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Financial Incentives
Local Incentive Programs
- Eugene D. Funk, Jr. Historic Preservation Grant Program (Bloomington)
- Harriet Fuller Rust Facade Grant Program (Bloomington)
- Dr. Robert G. Bone Historic Preservation Grant Program (Normal)
State Incentive Program (managed through McLean County government)
- Property Tax Assessment Freeze Program
Federal Incentive Programs
- Historic Preservation Tax Credit Program
- Preservation Easement Income Tax Reduction
Local, state, and Federal governments recognize the value of actively supporting preservation, restoration, and maintenance of traditional houses, buildings, and neighborhoods. One way they assist owners is to provide financial help. Financial incentives can take one of several forms. Federal income tax credits and a property tax assessment freeze are the most common. Grants are another.
In every financial incentive program, the work must meet given requirements before approval and the accompanying financial aid. Approval is guided by the Secretary of the Interior’s Standards for Rehabilitation.
Extensive and detailed documentation is an on-going part of the process. Completing the application in an efficient manner is challenging because of the need for review by multiple agencies (this takes time); the use of technical language (and sometimes jargon); and the demands of documentation. The total amount of money available annually varies depending on such things as budgets, number of applications, and time (of application) during the budget year.
The application procedure may seem unnecessarily unwieldy. However, all
requirements are clearly stated. Forms are extensive but straight forward.
Expectations for the work are outlined. The process of accumulating and
presenting the necessary information for the application moves in an orderly
manner. And, helpful guidance lies a phone call away. Don’t be discouraged.
For an owner who persists through time, research, and documentation, the
monetary reward can be substantial.
Start by reviewing the following summary of programs available to owners
living in Central Illinois, remembering that not all programs are available
all the time. Then get specific information for those of interest you.
The website of the Illinois Historic
Preservation Agency has current, detailed information and links to
allied sites.
LOCAL INCENTIVE PROGRAMS FOR HISTORIC PRESERVATION
Municipal governments are valuable allies in old house projects and channel funds from state and federal agencies. Both Bloomington and Normal have grant programs in which the government shares with the property owner a part of the cost of (approved) work on the exterior of an historic house. The financial value gained by an owner is matched by the value gained by the community. Well maintained buildings of historical significance increase the value of the community, and protect neighborhoods.
With few exceptions, it’s the zoning of the structure that is important not its address or inclusion within an historic district that makes a property eligible for financial incentives. The property must have historic zoning: S-4 in Bloomington and S-3 in Normal.
Eugene D. Funk, Jr. Historic Preservation Grant Program, Bloomington
Kenneth Emmons, City Planner
309/434-2341 or kemmons@cityblm.org
An annual program that focuses on exterior architecture of houses and
other structures on the same property as the house.
To be eligible, the location must be zoned S-4. Properties that lie within the boundaries of Franklin Park Historic District or the Davis-Jefferson Historic District, both of which are entirely S-4, are eligible. In addition, all other individual properties zoned S-4 are eligible to apply. This includes some individual properties within White Place Historic District, East Grove Street Historic District, North Roosevelt Avenue Historic District, and the Central Bloomington Downtown District and other individual addresses zoned S-4. Ask the city planner if you have a question about how your property is zoned.
- The grant reimburses up to 50% of the total cost of the approved project.
- A plan of proposed changes must be developed and sent to the Bloomington Historic Preservation Commission for approval. This agency also approves the final work.
- A maximum of 2 grants per fiscal year with a maximum of $2,500 for each grant.
- Covers professional architectural services, materials, and skilled labor.
- Owner has one year from the time the grant is approved to finish the project.
Harriet Fuller Rust Facade Grant Program, Bloomington
John Naylor, Uniquely Bloomington! |
Kenneth Emmons, City Planner |
For improvements to storefronts in downtown Bloomington. Taxable properties are eligible to apply in the area defined by municipal code as the Bloomington Central Business District or within the Tax Increment Financing District (TIF). This area is roughly defined by East, Locust, Madison Streets and, on the south, by Norfolk Southern Railroad tracks. Because of the irregular boundaries, check with Uniquely Bloomington! to determine if your property is eligible. NOTE that while no funds are available until the next fiscal year in May 2004, application should be made well in advance. Contact Uniquely Bloomington! for information and the application.
