April 30, 2010 Giving Credit
We at HBI are very excited and grateful to have been chosen by Secretary of State William Galvin and the Massachusetts Historical Commission to receive a generous allocation of Massachusetts Historic Rehabilitation Tax Credits for the preservation of the Eustis Street Fire House. State and Federal Historic Tax Credits are a critical source of funding for historic preservation, and competition can be fierce ? many worthy projects apply. HBI competed in two funding rounds and received at total of $247,000 in State Credits for the Fire House. Combined with Federal Historic Tax Credits we will receive, historic tax credits will contribute close to 40% of our construction costs there.
For those who are unfamiliar with Federal and State Historic Tax Credits, here?s a quick explanation. Qualified historic buildings (those that are either listed on the National Register for Historic Places or are eligible for listing and that will be revenue producing properties) that are being rehabilitated can receive up to 20% of their eligible project costs in Federal credits. In Massachusetts, such a project can also benefit with up to 20% in State tax credits, which are only available based on competitive allocation from the Commonwealth.
Tax advantaged rehabilitation work must comply with the standards set by the Secretary of the Interior?s Standards for the Treatment of Historic Properties. These credits can then be sold at a slight discount to an investor to raise equity for project costs. The investor applies the value of the credits toward their annual tax obligation. For more, detailed information about tax credits (both Federal and state by state), please click here for more information.
The legal and transactional costs associated with these projects can be substantial; it is generally believed that projects in excess of $1 million benefit most from these tax credit programs. This is certainly true for the Eustis Street Fire House, where a very small, but highly significant building will be rehabilitated at a cost of $2 million. Without the Federal and state tax credit programs, many historic buildings would never be preserved. The costs are often too high and the risks are typically too insurmountable. With these incentives in place, HBI will benefit from a base of capital that makes the Eustis Street Fire House?s reuse possible.
For more on the Eustis Street Fire House, please click here to read about it on our website.
Also, read about archaeology at the Fire House here on our blog, and please join us for our Groundbreaking event on May 15!