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State and Federal Historic Preservation Incentives Available in Oregon

Historic Preservation Incentives at the State and Federal level are either tax incentives or grants. PMA keeps up to date regarding these programs as incentives are ever-changing and apt to suddenly sunset or be revised. Following is a brief explanation of incentives offered by state or federal government or private agencies as of 2016. PMA has worked with multiple owners and agencies across the Pacific Northwest to take advantage of state and federal tax incentive programs, and we can provide expert experience in the latest interpretations of work that meets the standards for these incentives. A few other redevelopment incentive programs are also mentioned below, if they have been successfully combined with historic preservation incentive programs in Oregon.
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FEDERAL AND STATE OF OREGON TAX INCENTIVES

Oregon Special Assessment

Properties contributing to a district or individually listed on the National Register and in need of some rehabilitation are eligible for the State of Oregon Special Assessment property tax incentive. Property taxes are “frozen” at the time of application and are held at that value for 10 years. During this time period owners may make significant investments in the property without an increase in assessed value. The earlier the investment is made and the larger the resulting increase in market value, the greater the benefit to the owner.

A Preservation Plan must be submitted, outlining the rehabilitation work proposed. Exterior work is prioritized, and the work must meet the Secretary of the Interior’s Standards for Rehabilitation. The total valuation of work must be at least 10% of the property’s Real market value and that amount must be spent in the first five years of the special assessment period.

A second term of 10 years is available, with some limitations on the types of preservation work that are eligible for the program. Eligible work includes energy conservation projects, ADA compliance, seismic improvements, or sustainability. The investment must meet or exceed 10% of the Real market value of the property at the time of application.

Non-contributing properties in need of rehabilitation could be eligible for the State of Oregon Special Assessment property tax incentive, if it is determined by the State Historic Preservation Office (SHPO) that the property is or would be eligible for listing on the National Register, and that the renovation would restore obscured or missing historic character.

Federal Historic Tax Credit Incentives (HTC)

Rehabilitation tax credits, in the amount of up to 20% of the amount spent on the project, are available to qualifying projects.

Property must be listed either individually or as a contributing property to a historic district listed in the National Register. Alternately, to qualify for up to 10% in tax credits, a non-designated building must have been constructed before 1936.

Property must be income-producing for at least 5 years after rehabilitation. Owner-occupied residential projects such as condominiums do not qualify, but apartments or mixed-use projects are eligible. The project must be substantial. The owner must spend more on rehabilitation expenditures than the “adjusted basis” value of the property. The Investment Tax Credit does not include the purchase price of the property.

Rehabilitation work must meet certain standards for preservation. These are the Secretary of the Interior’s Standards for Rehabilitation.

gus-solomon-interior-courtroom

Federal Preservation Easement Tax Deduction
A preservation easement is a legal agreement to protect a historic property from changes, including neglect. The property must be individually listed on the NRHP or a contributing structure within a National Register-listed historic district or local historic district. If a property owner makes a voluntary donation to a trust such as the Historic Preservation League of Oregon (HPLO) of all or a portion of a property, the donation can qualify as a charitable tax donation. Only some of the rights associated with the property are being donated, and the donation permanently limits uses or changes as specified. The owner of the historic property may still use the property, and must maintain it. The owner may sell the property, but the restrictions will remain with the property. The preservation easement may be structured to include only the exterior of a building, or may include air rights, interiors, grounds, or other features.

OTHER INCENTIVES OR PROGRAMS

Private and Public Grants
Grants for historic preservation work vary widely as to eligibility rules, requirements, and amounts. While private-sector grant-making organizations are more apt to change grant programs or requirements year-to-year, they also are more likely to provide larger sums of money. Historic preservation grants are sometimes only available for preservation planning, survey, or designation work as opposed to “brick and mortar” projects.

The State Historic Preservation Office (SHPO) administers Federal grants directly to local government entities through the Certified Local Government (CLG) program. The SHPO also administers State grants through the Oregon Heritage Grants, Oregon Museums Grants, Preserving Oregon Grants, Diamonds in the Rough Grants, and Oregon Historic Cemeteries Grants. These are all competitive and offer relatively modest amounts of funding.

