By Jay Firsching
In case you weren’t aware, the Deep Ellum neighborhood in Dallas recently earned a place on the National Register, a federal catalog of significant historic locations. With this national recognition, it’s important to understand the implications, as well as the limitations, of this listing. For those who want to read about the district and see what buildings are in it, look here.
National Register: Benefits And Limitations
First and foremost, it’s crucial to clarify that inclusion in the National Register doesn’t entail any regulatory control. One common misconception is that being on this list means governmental authorities will dictate your actions. This notion is entirely unfounded. Think of a listing on the register as someone suggesting, “This spot is noteworthy. You should pay it a visit.”
Properties can earn individual listings or become part of a designated district. An individual listing requires distinctiveness or importance for some reason. However, most older structures don’t fit this criterion.
Conversely, a district like Deep Ellum emphasizes the significance of a broader area. The advantage of a district designation is that a building that might not meet individual criteria could still gain listing due to its contribution to the district’s history. While many buildings in Deep Ellum might not be individually eligible, collectively, they weave a crucial narrative about the African-American community’s history in Dallas. If your building is part of a district and plays a role in its history, you’re recognized on the National Register.
Property owners might wonder about potential drawbacks. In the past, some owners have expressed concerns that being listed could increase property values and consequently raise taxes. If you’re aiming to maintain lower property values, this concern is valid. The listing will likely stimulate economic activity in the district, potentially elevating property values. I think that covers the drawbacks.
Now, let’s delve into the benefits.
For property owners in Texas with National Register listings, the simplest advantage is an exemption from sales tax on labor for construction. This exemption can accumulate significantly over time, especially during extensive projects. Present a sales tax exemption form to contractors before they bill you because it’s unlikely you will get them to reimburse you if you provide the form after they have been paid.
A National Register listing can aid in resolving compliance issues with building codes. These codes incorporate specific allowances for historic structures. For example, adapting a building to intricate accessibility codes can be challenging, and a historic listing might offer some flexibility with code officials. This doesn’t mean compromising safety or accessibility; it facilitates constructive conversations for innovative solutions that might otherwise not be attainable. This way, your building can stay operational, safe, and inclusive.
Economic Incentives of Historic Register Properties
The economic incentives for registered buildings are substantial. By adhering to federal rehabilitation standards during building improvements, you can receive reimbursement from the federal government, up to 20 percent of total costs, and up to 25 percent from the state. This applies not only to construction but also to planning, professional fees, and various other expenses, except for site work and FF&E (furniture, fixtures, and equipment). Don’t be intimidated by the term “federal rehabilitation standards.” It essentially means making necessary improvements to the building while preserving its cool character.
Acquiring these tax credits is challenging because you must invest money to qualify, a hurdle some owners struggle to overcome. In essence, to secure a federal credit, your spending on improvements must match the building’s value, excluding the land. If your building is valued at $200,000, you need to spend that amount on enhancements. The state credit threshold is more attainable at just $5,000. The process can be intricate, which is why experts like me exist to guide owners through it. Some projects benefit from collaboration with an experienced architect and accountant familiar with such programs.
If you find yourself as the owner of a contributing building in the new Deep Ellum Historic District, congratulations! And rest assured, there’s no regulatory intervention coming your way. In fact, you can even choose to disregard the district without consequences, except for the probability of increased fascination with your neighborhood’s charm or observing neighboring structures experiencing rejuvenation thanks to the tax incentives. If you have questions or concerns, be sure to reach out to your friendly neighborhood preservation professional. We are here to help.
Founding Principal, Jay Firsching, established HRTC Services in March 2023 after almost 25 years of service with Architexas – Architecture, Planning, and Historic Preservation, Inc. with offices in Dallas, Austin, and San Antonio, Texas. Jay served as the firm’s in-house historic preservation professional working both independently on his own projects and as part of larger project teams within the firm. He helped the company grow into the largest and most respected preservation-focused architecture firm in Texas.
Prior to his work with Architexas, Jay served for three years with the Texas Historical Commission where he developed historic structure reports for historic Texas county courthouses. It was during this time that he also helped establish the largest historic preservation grant program in the nation, the Texas Historic Courthouse Preservation Program.
