INCENTIVE SUMMARY FOR HISTORIC PROPERTIES IN IOWA

Information courtesy of State Historical Society of Iowa (multiple program use encouraged)

Incentives available to you as you plan out your property rehabilitation:

Historic Resource Development Program (HRDP)$0.3-1 Million/yr.

Description: Matching grants for work on historic properties, museums and their collections, libraries and their collections. Properties can be owned by Certified Local Governments, State agencies (assuming no state money is used as match), businesses, non-profits, Native American tribes or individuals. Rehabilitation work on historic properties must meet The Secretary of Interior's Standards for Rehabilitation, approved by the SHPO (State Historic Preservation Officer). Contact Cynthia Nieb, Director, SHSI Grants at (515) 281-8754 or Cynthia.Nieb@dca.state.ia.us.
Properties: Acquisition, development and/or preservation activities for historical properties must be for those listed on the National Register of Historic Places (NRHP) and a certificate from SHPO or NRHP must accompany the HRDP application. Archeological properties are not required to be listed and may be certified by SHPO as eligible for the National Register. Other eligible projects may be training, public education, surveys and/or nominations to the National Register.

Temporary Property Tax Exemption Program for Substantial Rehabilitation

Description: At the discretion of county boards of supervisors (through their annual priority list), the substantial rehabilitation of an historic property (as defined in Iowa Code) which meets nationally accepted rehabilitation standards (and certified as such by the State Historic Preservation Officer), will be exempted from any increase in valuation for four years and then returned to full valuation over the following four-year period. Rehabilitation work on historic properties must meet a cost threshold test, The Secretary of Interior's Standards for Rehabilitation, and be approved by the SHPO (State Historic Preservation Officer). Contact Tax Incentives Programs Manager/National Register Coordinator, Elizabeth (Beth) Foster at (515) 281-4137 or Beth.Foster@dca.state.ia.us.
Properties: Properties must be listed on the National Register, be evaluated as National Register eligible, contribute to National Register or local historic districts, or be designated as a county or municipal historical landmark.

Federal Rehabilitation Investment Tax Credits for Certified Historic Structures

Description: Twenty percent of qualified rehabilitation costs are available as a credit against federal income taxes owned for income-producing properties. Rehabilitation work on historic properties must be "substantial" (an IRS test) and meet The Secretary of Interior's Standards for Rehabilitation. Applications and photos must be reviewed by the SHPO (State Historic Preservation Officer) and approved by the National Park Service. Contact Tax Incentives Programs Manager/National Register Coordinator, Elizabeth (Beth) Foster at (515) 281-4137 or Beth.Foster@dca.state.ia.us.
Properties: Properties must be listed on the National Register or be evaluated as National Register eligible and then listed within 30 months of project completion.

State Program for Property Rehabilitation Tax Credit $2.4 Million tax credits / year

Description: Twenty-five percent of certain rehabilitation costs are available as a credit against state income taxes of the owner(s). Properties do not need to be income producing. The cost of a qualified rehabilitation project must exceed either $25,000 or 25 percent of the fair market value (less the land value) for a residential property or barn before rehabilitation - whichever is less. For commercial properties, the rehabilitation project must exceed 50 percent of the assessed value of the property (less the land) before rehabilitation. The State Historic Preservation Office must approve the rehabilitation work before costs count toward the credit and tax credits are reserved for your project. There are limited credits available each year. Contact Tax Incentives Programs Manager/National Register Coordinator, Elizabeth (Beth) Foster at (515) 281-4137 or Beth.Foster@dca.state.ia.us.
Properties: Properties may be listed on the National Register, eligible for listing on the National Register or are barns constructed before 1937.

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HISTORIC RESOURCE DEVELOPMENT PROGRAM (HRDP)

Purpose:
To provide matching grants for work on historic properties, museums and their collections, libraries and their collections.

Eligibility Requirements:
Participation in the program is open to not-for-profit organizations, Certified Local Governments, individuals, businesses, state agencies, other units of government (i.e. school districts), and Native American tribes.

For historic preservation projects involving acquisition, development and/or preservation the structures, buildings, sites, or objects must be listed on the National Register of Historic Places or contributing resources to a property listed on the National Register. The exception is archeology sites, which may be certified by SHSI as being eligible for the National Register. Training, educational activities, surveys and nominations to the National Register may also be funded.

