1. National Register of Historic Places Federal Preservation Tax Credits
Rehabilitation Standards

2. National Register of Historic Places
Official federal list of districts, sites, buildings, structures, and objects significant in American history, architecture, archeology, engineering, and culture
Administered by National Park Service
Establishes criteria for evaluating historic properties
Identifies properties in Texas that deserve protection
Assists government and private groups plan new development
Helps guide travelers to places of historical interest
No restrictions on property owners
Priority access to technical assistance from the THC staff
Property owners may be eligible for grants or tax incentives

3. Properties eligible for listing in the
National Register of Historic Places must be
significant (at the local, state, or national level)
and retain integrity.

4. A Association with historic events or activities
Properties eligible for listing in the National Register posses historic significance
A Association with historic events or activities
B Association with important persons
C Distinctive design or physical characteristics
D Potential to provide information about prehistory or history

5. Significance Criterion A: Historic events or activities
Lampasas Colored School
Kyle City Hall
Texas Theater
Dallas

6. Criterion B: Association with Important Persons
Significance
Criterion B: Association with Important Persons
George W. Bush Childhood Home
Midland
Alden Dow Office
Lake Jackson

7. Significance Criterion C: Distinctive design or physical characteristics

8. Significance Criterion C: Distinctive design or physical characteristics

9. Significance Criterion C: Distinctive design or physical characteristics

10. Battle of Lyman’s Wagon Train
Significance
Criterion D: Information Potential
Battle of Lyman’s Wagon Train
Wheeler County

11. Significance National Register Criteria Considerations
Some properties are eligible only if special criteria are met
A: Religious properties
B: Moved properties
C: Birthplaces or Graves
D: Cemeteries
E: Reconstructed properties
F: Commemorative properties
G: Properties that have achieved significance within the last 50 years

12. Integrity The ability of a property to convey its significance
Location – is the property in its original place?
Setting – is the historic character of the surroundings intact?
Materials – are the original components intact?
Workmanship – is there evidence of the builder’s level of skill?
Design – is the original arrangement apparent (form, plan, style)?
Feeling – does the property evoke a historic period of time?
Association – is the property intact enough to retain a link
with historic persons or events?

13. Determinations of Eligibility
Is the property eligible for listing in the
National Register of Historic Places?
It is highly recommended that THC History Programs Division staff make a determination of eligibility before a property owner prepares a nomination or tax credit application
For each determination request, property owners must submit:
Current and historic photographs
Map
Brief history of property
History Programs staff will make a site visit to proposed
historic districts

14. Historic Rehabilitation Tax Credits
Federal Tax Incentives
Historic Rehabilitation Tax Credits
Since the program’s inception in 1976, the Texas Historical Commission has reviewed more than 1,000 applications and certified over 500 projects.
Fiscal Year 2007: $60 million in certified expenses in Texas.
Fiscal Year 2008: $92 million in certified expenses in Texas.
Since 1981, more than $1 billion has been invested in Texas through this federal tax incentive program.

15. Federal Tax Incentives
The 20% Investment Tax Credit (ITC) program provides a 20% federal income tax credit for the certified rehabilitation of a certified historic structure.
The program is administered jointly by:
National Park Service (NPS)
Internal Revenue Service (IRS)
State Historic Preservation Offices (SHPOs)
Who else is involved in a tax credit project in Texas?
Developer/Owner
Architect, preferably an architect with experience with historic buildings
Historic Preservation Consultant
Contractor(s)

16. The historic building must be listed or eligible for listing in the National Register of Historic Places, either individually or contributing to a historic district.
Jefferson Davis Hospital, W. A. Dowdy, architect, 1925.
Listed in the National Register during the tax credit process.
Union National Bank, 220 Main Street, Houston, Mauran, Russell and Crowell, architects, 1912.
Contributing to the Main Street/Market Square National Register Historic District.

17. After rehabilitation, the historic building must be used for an income-producing purpose for at least five years. Owner-occupied residential properties do not qualify for the federal income tax credit.
Rice Hotel, Houston, 1913 and 1998.
Rehabilitated as residential rental lofts.
The Rice Hotel, one of the most advanced and best known Texas hotels since its opening in 1913, stands on a site occupied from by the first Capitol of the Republic of Texas. Since 1841, the property has been used exclusively for hotels, with the exception of a brief period in 1842 when it was again the site of the Texas Capitol.
Built in 1913, nearly demolished in 1970’s
Rehabilitation began in 1997, Completed as residential lofts in 1999
Rehab cost = $30 million, New construction cost = $2.1 million, Tax credits = over $4.5 million 17

