Tax credit programs to help Rockland spruce up

Posted June 25, 2010, at 10:12 p.m.

ROCKLAND, Maine — Midcoast property owners gathered Thursday for a talk about how to obtain historic rehabilitation tax credits from town, state and federal government.

By combining the three levels of tax credits and grants, property owners can earn up to 330 percent return on their investments, according to architect Dennis Lachman, principal at Lachman Architects and Planners.

The projects must be for rehabilitation, Lachman said, not restoration. The buildings must have a contemporary use, but that use and the improvements cannot damage historic features.

“We’re not talking about restoring a building like it is in a museum,” he said at the Thursday night meeting at Rockland City Hall. About 25 people attended.

The tax credits are available only to people whose properties are on the National Register of Historic Places or are in a registered historic district. The property also must be income-producing for five years after the rehabilitation projects.

One of the benefits to the programs is the multitude of projects businesses can complete, according to Lachman. These include bringing the building up to code, adding sprinkler systems or elevators, redoing the floors or ceilings, rehabilitating doors, windows and more.

The trouble for many people is meeting the federal standards for rehabilitation, which Lachman described as rigorous. Some of those standards include how to clean a property — as gently as possible — how to repair and replace historic features of a property and how to preserve the character of the historic property. The state and federal guidelines are identical, Lachman said, but many people find it easier to work with the state because Maine has people on hand to help property owners through the process.

In some cases, property owners or tenants in historic properties can combine the larger of two state program tax credits with a federal tax credit and combine that with local grants and energy grants. If that seems like a lot to sort out, it is. Lachman stressed that anyone applying for these programs should consult a financial adviser. The smaller of the two state tax credits cannot be combined with the federal program.

Maine’s larger program, the Substantial Rehabilitation Credit, offers a 25 percent state credit for the rehabilitation, which can be combined with a 20 percent federal credit. The smaller state program, Small Project Rehabilitation Credit, is also 25 percent for projects between $50,000 and $250,000.

Maine is unique because property owners who rehabilitate their historic properties can get a tax refund. For instance, if a property owner received $2,000 in a tax credit for his work, but owed only $1,000 in taxes, the state will send that person a check for the other $1,000.

Lachman said after the meeting that he hoped people had a better understanding of how to use the programs.

“Many people don’t know that it exists or how it works,” he said. “It would be a shame if the program expired and property owners didn’t take advantage of it.”

The programs go until the end of 2013, but projects often take two years to complete, he said.

One interesting result of historic rehabilitation is that it is seemingly contagious, Lachman said.

“I’ve seen it,” he said. “One property will improve, then the next, then the whole block is improved. It starts with one. It can make a huge difference.”

After Lachman’s part of the presentation, Rockland Community Development Director Rodney Lynch announced that the city will apply for its second Facade Improvement Grant. In the city’s first attempt at the facade program in 2006-07, Main Street saw some major beautification.

The Grasshopper Shop got a rust-red coat of paint and green awnings; the Syndicate Block, which houses Rock City Books and Coffee, had brick repointing work done to help restore its third-story window arches; and Virginia Slawson’s properties near the end of Main Street by the ferry terminal got a makeover with new doors, paint and awnings.

Slawson said the grant matched her funds and she would have done more work, but “we ran out of time.”

If Rockland gets the facade grant again, she plans to do more, she said. This time, Rockland plans to include not just the face of Main Street, but also the sides and backs of buildings. This helps property owners such as Slawson, who has a visible north side of her building that she said needs some fresh paint.

Bob Strafford of Friendship also wants in on the program.

He owns five Rockland storefronts on the main strip and would like to roll on fresh paint and get new siding. He said he wished there was not a $25,000 cap on each property owner’s budget.

“$25,000 won’t go very far,” Strafford said.

Strafford did not partake in Rockland’s last round with the program, but he did get a facade grant for his Thomaston businesses. With that grant and a few other programs, Strafford said he invested about half a million dollars into his two Thomaston properties.

Lachman said the benefit of local programs like these is that they can work in conjunction with the state or federal programs to make work cheaper for property owners.

“They can work together,” he said.

Lynch said the city must gather a pile of letters of commitment from property owners or tenants in the city’s historical district before the city can apply for the program. If there is enough interest, the city will apply for the program by March 2011.

For information about Rockland’s facade program, call the city at 594-0304. More information about state tax credit programs is at maine.gov/mhpc/tax_incentives.

The talk was sponsored by Rockland Community Development Department, Rockland Main Street Inc. and Lachman Architects and Planners.

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