Contact Elizabeth (Beth) Foster, Tax Incentives Programs Manager/National Register Coordinator, to request National Register listing status, for certification of eligibility for archeological sites or forms for the nomination process. Her telephone number is 515-281-4137 or e-mail at Beth.Foster@dca.state.ia.us.

Deadlines and Time Lines:
HRDP applications are due January 15 of each year. Grants are awarded in June. Work cannot begin on any project until the contract has been signed. A contract will be drawn and signed by July.

You may submit project plans/specs for review to see whether you are meeting the applicable standards. (Rehabilitation work must be completed in accordance with The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings.) At each reimbursement request, you are required to submit photographs, a progress report and your evaluation of how the work thus far has met the applicable standards.

Form of Funding:
Matching grants are competitively awarded and the ratio of cash match required is determined by the status of the applicant (e.g. non-profit organizations 2 to 1, private businesses 1 to 1).

Contact:

Cynthia Nieb, Director, SHSI Grants
Department of Cultural Affairs
Historic Resource Development Program
600 E. Locust Street
Des Moines, Iowa 50319-01290
515-281-8754 or Cynthia.Nieb@dca.state.ia.us

TEMPORARY PROPERTY TAX EXEMPTION FOR HISTORIC BUILDINGS

Purpose:
To provide a local property tax incentive for the sensitive, "substantial rehabilitation" of historic buildings.

Eligibility Requirements:
Properties must be listed on or eligible for the National Register, contributing to National Register properties, Historic Districts or local historic districts, or designated by a county or municipal landmark ordinance.

The property must also be eligible based on the specific county's priority list for that tax year. The County Board of Supervisors will establish priorities for which an exemption may be granted and will annually designate real property in the county for a historic property tax exemption. A public meeting must be held, with notice given, at which the proposed priority list will be presented.

By December 31 of the year in which the rehabilitation work takes place, a three-part substantial rehabilitation application must be submitted to the State Historical Society of Iowa (historic preservation bureau). Part 1 evaluates the significance of the property, Part 2 focuses on the proposed rehabilitation work to be undertaken. Part 3 is a request for certification that the rehabilitation work has been completed in accordance with The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings and that the expenditure meets a "substantial rehabilitation" test. It is best to submit parts 1 and 2 of the application before the project begins so that approval from the State Historical Society can be given. Part 3 must be submitted after the rehabilitation work is completed.

There is a minimum amount of rehabilitation investment needed to be eligible for this program. A "substantial rehabilitation test" is required. Before completing the three forms it is advisable to estimate the adjusted basis and the total rehabilitation investment for the project to determine whether it will likely meet the "substantial rehabilitation" test.

There are two separate applications of the test--one for income-producing and one for non-income producing properties.

Form of Incentive:

The program provides a combination of four years full exemption from any increased valuation due to the work and four years of decreasing exemption (up to the new valuation), for all rehabilitation projects which began after July 1, 1990. The actual exemption application must be made to the assessor of the property's jurisdiction not later than February 1 of the assessment year. Application to receive approval of the State Historic Preservation Officer for the completed work must be made before December 31 of the year that the work was completed.

Contact:

Elizabeth (Beth) Foster
Tax Incentives Programs Manager/National Register Coordinator
Department of Cultural Affairs
600 E. Locust Street, Des Moines, IA 50319-0290
(515) 281-4137 or Beth.Foster@dca.state.ia.us

FEDERAL INCOME TAX CREDIT FOR HISTORIC PRESERVATION

Purpose:
To provide a federal incentive (Rehabilitation Investment Tax Credit) for the sensitive rehabilitation of historic structures, in keeping with the characteristics for which they are significant, and to revitalize the neighborhoods in which they are located.

Eligibility Requirements:
Two categories of buildings are eligible, if they can be depreciated (used for income-producing purposes) and if the rehabilitation is "substantial" (see below).

For the historic rehabilitation tax credits, where 20% of qualified rehabilitation expenditures are available as tax credits, the structure is eligible if it is on the National Register of Historic Places or is evaluated as meeting the qualifications set for National Register listing by the U.S. Secretary of Interior. (The property must be listed within one or two years, however.) Contact Elizabeth (Beth) Foster, Tax Incentives Programs Manager/National Register Coordinator, at 515-281-4137 or Beth.Foster@dca.state.ia.us for listing status or information about how to nominate the structure to the National Register.
For the 10% tax credit program, the structure must have been first used or occupied prior to 1936 and may be used only for non-residential purposes, such as commercial or industrial purposes.