18. The project must meet the “substantial rehabilitation test
The project must meet the “substantial rehabilitation test.” The cost of the rehab must exceed the pre-rehabilitation value (or basis) of the building.
Assessed value of property and improvement (building)
Assessed value - land value = pre-rehabilitation value (basis)
Necessary expenditure to qualify for program
$1,500,000
1,500, ,000,000 = 500,000
$500,001
Qualifying expenditure
Actual expenditures
Tax credit
(20% of $1,000,000)
$500,001
$1,000,000
$200,000

19. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Who Takes the Credit?
The owner(s) of the building at the time it is placed in service are entitled to the tax credits.
Long term leaseholders may also claim the credits if their lease exceeds 50 years.
The building may be sold during construction but it is the owner at the time of completion that claims the credits.
The credit is claimed in the tax year that the building is placed in service.
Elizabeth Butman State Coordinator for Project Review 19

20. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Claiming the Credit
The tax credit is worth 20% of the eligible rehabilitation costs.
This is a credit not a deduction! For example if the rehabilitation costs were $150,000 the credit would be $30,000.
The credit itself is not capped, so if your costs were $100 million the credit would be $20 million.
The credit can be carried back one year (by amending a prior tax return) and forward 20 years.
Elizabeth Butman State Coordinator for Project Review 20

21. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Application Process
The tax credits are coordinated through the Texas Historical Commission before, during, and after construction.
The National Park Service and IRS make the final determinations and approvals.
Application process additional slide?
Benjamin Apartments, Alfred Finn, architect, Abandoned building, Houston, 1999.
Rehabilitated as offices, 2001.
Elizabeth Butman State Coordinator for Project Review 21

22. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Eligible Projects
Income-producing use, or depreciable in IRS terms.
Listed or eligible for the National Register of Historic Places, individually or as contributing to a district.
The rehabilitation must meet the Secretary of the Interior’s Standards for Rehabilitation.
The historic integrity of the building must be preserved but restoration is NOT required!
First City Building, Beaumont, 2008; $4.9 million rehab
Rosales House, Austin, 2001; $107,000 rehab
Elizabeth Butman State Coordinator for Project Review 22

23. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Substantial Rehabilitation
Eligible rehabilitation expenditures must exceed the greater of:
$5,000 OR
The adjusted basis of the building (generally the value of the building without the land)
Coale Building, Beaumont, pre-rehab
Coale Building, Beaumont, 2006
Elizabeth Butman State Coordinator for Project Review 23

24. What expenses are eligible to receive credit in a rehabilitation project?
Walls
Partitions
Floors
Ceilings
Chimneys
Stairs
Windows and doors
HVAC systems
Architectural & Engineering fees
Historic Preservation Consultant fees
Permanent coverings, such as paneling or tiles
Plumbing and plumbing fixtures
Electrical wiring and lighting fixtures
Escalators, elevators, sprinkler systems, fire escapes
Other components related to the operation or maintenance of the building

25. What expenses are ineligible to receive credit in a rehabilitation project?
Appliances, Furniture, and Cabinets
Carpeting (if tacked in place and not glued)
Decks (if not part of original building)
Demolition costs (removal of a building on site)
New construction costs
Fencing
Feasibility studies
Financing fees
Landscaping, Retaining walls, Planters
Leasing expenses
Parking lot
Paving and Sidewalks
Porches and porticos (not part of original building)
Signage
Window treatments

26. Federal Tax Incentives
Reconstruction
The act or process of depicting, by means of new construction, the form, features, and detailing of a non-surviving site, landscape, building, structure, or object for the purpose of replicating its appearance at a specific period of time and in its historic location.
Preservation
The act or process of applying measures necessary to sustain the existing form, integrity, and materials of an historic property.
Restoration
The act or process of accurately depicting the form, features, and character of a property as it appeared at a particular period of time. Includes the removal of features from other periods in its history and reconstruction of missing features from the restoration period.

27. Rehabilitation Federal Tax Incentives
The act or process of making possible a compatible use for a property through repair, alterations, and additions. Includes preserving those portions or features of the building which convey its historical, cultural, or architectural values.
Rehabilitation not only encourages the repair of historic buildings, it allows appropriate alterations to ensure their efficient contemporary use.
Examples include the continued use of hotels, stores, and private residences, as well as the adaptation of vacant schools into apartments, warehouses into offices, and industrial buildings into commercial space.

28. What is the application process?
Part 1 - Evaluation of Significance
typically a 30 day review at state level and 30 day review at federal level. Times may vary.
Part 2 - Description of Rehabilitation
typically a 30 day review at state level, 30 day review at federal level, can be submitted at the same time at the Part 1
Part 3 - Request of Certification of Completed Work
typically a 30 day review at state level, 30 day review at federal level
In addition to the ITC application process, the building must be listed on the National Register of Historic Places. This can be done before, during or after the rehabilitation. NRHP listing takes about 18 months to two years – plan ahead. IRS is sent information about whether the ITC application is completed and the building NRHP listed.