New Market Tax Credit
In December 2015, Congress approved an extension of the New Market Tax Credit (NMTC) program through 2019. There is an immediate opportunity for investors, low-income communities, and businesses to use this successful program in order to revitalize economically distressed areas and create jobs. The State also runs the Oregon New Market Tax Credit program, which is modeled on the same requirements as the Federal program.

The Blanchet House of Hospitality, a new (2012) building in a historic district in downtown Portland, used New Markets Tax Credits. NMTC and HTC have also been used together, such as in the Mercy Corps restoration/ expansion in the Skidmore Old Town historic district.
The NMTC is not available for loans or investments in projects involving residential rental housing alone, but may be used for mixed-use and some other housing projects. Investments must be made to designated Community Development Entities (CDEs), which in turn provide investments in low-income communities. The investment is claimed over a 7-year credit allowance period.

Low-Income Housing Tax Credits
The federal government allots a certain amount per state per year to be awarded to developers willing to provide low income housing. Residential rental properties only may qualify for the Low-Income Housing Tax Credits (LIHTC) program. A certain percentage of the units must be restricted to occupants making 50% or less (or 60% or less) of local median income, and the affordability restrictions must be maintained for a minimum of 30 years. LIHTC has been successfully combined with HTC in downtown Portland projects such as the Admiral Apartments, the Martha Washington, and the Bronaugh Apartments.

Written by Kristen Minor, Associate/Preservation Planner

Local Historic Preservation Incentives Available in Portland, Oregon

With a firm comprised of architects and planners, we understand and assist owners and developers navigate local historic preservation incentives made available by the City of Portland. The following is a comprehensive overview of incentives offered by the City, as of 2016, in the form of various use allowances, development rules “waivers,” and opportunities to transfer allowed but unused floor area to other property owners, creating an opportunity for a monetary benefit. We grouped the available historic preservation incentives available by the following: City of Portland Incentives, City of Portland/State of Oregon Building Code Allowances, and Portland Development Commission Programs.

The City of Portland’s Central City 2035 Plan (as well as other related City code projects) are currently under review. The Proposed Draft was published in June 2016 and is being reviewed by many City and non-City agencies, bureaus, and organizations. Proposed changes directly affect portions of the Portland Zoning Code, but the existing Zoning Code will remain in effect until adoption of the final Central City 2035 Plan, probably in late 2018. Increased transfer options are the major change proposed.

“Landmark” as defined by the City is a property individually listed on the National Register, or evaluated by the City of Portland as a local historic resource. Many incentives are also available to resources designated contributing to a National Register-listed Historic District or locally designated Conservation District.

Marshall Wells Lofts building preservation plan.

CITY OF PORTLAND INCENTIVES
Additional density in Single-Dwelling zones. Landmarks in Single-Dwelling zones may be used as multi-dwelling structures, up to a maximum of one dwelling unit for each 1,000 square feet of site area. No additional off-street parking is required, but the existing number of off-street parking spaces must be retained. The landmark may be expanded and the new floor area used for additional dwelling units only if the expansion is approved through historic design review.

Additional density in Multi-Dwelling zones. Landmarks and contributing structures in historic districts located in multi-dwelling zones may be used as multi-dwelling structures, with no maximum density. No additional off-street parking is required, but the existing number of off-street parking spaces must be retained. The building may be expanded and the new floor area used for additional dwelling units only if the expansion is approved through historic design review.

Nonresidential uses in the RX zone. In the RX zone, except on certain sites which directly front on the Park Blocks, up to 100 percent of the floor area of a landmark or contributing structure may be approved for Retail Sales and Service, Office, Major Event Entertainment, or Manufacturing and Production uses through Historic Preservation Incentive Review.