- Generally, limited to exterior work.
- Either a property owner or business owner may apply.
- Total repair or restoration costs are reimbursed up to a maximum of 50% of the total cost. (or 25% of roofing work.)
- Grant has a maximum of 2 grants per fiscal year with a maximum of $20,000 per project per year
- The project must be evaluated and approved by the Bloomington Historic Preservation Commission.
- Ineligible changes include interior remodeling; major structural repair; furnishing or other property that is not a part of the real estate.
- A non-refundable fee applies.
Dr. Robert G. Bone Historic Preservation Grant Program, Normal
Mercy Davison, Town Attorney
309/ 434-2341 or mdavison@normal.org
To be eligible the property must be zoned S-3 which means it either lies
within one of the three districts designated historically significant
by the town of Normal (Cedar Crest, Highland, Old North Normal), or, it
is an individual structure identified by the town of Normal as a local
historic landmark. Camelback Bridge; Normal Theater; and a half dozen
residential or commercial buildings in the town meet that requirement.
Ask the Normal town attorney or the town planner (both at 309/ 454-2444)
if you have a question about how your property is zoned.
- Limited to exterior work.
- The grant matches funds with homeowners up to 50% of the total cost of a project.
- The proposed changes must be approved by the Normal Historic Preservation Commission as does the final work.
- The grant carries a maximum of 2 grants per fiscal year and a maximum of $5000 per grant.
- Owner has one year from the time the grant is approved to finish the work.
STATE TAX INCENTIVE PROGRAM (MANAGED THROUGH MCLEAN COUNTY)
TAX INCENTIVE PROGRAM: Property Tax Assessment Freeze
Division of Preservation Services, Illinois Historic Preservation Agency
Local Government Services Coordinator
Springfield 217/ 785-4512
http:// www.state.il.us/hpa/ps/taxfreeze.htm
This program focuses on owner-occupants and encourages their preservation
efforts by freezing the assessed valuation of the home at the level the
year rehabilitation work began. To qualify, a structure must be a single
family house, co-op or condominiums, or a 6-flat if one flat is owner
occupied.
Before you begin the application process, find out if your building is a registered historic structure. If you don’t know, go through one of the local historic preservation commissions or through the Illinois Historic Preservation Agency. A building qualifies as a registered historic structure either by its listing on the National Register of Historic Places or by being designated by an approved local historic preservation ordinance. That is, Bloomington and Normal work locally to evaluate and designate local historic preservation districts and single structures. (The latter are often referred to as “landmarks” by the Town of Normal, an example is the residence at 607 N. Main Street). Also find out the assessed value of your property and its market value. For this you can refer to your current property tax bill.
Generally, you contact Illinois Historic Preservation Agency (IHPA); you do the work; you get approval and a document saying the work meets the requirements; you give the document to the assessor who then adjusts your taxes. For details of the application process contact IHPA. In general the program works in the following way. The assessed value of the historic property is frozen for eight years at the level at which it was when rehabilitation began. After the 8 years of frozen tax levels, the assessed value is gradually increased to current market level. At least 25% of the building’s market value must be spent on the work. Special conditions apply so for detailed information about the requirements and process review the standards and guidelines set by the Secretary of the Interior.
FEDERAL TAX INCENTIVES FOR HISTORIC PRESERVATION
Rehabilitation tax credit programs are a collaboration between the National Park Service (NPS), the State Historic Preservation Officer (SHPO) at the Illinois Historic Preservation Agency in Springfield, and the Internal Revenue Service (IRS). They are complex programs and can only be briefly treated within this guide. If, after reviewing the general descriptions of the programs below, they seem right for your circumstance, go to the Federal Historic Preservation Tax Incentives website which describes them in detail.