29. Part 1 – Evaluation of Significance
The Texas Company Building, 1915, Houston
Warren and Wetmore, architects
Not listed on National Register of Historic Places,
determined eligible and listed prior to participation in the tax credit program.

30. Part 2 – Description of Rehabilitation

31. Part 2 – Description of Rehabilitation

32. Part 3 – Request for Certification of Completed Work

33. Part 3 – Request for Certification of Completed Work

34. Secretary of the Interior’s Standards for Rehabilitation
The rehabilitation work must be done according to the Secretary of the Interior’s Standards for Rehabilitation.
• 10 basic principles created to help preserve distinctive character
• Allow for change to meet new needs
• Apply to historic buildings of all types, periods, styles and sizes
• Apply to both interior and exterior of the building
• Apply to related landscapes features and site and environment as well as attached, adjacent or related new construction
Benjamin Apartments, Alfred Finn, architect, Abandoned building, Houston, 1999.
Rehabilitated as offices, 2001.

35. Secretary of the Interior’s Standards for Rehabilitation
Standard 1: Choose an appropriate use.
A property shall be used for its historic purpose or be placed in a new use that requires minimal change to the defining characteristics of the building and its site and environment.
Union Building, Fort Davis, pre-rehabilitation.
Jeff Davis County Library, post-rehabilitation. 35

36. Secretary of the Interior’s Standards for Rehabilitation
Standard 2: Preserve character-defining features.
The historic character of a property shall be retained and preserved. The removal of historic materials or alteration of features and spaces that characterize a property shall be avoided.
Moore and Tyler Groceries, Tyler.
Heavy timber framing left exposed in apartments.

37. Secretary of the Interior’s Standards for Rehabilitation
Standard 3: Maintain true historical development.
Each property shall be recognized as a physical record of its time, place, and use. Changes that create a false sense of historical development, such as adding conjectural features or architectural elements from other buildings, shall not be undertaken.
One-room schoolhouse, ca
After “rehabilitation” as a residence. 37

38. Secretary of the Interior’s Standards for Rehabilitation
Standard 4: Consider later changes as potentially significant.
Most properties change over time; those changes that have acquired historic significance in their own right shall be retained and preserved.
The site of the Alamo Portland & Roman Cement Works, San Antonio (Bexar County) contained rock with the proper proportions of lime and clay to produce portland cement. As a result the Alamo Portland and Roman Cement Company was chartered in January In 1907 the old quarry and plant site was deemed unsatisfactory due to inaccessibility to railroad freight. In 1908 the plant relocated to a site near Alamo Heights.
The cement factory had been abandoned for several years. In 1917 San Antonio Park Commissioner Ray Lambert conceived the idea that the old quarry and works would be a suitable location for a sunken garden. Due to the money raising efforts of Park Commissioner Lambert the old Alamo Portland and Roman Cement Works was converted into a sunken garden using prison labor. Total cost of the conversion was only $7,000 which included a Mexican village, Pagoda, and the sunken gardens.
A young Japanese couple was invited to manage the gardens until the advent of World War II when Mr. and Mrs. Jingo were forced to move because of rising Japanese sentiment concerning the bombing of Pearl Harbor.
Now referred to as the Sunken Gardens in Brackenridge Park.
Alamo Portland & Roman Cement Works, 1880.
Converted to San Antonio Sunken Garden, 1917.
People’s National Bank Building, Tyler, 1932.
Original design and later alterations by Alfred Finn. 38

39. Secretary of the Interior’s Standards for Rehabilitation
Standard 5: Protect distinctive construction and craftsmanship.
Distinctive features, finishes, and construction techniques or examples of craftsmanship that characterize a property shall be preserved.
Socorro Mission, El Paso County. The present church was constructed circa 1840 and, excluding the replacement of windows, doors and some interior decoration, the fabric of the structure is basically unchanged. The Socorro Mission has served the surrounding community since its establishment in 1682 and continues to be an active religious institution. Recorded Texas Historic Landmark
The structure, which is of adobe covered with white washed adobe plaster, is nearly H-shaped in plan, and is 117 feet long, 72 feet wide on the entrance (south) facade, and 67 feet wide at the transept. The foyer is flanked by the baptistery on the east and a mortuary chapel on the west. These three elements combine to make up the long, flat south facade of the church
First City Building, Beaumont, 1962.
Concrete screen wall.
Socorro Mission, El Paso County, ca
Hand-hewn beams, carved brackets, and adobe walls. 39