For both, there should be "substantial rehabilitation" within a 24*-month period (reinvesting in rehabilitation an amount exceeding the "adjusted basis" or depreciated value of the building). To qualify for the 20% tax credit for historic buildings, the rehabilitation must be approved as meeting The Secretary of the Interior's Standards for Rehabilitation and Guidelines for Rehabilitating Historic Buildings (i.e., the work is consistent with the historic character of the building and, if applicable, the surrounding historic district).

*In some instances, the substantial rehabilitation for 20% tax credits may extend over 60 months and several phases.

Form of Funding (based on percent of qualified rehabilitation expenditures):

Investment tax credit reduces the federal income taxes owed by the owner, as follows:

20%      of qualified rehabilitation expenditures is the amount of the credits for an approved substantial rehabilitation of a depreciable building either individually on the National Register or a contributing building in a district

or        for an approved substantial rehabilitation of a depreciable building that is eligible for the National Register and will be nominated within one or two years.

10%      for "non-historic" and non-residential older building that was built prior to 1936

or        for non-residential buildings that are "non-contributing" and located in historic districts, the owner must apply to the state to be certified as non-contributing.

Contact:

Elizabeth (Beth) Foster
Tax Incentives Programs Manager/National Register Coordinator
Department of Cultural Affairs
600 E. Locust Street, Des Moines, IA 50319-0290
(515) 281-4137 or Beth.Foster@dca.state.ia.us

NEW TAX CREDITS FOR HISTORIC REHABILITATION

Iowa is now offering a financial reward for substantial rehabilitation of historic buildings.

The Iowa Historic Property Income Tax Credit, signed into law in May 2000, provides an income tax credit of up to 25 percent of qualified rehabilitation costs. Another 20 percent is possible if the property qualifies for the Federal Rehabilitation Investment Tax Credit (for income-producing properties only).

"It's visionary for the legislature to recognize that rehabilitation of historic properties is one of many tools for economic development," said Patricia Ohlerking, former Deputy State Historic Preservation Officer.
Several types of properties are eligible for the tax credit:

The property is listed on the National Register of Historic Places, or is determined by the staff of the State Historic Preservation Office to be eligible for listing.
The property contributes to the historic significance of a historic district that is listed, or eligible to be listed, on the National Register.
The property is a local landmark via government action.
The property is a barn constructed prior to 1937.

About half of the states offer similar credits, but several are more restrictive. Some states provide a credit of only 20 percent of qualified investment, and others insist that properties must be actually listed on the National Register to participate.

The credit program eligibility varies depending on the type of building. For residential properties, for example, the value of the work must equal at least $25,000 or 25 percent of the fair market value of the property, excluding the land, prior to rehabilitation, whichever is lower. For commercial properties -- including multi-family housing projects, the work must be at least 50 percent of the assessed value, excluding the land.

"If you have a historic house with a fair market value of $60,000, excluding the land, you only need $15,000 of work to qualify. A paint job, a roof and a new furnace would gobble that up pretty quick," said former historic preservation architect Judy McClure. "If you qualified in that situation, you would receive up to 25 percent of the rehabilitation amount in tax credits. If you spent $20,000, it could be as much as $5,000 in credits. Remember, a tax credit means that you're getting a dollar-for-dollar reduction on the amount of income taxes you owe the state," she said.

Like other State Historical Society of Iowa incentive programs, the repair-oriented work must meet nationally accepted rehabilitation standards and guidelines, and State Historical Society approval is needed before expenditures can count toward the state income tax credits.

State government has set a cap of $2.4 million to cover all of the credits. The Society has set up an approval/encumbering system so that an owner would know what year in the future that state tax credits would be available for the completed project.

Contact:

Elizabeth (Beth) Foster
Tax Incentives Programs Manager/National Register Coordinator
Department of Cultural Affairs
600 E. Locust Street, Des Moines, IA 50319-0290
(515) 281-4137 or Beth.Foster@dca.state.ia.us