Historic Tax Credits

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London Holmgren

Historic Tax Credits

Written by
London Holmgren

Historic Tax Credits

Written by
London Holmgren

Historic tax credits often make the difference between preserving a piece of history or tearing it down and starting anew. That’s because historic building renovations often cost more than many new builds and pose additional challenges. However, when restored and adapted to new uses, they provide a richness in building detail that creates an unreplicable space. At Lloyd Architects, we firmly believe in adaptive reuse wherever possible. It’s more sustainable than building new, and it preserves the authenticity of heritage and place in our communities.

As architects, the puzzle each historic preservation and adaptive reuse project pose excites us. Each building is a unique history course, and the constrained parameters of designing within a rigid shell create design challenges that spark creativity in a way a blank slate cannot. It’s a giant puzzle, figuring out how to fit the building program into the shell and where the delineations of historic vs. new should be.  

The romanticism in saving a historic building is evident, and what often isn’t is how to make it financially feasible. Historic tax credits are critical for financial feasibility, as they offer considerable sway in the proforma. Assuming your project qualifies for historic tax credits, the first step is determining if the added work is worth taking advantage of them.  

Historic Tax Credits Case Study 

Lloyd Architects worked with the developers of the Granary Campus on a three-part process to secure historic tax credits for the project. It was a lengthy process and ultimately worth it, with 20% of the qualifying construction costs and soft costs being eligible for tax credits. The team beautifully preserved aspects of the building, and the historic tax credits made the project financially feasible. 

A "before" photo of the Granary Campus
Part 1

The first step in securing historic tax credits for this project was to demonstrate to the National Park Service that the Granary building should be considered a contributing structure to the Salt Lake City Warehouse District, meaning it’s a meaningful representation of a historic architectural style or significant period of history. That process involved:  

  • Outlining the history of the building 
  • Outlining what, if anything, in the building is being used now
  • Documenting, including a written description and photographs of what makes the building historically significant. In this case, the building is an example of vernacular warehouse architecture and has a history within the state that ties to rail cars in Salt Lake City

With the approval, the building is named a qualified structure, which allows the owner to capture federal tax credits for rehabilitation.  

A "before" interior photo of the Granary Campus
Part 2

After securing individual designation for the Granary Building, Lloyd Architects, in collaboration with the Utah State Historic Preservation Office, began the historic tax credit approval process. That involved: 

  • Outlining the design and materials of the building in its existing state and the building condition
  • Writing a comparative analysis of what the building was used for, what the plans for rehabilitation are, and how those plans align with the Department of the Interior’s Standards for Rehabilitation
  • Drawing sets that detail all work to be done 

With the application reviewed by the Department of the Interior, the exterior facade and exposed interior structure, and windows were deemed historically significant. To get to this point involved working collaboratively with the State Historic Preservation Office to determine what elements of the proposed building design would be acceptable to the Department of the Interior. One challenge the team encountered was cleaning the building’s historic beams coated in years of coal dust buildup. The team proposed sandblasting, which was deemed too harsh and could potentially damage the beams. After experimenting with different materials, the Department of the Interior gave permission to use recycled glass, which is significantly finer than sand, with a lower PSI to clean the grime off the beams.  

Part 3

After the hard work of getting approved for the tax credits, the next steps are providing photo documentation of the final building to the Department of the Interior and working directly with the client to provide any needed information so that they can secure their tax credits. 

After completing the project, the Federal Tax Credit must be spread out over five years and can be carried forward for an additional fifteen years after that. The rehabilitation standards have to be met for five years after the project is completed.

A "before" photo of The Virginia House

Lloyd Architects typically has at least one historic tax credit project in the office at any given time. We are currently pursuing tax credit work for the Virginia House at the Homestead Resort. The Virginia House is already individually listed, and we received conditional approval on our plan to restore the building. We first designed a new porch for the house based on photos from the 1990s. To satisfy the condition, we worked with the State Preservation Office to find photo documentation of the house from the 1880s. Our porch design now reflects what was on the building originally.

As architects, knowing how to obtain historic tax credits plays a pivotal role in preserving and adaptively reusing these neglected buildings. Not only does it help to overcome financial hurdles, but it allows us to breathe new life into these spaces while maintaining their integrity. With the right skills, knowledge, and a shared passion for preservation, we can ensure the longevity of these historical buildings.