40. Secretary of the Interior’s Standards for Rehabilitation
Standard 6: Repair rather than replace.
Deteriorated historic features shall be repaired rather than replaced. Where the severity of deterioration requires replacement of a distinctive feature, the new feature shall match the old in design, color, texture, and other visual qualities and, where possible, materials. Replacement of missing features shall be substantiated by documentary, physical, or pictorial evidence.
At Left: Lower window sash replaced, based on physical documentation.
At Right: Incompatible new window (lower right), resulting in loss of the building's historic character. 40

41. Secretary of the Interior’s Standards for Rehabilitation
Standard 7: Avoid destructive physical and chemical treatments.
Chemical or physical treatments, such as sandblasting, that cause damage to historic materials shall not be used. The surface cleaning of structures, if appropriate, shall be undertaken using the gentlest means possible.

42. Secretary of the Interior’s Standards for Rehabilitation
Standard 8: Protect significant archeological resources.
Significant archeological resources affected by a project shall be protected and preserved. If such resources must be disturbed, mitigation measures shall be undertaken.
Fort Davis, adobe ruins.

43. Secretary of the Interior’s Standards for Rehabilitation
Standard 9: Make alterations and new additions compatible.
New additions, exterior alterations, or related new construction shall not destroy historic materials that characterize the property. The new work shall be differentiated from the old and shall be compatible with the massing, size, scale, and architectural features to protect the historic integrity of the property and its environment.
Rosales House, Austin.
Rear addition.
Arnold’s Bakery (Shoehorn), East 11th St., Austin.
Side addition.

44. Secretary of the Interior’s Standards for Rehabilitation
Standard 10: Make new additions reversible.
New additions and adjacent or related new construction shall be undertaken in such manner that if removed in the future, the essential form and integrity of the historic property and its environment would be unimpaired.

45. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Small Project Obstacles for 20% Credit
Lack of existing National Register Historic Districts places an enormous burden on many small commercial owners.
Cities should undertake survey projects and National Register nominations for districts to benefit a large number of property owners.
S.H. Kress Store, Longview, 2006
Part 1 application denied,
Not individually eligible and no downtown historic district
Elizabeth Butman State Coordinator for Project Review 45

46. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Small Project Obstacles for 20% Credit
Lack of awareness about the credits
Spread the word
Financing and lack of capital to get a project off the ground since the credits are collected at the end
Intimidating application and IRS requirements
The THC staff can walk applicants through the process if consulted early. The IRS has a few specialized agents knowledgeable about the credits.
Lack of a state tax credit
There is a sales tax exemption on labor for National Register listed buildings, available through the Comptroller’s Office.
“Do it yourself” preference for application and construction
Small projects need professional assistance. Encourage the use of historic preservationists and architects to improve the application, design, and final project.
Timeliness of application submission prior to construction.
Consult with THC early and apply before undertaking construction.
Elizabeth Butman State Coordinator for Project Review 46

47. Federal Tax Incentives
THC Division of Architecture Introduction
January 21, 2010
Federal Tax Incentives
Federal 10% Credit for Non-Historic Buildings
This is a simplified credit for income-producing, non-residential buildings constructed prior to 1936.
To qualify, the building must NOT be listed on the National Register or within a National Register District unless it is certified by NPS as non-contributing. (This is the only THC or NPS involvement in this credit.)
This credit is intended for non-historic buildings; however, an eligible building that is NOT listed on the register may choose this credit at the owners discretion.
A rejected 20% project may not utilize the 10%.
Elizabeth Butman State Coordinator for Project Review 47

48. Moore and Tyler Grocery Buildings, Tyler
Built in 1912
Rehabilitation began in 2007
Filed as two separate tax credit applications
Completed as residential apartments in 2008
Rehab cost = $4.9 million
New construction cost = approx. $250,000
Tax credits = nearly $1 million 48

49. First City Building, Beaumont
Built in 1962
Beaumont Commercial Historic District National Register nomination amended to extend the period of significance and boundaries
Rehabilitation began in 2006
Completed as office and retail in 2008
Rehab cost = $4.9 million
New construction cost = $30,000
Tax credits = nearly $1 million 49

50. Rosales House, Austin
Listed as contributing to the Hyde Park Historic District
Rehabilitation began in 1998
Completed as residential rental property in 2001
Rehab cost = $107,000
New construction cost = $28,000
Tax credits = $20,000
Certified in 2001, single family residence
HYDE PARK: AN EARLY SUBURBAN DEVELOPMENT IN AUSTIN, TEXAS ( ) 50