TAX INCENTIVE PROGRAM: 20% Federal Income Tax Credit
Administered by the Illinois Historic Preservation Agency (IHPA), National
Park Service, and IRS
Division of Preservation Services, Illinois Historic Preservation Agency
217/ 785-4512 (IHPA) www.state.il.us/hpa/ps/taxcredits.htm
This program compensates owners of income-producing properties (rental-residential,
commercial, industrial, and agricultural buildings) who invest in their
buildings by lowering the amount of tax owed. Eligible sites in the twin
cities are all income-producing properties zoned S-4 in Bloomington and
zoned S-3 in Normal. Many of these lie within the local historic districts
such as White Place Historic District and Cedar Crest Historic District
while others are individual addresses scattered throughout the towns.
In addition, individual addresses entered in the National Register of
Historic Places, a Federal list of significant historical sites, may also
be eligible. To be eligible to apply, your property must be listed individually
on the National Register of Historic places or part of an historic district
that is listed on the National Register or is eligible for such listing.
To find out if your property is eligible to apply, contact the city planner
in Bloomington (309/ 434-2341 or kemmons@cityblm.org)
or, in Normal, the town attorney (309/ 434-2341 or mdavison@normal.org).
For detailed information you can see the IHPA site. In general, a 20% income tax credit is available for approved (and substantial) rehabilitation. The credit is subtracted directly from the Federal income tax owed by the owner. Expenditures may not include new additions, property acquisition, furnishings, site improvements or landscaping. Once the application is approved, projects may take up to five years to be completed. The National Park Services charges a fee for review and certification based on the qualifying expenditures.
TAX INCENTIVE PROGRAM: 10% Federal Income Tax Credit
Administered by the Internal Revenue Service (IRS)
Go to the IRS forms
website to download Form 3468 and instructions. Also, refer to the
Federal Historic Preservation's list of frequently
asked questions.
This program lowers the amount of tax owed by the owner. Structures listed on the National Register of Historic Places are not eligible nor are those in state or local certified historical districts (such as Old North Normal or White Place). The 10% rehabilitation tax credit equals 10% of the amount spent to rehabilitate a non-historic building built before 1936.
- Generally, substantial rehabilitation required.
- Specific requirements for amount of physical structure to be retained.
- 50% of exterior walls must remain as exterior walls
- 75% of exterior walls must remain as exterior or interior walls
- 75% of building’s internal structure must remain
- No formal design review process is required. Download form 3468 and submit to IRS.
TAX INCENTIVE PROGRAM: Preservation Easement Income Tax Credit
Contact Landmarks Preservation Council of Illinois (LPCI)
312/ 922-1742 www.landmarks.org
A preservation easement is a voluntary legal agreement that offers protection
to an historic house (or other historic entity) after rehabilitation is
complete. Under an easement agreement the owner receives an income tax
reduction in return for agreeing to give a part of his property rights
to a nonprofit organization or government unit whose mission includes
historic preservation.
As an example, the owner of a building might donate the facade of the house to the preservation organization that then protects and monitors that space. For that donation, the owner receives a potentially substantial tax reduction. The size of the tax deduction is generally equal to the decrease in fair market value caused by the restriction placed on the property as a result of the easement. The owner can no longer alter the facade without approval by the preservation agency. Other sorts of easements are available such as donation of side yards or open space.
The agreement is not to be entered into casually because this agreement accompanies the property through perpetuity, transferring to all future owners. Once in place, the restriction runs with the title of the property. Certain conditions and restrictions apply to the property following donation of an easement.
Begin the investigation to find out if this program is for your property by contacting the Landmarks Preservation Council of Illinois, a state-wide advocacy group with an easement program. The staff is experienced and knowledgeable. Also see the website for information.
Specifics include:
- The building must be a certified historic structure or building listed on the National Register of Historic Places or an individual landmark building named so by municipal ordinance.
- Detailed documentation is required to establish significance and to process the application.
- The value of the easement is 15% of fair market value of the property and is determined by appraisal.
- The Federal income tax deduction is a one time write-off. The idea is that the tax reduction value equals the financial loss from the gift.
- A fee is charged by LPCI on application but is returned if building is found to be ineligible.
- A one-time cash donation to LPCI is required to cover on-going preservation work of the agency.
- This donation is deductible from Federal income tax.