Nonresidential uses in the RH, R1 and R2 zones. In the RH, R1 and R2 zones, up to 100 percent of the floor area of a landmark or contributing structure may be approved for Retail Sales and Service, Office, or Manufacturing and Production uses as follows:

a. Review required. The nonresidential uses must be approved through Historic Preservation Incentive Review; and

b. Previous nonresidential use required. The last use in the structure must have been in a nonresidential use category and have been allowed when established; if part of the structure was in residential use, the proposal must include at least as many dwelling units as were part of the last allowed use or uses. If the last allowed use was residential only, the structure is not eligible for this incentive.

Daycare is an allowed use in all residential zones in historic landmark or contributing structures. In non-historic structures, daycare uses in residential zones other than RX require a conditional use review.

Conditional uses in Residential, Commercial, and Employment zones. In these zones, applications for conditional uses at landmarks or contributing structures are processed through a Type II procedure, rather than the longer Type III procedure requiring a public hearing.

Exemption from minimum density. Minimum housing density regulations do not apply in landmarks or contributing structures.

Crane building historic consulting for storefront updates.

Commercial allowances in Central City Industrial zones. National Register-listed properties or those contributing to a National Register-listed historic district have potential to include office and retail uses.

Commercial allowances in employment and industrial zones. Office and retail uses are allowed in landmarks in areas where those uses are otherwise restricted.

Increased maximum parking ratios in Central City. National Register-listed properties or those contributing to a National Register-listed historic district within the Central City Core parking area are allowed to increase parking ratios.

Commercial allowances in Guild’s Lake Industrial Sanctuary District. Increases allowances for office and retail uses in landmarks in an area where non-industrial uses are otherwise restricted.

The transfer of density and floor area ratio (FAR) from a landmark to another location is allowed in Multi-Dwelling, Commercial, and Employment zones. Historic properties with unused development “potential” therefore may find a market for the FAR.

Proposed Development transfer opportunities (potentially adopted in 2018):
Landmarks and contributing resources in historic districts will be able to transfer FAR City-wide, as long as the “sending” resource meets seismic reinforcement standards. Seismic work may be allowable in phases over a period of years. FAR to be transferred is not only the base amount unused by the existing historic structure, but also an additional 3:1.

U.S. Custom House renovation and historic tax credits.

PORTLAND DEVELOPMENT COMMISSION PROGRAMS
The Portland Development Commission (PDC) has operated several programs to benefit owners of existing buildings (not necessarily historic buildings). These programs have been suspended and will be replaced by the Prosperity Investment Program (PIP). Information about the PIP is not yet available, but the program may still provide benefits to owners, similar to the suspended Storefront Improvement Program.

For further information on how PMA helps owners consider reuse options, navigate the regulations, and take advantage of available benefits – please visit our website to review our multidisciplinary projects and comprehensive architecture, building envelope science, and planning services.

Written by Kristen Minor, Associate, Preservation Planner

Condo Cancer

The Greenest Building is the Existing Building

Portland has seen increasing demand for rentals over the past couple years and the trend towards high rents and low vacancy rates has enabled the rapid rate of new housing development we see today. In 2012, 5,300 new apartments were expected to hit the market by 2014. Appraisers suggested that this development would balance the market away from a landlord’s market. (5) However, this development has led to shocking amounts of high density development and demolitions of historic homes. Portlanders are probably very familiar now in 2014 with how this has begun to change their residential neighborhoods. Metro predicts by 2035, Portland’s population will reach 3 million, and the city would need to accommodate about 725,000 more residents in about 10% of vacant/infill land available within the urban growth boundary. Metro’s Research Center defines in a June 2014 draft that the Buildable Land Inventory for Residential Capacity Assumption includes 15,000 single family homes, 42,000 low density multi-family, and 171,000 high density. (3) With this predicted growth, what standards are we going to hold new construction to?

Portland Structures: Constructed before 1990 from Bureau of Planning and Sustainability

Unfortunately, the demand for housing and the support of high density development within inner Portland has led to the demolition of an increasing number of historic homes, from 73 single-dwellings in 2012 to 141 in 2014. (3) The market has also turned in favor of developers looking to turn a profit, and these financially-driven decisions are driving up larger, high density buildings. Currently, the Bureau of Development Services has no definition for demolition, which allows developers to define new construction as a renovation if any part of the building is kept, even just the foundation. Demolition of existing buildings usually is permitted with no design review if the project adheres to codes set in Portland’s 1979 Comprehensive Plan. (4)

Enlarged image of earlier focused on Division St.

