabilitation Tax Credit Program had not been overhauled since 1986," he said. "It had grown so much that it seemed geared more toward larger projects, and we needed to say that it was appropriate for smaller, main street projects as well. The program needed greater clarity."

The changes also are designed to help the first-time small project developer or owner through the steps involved in the tax credit program, making it more user friendly.

State Tax Credit Programs

Some states have decided to add their own historic rehabilitation tax credit program to the mix, while others have not. We looked at California, Colorado and Missouri to see how historic buildings are being brought to a new life in those states.


California is one of the states that does not have its own historic rehabilitation tax credit program, but that hasn't deterred developers from bringing old buildings back to life.

For the fiscal year 2006 California ranked 11th in the country in the amount of investments certified. The state saw $80.5 million divided among seven projects.

"The federal tax credit program has been very successful in California," said Tim Brandt, supervisor of investment tax credit program for the state.

Brandt said there have been some notable projects done in conjunction with the program, including the Ferry Building in San Francisco, the Subway Terminal Building in Los Angeles (redone as an apartment), Young's Market in Los Angeles ("it could have been lost," he added), and the old Haslet warehouse in San Francisco, which became the very fashionable Argonaut Hotel.

"We have a lot more of the larger projects," he added. "Last year we had the most in terms of dollar amount."


Given Colorado's rich Old West history, it should come as no surprise that Colorado was one of the first states to offer a State Income Tax Credit for Historic Preservation.

Since 1991, more than 400 historic rehabilitation projects have taken advantage of the state tax credit, and 90 percent of those rehabilitation projects have involved private homes.

According to the Office of Archaeology and Historic Preservation (OAHP), projects have created more than 21,000 jobs in Colorado since 1981.

Much like the federal program, the state offers a similar 20 percent state income tax credit based on $5,000 or more of approved preservation work on designated properties.

A good example of how the rehabilitation program is working is the old St. Vincent's Hospital building in the historic mining town of Leadville.

"The Sisters of Charity arrived in Leadville during the winter of 1878 and established a mission to tend to the sick," explained Joseph Saldibar, Architectural Services Coordinator for the OAHP. "The following spring, the town collected money to establish a proper hospital building, which opened that March. It was replaced in 1901 with the current brick and stone building, which was built for $30,000.

"St. Vincent's served as Leadville's only hospital until 1954, when it was declared a fire hazard by city officials," he continued. "The Sisters decided against renovation or demolition, choosing instead to move to a new facility on the other side of town. The old building was left vacant for nearly 50 years until being renovated for condominiums in 2003-2007."


For Missouri, where some say the Old West really began, there are plenty of historic buildings that have been rehabilitated, but plenty more yet to be saved.

Missouri's historic rehabilitation tax credit program began in 1998. The state's program allows a 25 percent tax credit, and unlike the federal program, Missouri allows tax credits to be transferable, and they can cover an owner's personal residence.

"As a result, Missouri has ended up being one of the leading states using the federal program," Mark Miles, director of the State Historic Preservation Office. "And the National Trust for Historic Preservation is pushing other states to look at what we've been doing."

In the most recent National Park Service report (FY2006), Missouri ranked first in the number of rehabilitation projects receiving preliminary approval, second in dollars invested in projects receiving final approval, and third in the number of projects receiving final approval.

While many large projects have been successful, such as the old Post Office building in St. Louis, which had languished for many years, Miles said smaller projects can successfully be rehabilitated.

"In Boonville, for example, there is the old Ballantine House, an 1840s hotel that was successfully converted to office space," he said.

The Ballantine House hotel, by the way, used to provide Missouri River boat traffic passengers with accommodations.

For Miles and his staff, there is no shortage of historic buildings to be saved.

"There are still plenty of historic properties out there," he said. "What's nice is that the word is getting out that it makes sense to rehab these properties."

For more information about the Federal Historic Rehabilitation Tax Credit Program, visit the National Park Service Web site at
www.nps.gov/history/hps/tps/tax/index.htm and for information about state programs visit the National Conference of State Historic Preservation Officers at www.ncshpo.org for information about your state.


Basic Requirements for the Federal Tax Credit Program

What are the basic requirements that determine whether a project will be eligible for the 20 percent tax credit?

According to the National Park Service, there are four factors that can help you decide whether your rehabilitation project proposal would meet the basic application requirements for the 20 percent tax credit.

  • The historic building must be listed in the National Register of Historic Places or be certified as contributing to the significance of a "registered historic district."

  • After rehabilitation, the historic building must be used for an income-producing purpose for at least five years. Owner-occupied residential properties do not qualify for the federal rehabilitation tax credit.

  • The project must meet the "substantial rehabilitation test." In brief, this means that the cost of rehabilitation must exceed the pre-rehabilitation cost of the building. Generally, this test must be met within two years or within five years for a project completed in multiple phases.

  • The rehabilitation work must be done according to the Secretary of the Interior's Standards for Rehabilitation. These are ten principles that, when followed, ensure the historic character of the building has been preserved in the rehabilitation.