State officials outline tax credits, special valuation and grants as tools for Gig Harbor preservation; Places conference coming in October

City of Gig Harbor preservation commissioners heard a detailed briefing on financial incentives for rehabilitating historic buildings from the Washington State Department of Archaeology and Historic Preservation on Jan. 28.

Michelle Thompson, certified local government coordinator at the Washington State Department of Archaeology and Historic Preservation (DAP), and Jeronimo (Geronimo) Roldan, the state historical architect, described federal tax credits, the state's special tax valuation, certified local government (CLG) grants and smaller facade-improvement programs and answered commissioners' questions about eligibility and outreach.

Thompson said many incentives require a building to be listed on a register (local, state or national) and noted the Places conference will be hosted in Gig Harbor Oct. 8—Oct. 10. "We've been working in the past few years to push the conference a little bit preservation end of it," she said, inviting the commission to participate in mobile tours and panels.

Roldan explained the Federal Historic Tax Credit program and how it works in practice. "Basically, in the simplest terms, it's 20% of your project budget that you get back over 5 years, on your general business taxes," he said, using a $1,000,000 rehab (a $200,000 credit taken over five years) as an example. He said projects must be eligible for the National Register (either individually listed or contributing to a district), must be income-producing (commercial, rental or similar), must meet a minimum threshold of substantial rehabilitation (discussed as an adjusted-basis test) and must follow the Secretary of the Interior's Standards for Rehabilitation.

On the Secretary of the Interior standards, Roldan summarized the practical approach agencies use: "Repair as much as possible; replace in kind when you can't repair; make new work reversible and compatible." He said applicants typically submit a three-part application: an evaluation of significance (Part 1), a detailed description of proposed work (Part 2) and photographs of the completed work (Part 3).

Thompson described Washington State's special tax valuation, a state program passed in the 1980s intended to reduce the property-tax penalty that can follow rehabilitation. Under the program as explained to the commission, owners must spend at least 25% of the assessed value of the property minus the land cost on qualified rehabilitation expenses during a 24-month period; the resulting benefit reduces assessed value for tax purposes for a 10-year period. Thompson said the state standards for special valuation use Washington Advisory Council standards (not exactly the same wording as the Secretary of the Interior standards) and include maintenance expectations.

Both presenters said "qualified rehabilitation expenditures" generally include costs that are integral to the building (foundations, HVAC, structural work, hard and soft costs such as permit fees and professional services) and exclude items that could be removed and taken away. Roldan added: "Anything that you wouldn't be able to take with you if you move, basically." He also warned that additions or work expanding the building footprint typically do not qualify.

Thompson and Roldan described several other tools and grant sources: CLG grants (competitive, awarded annually and limited to certified local governments), National Park Service and state grants, Washington Trust for Historic Preservation programs, and small facade-improvement grant models (often modest awards such as about $5,000 used for awnings, paint and exterior repairs). Thompson said CLG grants can be used to fund National Register nominations or consultant work to prepare nominations, which can make properties eligible for federal grants and tax credits when those opportunities arise.

Commission members asked several practical questions: whether nonprofits can use tax credits (Roldan explained lease structures can allow a taxable entity to claim credits while returning control to a nonprofit over the recapture period); what happens if a building is sold ("The tax credits go with the building," Roldan said); and how a recent state funding freeze might affect DAP staff (presenters said the federal tax-credit program itself is administered through the IRS and National Park Service and was not frozen, but their state preservation positions are paid in part from state preservation funds and the effect of a freeze on state programs was "unknown").

Thompson encouraged early contact with state staff: "If you're interested in doing tax credits or special valuation or any of these things, reach out to us as early as possible on the project," she said, noting applicants who wait until a project is complete can miss eligibility. She also offered to share follow-up materials, links and a PDF of the slides, and asked commissioners to provide email addresses so staff could add them to a notifications list for grant opportunities.

Commission discussion touched on local examples and outreach: commissioners noted their downtown and some city-owned sites, discussed using CLG grants to update Gig Harbor's local register (members said their last survey update was around 2008), and asked about using facade-improvement models funded from demolition permits or other local resources. Thompson recommended collaboration with the Gig Harbor Downtown Association and said the Places conference would be an opportunity to showcase local resources and host mobile tours.

Why it matters: the briefing identified specific, actionable tools — tax credits, special valuation, CLG grants and small facade programs — that can reduce cost barriers for property owners and align preservation with economic revitalization. Staff emphasized that many of the larger grants and tax incentives require listing on a register and urged the commission to prioritize nominations and outreach so properties are ready when funding opportunities arise.

Thompson and Roldan left commissioners with practical next steps: collect commissioner email addresses for DAP mailing lists; consider applying for CLG funding to support National Register nominations or a register update; and prepare possible walking tours or outreach tied to the Places conference.