Tax Credits Eyed To Preserve Historic Homes

By: Tim Wood

A state local option law allows tax credits for rehabilitation of residential homes within state register of historic places, such as the Old Village, above. FILE PHOTO

CHATHAM – Frustrated that the town's demolition delay bylaw hasn't discouraged more property owners from tearing down historic homes, preservationists are investigating a new tool to help save old houses, one that's more carrot than stick.

State law provides local communities with the option of giving owners of old homes a one-time tax credit on the rehabilitation of historic homes. The local option, which must be adopted by town meeting, allows the phasing in over five years of the increased assessment due to preservation work.

Historical commission members think there's enough merit to the idea to ask Principal Planner Aly Sabatino to investigate it further. However, the tax credit comes with significant restrictions, and has only been adopted by one other town – Wellfleet – where it's never been used. In fact, Sabatino told the commission last week, no one has applied for it in any of the handful of towns where it has been adopted.

“There's not a real example, because no one has used it,” she said.

Nonetheless, commissioners were interested in learning more about the tax credit.

Commission members have been frustrated by a steady march of demolition delay applications for homes 75 years and older. Some have been waived, when the structure is deemed to be not historically significant, but the commission has applied delays of up to 18 months in many cases. Sometimes an owner or a buyer applies with the expectation that the delay will be imposed and a willingness to wait it out in order to build a new house, rather than save the historic portion of the building and add on to it in a way that preserves the historical significance. A delay on a home on Stage Harbor Road ran out June 1 and the owner is likely to raze the historic structure.

Under the enabling legislation, the increase in assessed value accrued through rehabilitation of a qualifying home can be spread over a period of five years until the full assessment of the property is reached. The property must be owner-occupied and must be listed in the state registry of historic places, either individually or as a contributing element in a historic district.

The town has two National Register Districts: The Old Village and the Marconi complex. Uncertain is whether properties deemed eligible for listing on the National Register would also qualify; that could include homes along Stage Harbor Road, which was determined to be eligible for listing as a National Historic Register District by the Massachusetts Historical Commission. A nomination did not move forward after a majority of homeowners within the proposed district rejected the idea.

However, the town does have a significant number of homes within the Old Village District, and even more if the historic business district qualifies, said Historical Commission Chairman Frank Messina.

“I would work here,” he said.

The rehabilitation work must also comply Massachusetts Historical Commission standards.

“That's a tough bar,” said Messina, “because Mass Historic can be tough.”

Commission member Jane Moffett said she knows many people who have rehabbed historic homes and some would be concerned about the bureaucracy surrounding the tax credit.

“I don't want to be negative,” she added. “Anything we can do to preserve history I'm in favor of.”

Commission member Robert Oliver proposed a similar historic rehabilitation tax credit which would apply to 10 percent of the cost of the qualifying work or $10,000, whichever is less. His proposal would cover buildings deemed eligible for National Historic Register listing.

However, the town could not enact Oliver's proposal without special legislation. It would not fall within the parameters of the local option, Section 5J of Chapter 59 of Massachusetts General Laws.

“You can't do what the state does now allow as far as taxation,” Messina noted.

Commission members were interested enough in the local option law to ask Sabatino to develop some examples.

“I think it would be easier for us to explain it to people” if there are concrete examples of how the tax credit would work, Messina said.

“I think it's worth doing something. We're losing houses at an alarming rate,” he said.

The Massachusetts Historical Commission also has a rehabilitation tax credit program aimed at large commercial projects, such as the conversion of historic structures into affordable housing or other public use.