Financial Incentives
Financial Incentives for Historic Preservation
Prepared for Naperville Preservation Inc. by Joe McElroy
with assistance of Landmarks Illinois — May 1, 2024
with assistance of Landmarks Illinois — May 1, 2024
State & Federal:
20% Federal Historic Tax Credit: Available for rehabilitating a historic building for an income-producing use. This dollar-for-dollar federal income tax credit, equal to 20% of the qualified construction costs and expenses, may be used by the building owner or syndicated to a tax-credit investor. To qualify for the credit, rehabilitation costs must exceed the building’s “adjusted basis”—that is, the purchase price minus the land cost and depreciation, (prior improvements by the current owner. The building must be a local landmark or listed on the National Register of Historic Places before the project is completed. The program is administered by the Illinois State Historic Preservation Office and National Park Service.
25% Illinois State Tax Credit: Available for rehabilitating a historic building for an income-producing use. This a competitive, dollar-for-dollar state income tax credit, equal to 25% of the qualified construction costs and expenses, must be coupled with the 20% Federal Historic Tax Credit. Each project that qualifies can apply for 25% of its qualifying rehabilitation expenditures (QREs) up to a total of $3 million in state income tax credits. Rehabilitation costs must exceed the building’s “adjusted basis”—that is, the purchase price minus the land cost and depreciation. The building must be a local landmark or listed on the National Register. Administered by the Illinois State Historic Preservation Office. Funding level: $3 million maximum.
Illinois Property Tax Assessment Freeze: Property taxes frozen for rehab projects—exterior and/or interior—that exceed 25 percent of assessed value. The program can freeze the assessed value of the historic, owner-occupied, principal residence for a period of 8 years, followed by a four-year period during which the property’s assessed value steps up to an amount based upon its current market value. This results in 11 years of reduced property taxes.
National Trust Preservation Funds: Offers 50/50 matching grants for planning, education and wide variety of activities. Must be members of National Trust. Funding level: $2,500-$5,000. The National Trust also offers grants that fund brick & mortar restoration grants up to $15,000:
Private Sector:
Corporations at times provide grants. For example, Exxon provided grants towards the efforts to save Old Nichols Library and the Kroehler Mansion.
Not-For-Profits
Preservation Heritage Fund: Grants provide monetary assistance to significant structures or sites in Illinois that are under threat of demolition, in imminent deterioration, in need of stabilization, in need of structural or re-use evaluation, or need to be evaluated for landmark eligibility. Funding level: Up to $5,000. Usually reserved for not-for-profit organizations.
Barbara C. and Thomas E. Donnelley II Preservation Fund: Significant structures or sites in Illinois that are under threat of demolition, imminent deterioration, or are of such architectural importance that their preservation will benefit the public. Emphasis on education, such as a mid-century modern exhibit. Funding level: $500-$2,500. Usually reserved for not-for-profit organizations.
Preservation Easement Donation: Assigns a qualified nonprofit organization—such as Landmarks Illinois—the right to review and approve alterations to a property for the purpose of preserving it in perpetuity. The donation of a preservation easement may be eligible for a one-time charitable federal income tax deduction, which is based on the appraised value of the preservation easement. To be eligible for the deduction, the property must be a certified historic structure either listed in the National Register of Historic Places individually or contributing to a NR district, or be contributing to a local landmark district.
Reinvestment Program: A new program that will offer professional services, partnerships, purchase offers and revolving loans.
League of Women Voters: The League sponsors preservation efforts—please contact the local chapter.
Local
The financial incentives described below are not available in Naperville. They are listed here as examples of what can be done at the local level.
Aurora Historic Preservation Grant Program: For owner-occupied properties with no more than two units. Exteriors only. Funding level: $5,000-$10,000 grants; Projects between $10,000 and $20,000 require 50/50 match.
Historic Chicago Bungalow Association: Offers design assistance, energy improvement loans. When started, offered rehab loans and low-interest financing.
Village of Hinsdale Historic Overlay District: Hinsdale has a Historic Overlay District and a list of significant properties within that district. Owners of these properties are eligible for building permit fee waivers; expedited permit processing; village property tax rebates for significant exterior improvements; and matching grants for up to $10,000 with a minimum investment of $20,000.
City of Geneva: Using American Rescue Plan Act funding and a sales tax rebate, the city approved an economic incentive plan for renovation of the Little Owl/Flagstone building at 101-105 W. State St.