The lack of check and balances on new construction has the potential to destroy neighborhood character one house at a time. Portland has already started to lose affordable housing for young families and minorities, and this will continue if starter homes are replace with high end apartments and high scale houses. Not to mention, demolition includes destroying old growth timber, custom workmanship of skilled labor, and irreplaceable history. Developers and architects should be held accountable for whether new construction will be able to age within the surrounding neighborhood and have longevity of actual craftsmanship.

From a sustainability perspective, restoring an existing build is ‘greener’ than demolition. Restore Oregon claims 26% of the state’s landfill comes from demolition and construction waste and on average, 115 lbs/sqft of waste is generated from a demolition. Rehabilitation of a historic structure could mean 60% of costs go into the local labor market, according to Restore. (3) The Portland Coalition for Historic Resources and Architectural Heritage Center are proposing a plan to the Portland City Council that include requirements to call any project that brings down 50% or more of a structure a demolition, coupled with removal of a section of the building code that allows some properties to be demolished without proper notification and delay. In addition, establish a task force to identify additional building and zoning code improvements that would ensure demolitions are appropriately managed and that replacement construction responds to neighborhood characteristics. (5)

Residential Demolitions by year demolished

If new construction projects are abiding code and are past the planning stage of the land use processing, communities are left with little options other than to watch as a bystander. It is no longer in Portland code to protect solar access or give neighbors notice of new development. (2) There are loopholes in requirements to post and deliver notices about demolition. We need to hold renovations and new construction to a new standard of contextual awareness and long-lasting architectural visions that are incorporated into codes. If we continue allowing developers to build to the maximum height, maximum FAR, with little or no design review from community representatives, what will become of our neighborhoods? Heather Flint-Chatto of the Division Design Initiative brings up some important points when she states for the Southeast Examiner: “Will we continue to allow significant impacts such as lack of parking, loss of solar access and privacy, increased traffic, lack of respect for adjacent context or existing character and no real ability for neighborhoods to have meaningful and timely input on projects?” (2)

Single-dwelling residential and commercial demolition applications via BPS

Architecture for Humanity Portland is currently working with Division Design Initiative, a grass roots initiative to bring together a community vision and avenue actualization of its goals. This Initiative was created in response to the burst of housing development that has happened over the last 24 months. During the past year, as more than 8 high density housing projects have gone under construction, and Division’s neighborhood has felt the change. The Initiative has created a process that community leaders hope will engage neighbors and businesses to explore future design issues and concerns. This would include a toolbox of design guidelines for new development in the area, mapping of key sites/special places, and priorities for new development that is sensitive to existing character that supports economic growth and vitality. (1)

House being demolished on NE Alameda

SE Uplift and Architectural Heritage Center also have been working to promote communities that are livable, socially diverse, safe and vital. Southeast Uplift provides an organizational structure and forum to empower citizens to effectively resolve issues of livability and community development. (3)

Written by Hali Knight, Architect I

Sources:
1 Division Design Initiative. Accessed 8 Aug 2014
2 Hery, Karen. “Profits Trump Courtesy.” Southeast Examiner. February 1,2014.
3 Kellett, Bob. “The Whos and Whats of Home Demolitions.” Southeast Uplift Neighborhood Coalition. July 11, 2014.
4 Pierce, Midge. “Downside to density designs.” Southeast Examiner. March 1, 2014.
5 Portland Preservation. Bosco-Milligan Foundation/Architectural Heritage Center. Accessed 8 Aug 2014 http://portlandpreservation.wordpress.com/
6 Njus, Elliot. “Apartment Market Grows Tighter,” The Oregonian. April 17, 2013. < http://www.oregonlive.com/front-porch/index.ssf/2013/04/apartment_market_grows_tighter.html>