The Commonspace > May 2003 > From the Source

Ever wonder what causes a company like HRI to stray from its familiar turf (in HRI's case, New Orleans) and take on huge projects such as the recently opened Renaissance Grand Hotel (AKA the Statler, AKA the convention center hotel), the Renaissance St. Louis Suites (AKA the Lennox) or the Merchandise Mart?

Answer #1: the fantastic architecture and craftsmanship of our historic buildings.

(small voice): but they have those in New Orleans!

Answer #2: the 20% federal historic rehab tax credit that recently celebrated its 25th anniversary.

(small voice): but they have that in New Orleans!

Answer #3: the 25% state historic rehab tax credit passed by the Missouri General Assembly in 1997.

Ever wonder what's increasing homeownership in St. Louis and revitalizing streets in communities all across the state?

Answer #1: the fantastic architecture and craftsmanship of our historic buildings.

Answer #2: the 25% state historic rehab tax credit passed by the Missouri General Assembly in 1997.

Answer #3: individuals — you may be one yourself — who have the vision and energy to see the possibilities.

The combination of great buildings, individuals and the state and federal tax credit programs have made the rehab of historic buildings a $346 million industry in Missouri... and generated 28,000 jobs.

The direct economic impact of the two tax credit programs is fantastic, but what sets Missouri apart and makes it a national model is the fact that its tax credit program spurs home ownership and the revitalization of urban and rural areas alike. Unlike the 25-year-old federal historic rehab tax credit that's helped revitalize commercial and rental properties, Missouri's tax credit facilitates the development of condos and owner-occupied single-family buildings in addition to income-producing properties.

I've been the State Historic Preservation Office staff member in the Missouri Department of Natural Resources' St. Louis Urban Outreach Office for almost three years. In that time I've answered thousands of questions — about Underground Railroad sites, grave sites, tombstones, the National Register of Historic Places, Section 106 of the National Historic Preservation Act, etc., etc.

Most people who call me want to know about one thing.

Tax credits.

Here's the skinny:

Missouri's 25% State Historic Rehab Tax Credit is currently available to homeowners as well as to those who are using property for economic gain (nonprofits are explicitly excluded from participating) who

are rehabbing a building on (or contributing to a district that's on) the National Register of Historic Places or contributing to a local district that has been certified by the National Park Service. Only work being done on a contributing building counts — no landscaping, fences, additions to the building, or construction of additional outbuildings, and
are doing rehabilitation work that meets the Standards for Historic Rehab set by the Secretary of the Interior (referred to as "the Secretary's Standards"), and
are doing rehabilitation whose costs are greater than 50% of the purchase price of the property.

There are currently no recapture provisions and the tax credits are currently fully transferable to any person/entity owing Missouri income taxes. But see the note at the bottom — they ARE subject to change!!!

The state program is administered by Missouri's Department of Economic Development; all projects are reviewed for compliance with the Secretary's Standards by the State Historic Preservation Office.

For-profit ventures often combine the 25% State Historic Rehab tax credit with the 20% federal Historic Rehab Tax Credit. What follows is a sketch of the additional restrictions imposed by the federal program:

the federal version is only for depreciable structures (translation: homeowners are not eligible), and
the federal version requires that the allowable rehab expenses equal of at least 100% of the adjusted basis (purchase price minus value of land minus depreciation since purchase plus capital improvements since purchase) or $5,000, whichever is greater, and
the federal version has a recapture provision (translation: credits are non-transferable and must be repaid on a prorated basis if property is sold within 5 years of project completion... which is why the federal tax credit isn't used to develop condos), and
the federal version cannot be utilized by those required to file using Alternative Minimum Tax provisions.

Nonprofit participation in the federal program is possible — but very complex.

The federal program is administered by the National Park Service; all projects are reviewed for compliance with the Secretary's Standards by the State Historic Preservation Office AND the National Park Service.

How do you get started?

Click on the links above and take a look at the applications, guidelines and Secretary's Standards. Give me a call at 314-340-5618 to find out if the building you're interested in is eligible (remember, just within the boundaries of a district does not mean it contributes to it!) and to get more information; or e-mail me at nrzapak@mail.dnr.state.mo.us.

Final note: like all acts passed by our representatives in Jefferson City or Washington, D.C., the tax credit programs described above are subject to change. I am not aware of any changes being proposed at the federal level. Over the last couple of years changes have been proposed at the state level. The easiest way to track the proposals and where they are in the process, is to check out the Missouri General Assembly's joint bill tracing search engine.

Kris Zapalac's photo is already on the Internet. Check out the website of the Missouri Department of Natural Resource's Outreach and Assistance Center, of which both the State Historic Preservation Office and the St. Louis Urban Outreach Office are parts. Just don't let her know you recognized her from the photo!