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.

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.

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