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Historic Augusta launches real estate program

Program aims to preserve buildings

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Historic Augusta Inc. announced a program Tuesday aimed at placing more historic properties in the hands of buyers in hopes of preserving distressed buildings.

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People tour the Henry-Cohen House on Greene Street, which was purchased through Historic Augusta's new real estate program. The Italianate-style house was placed on the group's endangered properties list in 2010.  JACKIE RICCIARDI/STAFF
JACKIE RICCIARDI/STAFF
People tour the Henry-Cohen House on Greene Street, which was purchased through Historic Augusta's new real estate program. The Italianate-style house was placed on the group's endangered properties list in 2010.

The Real Estate Program of Historic Augusta wants to increase the efficiency of local preservation efforts by matching buyers and sellers. Historic Augusta acquires options to buy buildings and then sells them to preservation-minded buyers.

Erick Montgomery, the executive director of Historic Augusta, said the program adds a concentrated focus to the organization’s mission of saving distressed, historic properties.

Through the program, Historic Augusta plans to help interested buyers understand financial options and steps for preservation.

“If it was a simple property to sell, the market would take care of it,” Montgomery said. “So many people would love a historic home but you have to have a certain understanding of the significance of the historic features and of the finances that make it work.”

The first property to benefit from the program was 920 Greene St., also known as the Henry-Cohen House. Historic Augusta acquired the option and sold the circa-1853 home to Mark Donahue, a general contractor from Augusta.

Donahue has had luck with historic renovation. He converted 309 Eighth St. into eight apartments, which he says rent quickly.

The Henry-Cohen House was placed on Historic Augusta’s endangered properties list in 2010. The Italianate-style home was built by Isaac Henry, a local banker.

Donahue plans to convert the three-story house into six 900- to 1,000-square-foot apartments.

Bathrooms and kitchens will be added, and a back porch enclosed to create an additional room. A balcony will be built for one upstairs apartment on the back of the house.

“The place is in fantastic shape. It just needs to be cleaned up and wallpaper stripped down,” Donahue said.

With completion expected in late summer or fall, Donahue plans to rent the units for between $650 and $750.

Two other properties, 307 Ninth St. and 586 Broad St., have also been placed under option for the program.

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raul
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raul 01/31/12 - 08:28 pm
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Glad the houses are being

Glad the houses are being saved, but I didn't think historic preservation meant converting historic houses into apartments. Thought the idea was to restore the house as much as possible to the era it was built.

countyman
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countyman 01/31/12 - 11:28 pm
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Many homes in the CBD have

Many homes in the CBD have been restored back to their original purpose.. 309 Eighth street, 307 Ninth street, and 586 Broad street are/were vacant buildings, and not homes..

Plenty of young professionals, GHSU-ASU-Paine students, etc want to live downtown, and need a variety of nice lofts, studio bedrooms, or condo to choose from.. The lofts at Enterprise Mill are always full, because the CBD needs additional housing..

The Dunbar Howard house in Olde Town was recently renovated into 12 apartments.. The units were all leased within 30 days of completion..

mike71345
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mike71345 02/01/12 - 03:40 am
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Raul, the tax credits

Raul, the tax credits available for historic preservation apply only to income-producing properties, not owner-occupied housing. There is an eight-year property tax freeze available for homeowners, but only if you spend at least 50% of the value of your house fixing it up to government preservation standards. I know it sounds complicated (and if you were really worried about a rise in your property tax, you wouldn't be spending half the value of your home to save a few bucks for 8 years anyway, now would you?), so I'll simply post what Erick Montgomery of Historic Augusta posted in one of that association's newsletters. Hopefully this will make things clearer (I apologize for its length)–
"If you are considering the purchase and subsequent rehabilitation of a historic building in Augusta, you need to be aware of tax benefits that could help your bottom line. Projects both big and small can potentially benefit, but you need to go into it with a fundamental understanding of the rules and procedures before you start the work.
HERE ARE A FEW OF THE BASICS:
For commercial, income producing buildings, there are a bundle of benefits. First there is a 20% investment tax credit, which can be subtracted from the taxes you owe to Uncle Sam every April. There is also a property tax abatement, which will freeze your county assessment at the pre-rehab value for a period of 8 1⁄2 years. After that it goes up half way to the fair market value in the 9th year and to full FMV in the 10th. But it does give you some time before the tax assessor asks for more money. A third tax incentive is another investment tax credit, which can be subtracted from the taxes you owe to Governor Perdue every April. That one is limited to a $5,000 cap, but if you are doing the other two, you may as well apply for this one at the same time.
Commercial, income-producing buildings include offices that are rented to others, offices used by the owner for his or her own business, retail space, manufacturing spaces, or rental residential spaces. Some buildings are mixed use. But none of them can be owner occupied for the Federal Historic Preservation Investment Tax Credit program.
Owner-occupied residential structures do not get the Federal tax credits, but can benefit from the Georgia property tax abatement program. File the proper paperwork and follow the rules, and the tax assessor will not come around to jack up your taxes until after the eighth year has passed, as described above.
For commercial, income producing buildings, you have to do a “substantial rehabilitation,” which means at least $5,000 or the adjusted basis of the building. That means you have to spend the same amount as the building was worth before you started the project. The value of the land is not included in that. The adjusted basis can be figured by taking the value of the whole property, subtracting the value of the land, and then subtracting any depreciation you have already taken. So as an example, if you buy a property for $100,000 and the lot is worth $50,000, and you have not taken any depreciation yet, you would have to spend $50,000 on the rehab to qualify.
The property tax incentive to hold down your real estate taxes for doing rehab to your owner-occupied historic home only requires that you spend 50% of the adjusted basis. So in the above scenario, if it was a house that you lived in, you would only have to spend $25,000 to qualify. But, YOU MUST FOLLOW THE RULES!
So what are these rules? They really are not that onerous, but you need to know them before you start a project so you don’t get into a fuss with the bureaucrats that administer the program. Rule number 1 is that the building be listed in the National Register of Historic Places. In some cases this is an individual listing of a specific building. But it works just as well if it is a building in a historic district that is listed in the National Register. “Contributing buildings,” (i.e. old ones that still look old) qualify. Non-contributing buildings (i.e. too new, or really-messed-up old ones) don’t. There is a form to fill out for that. Historic Augusta can tell you if you are already considered
historic or not. If you’re not, you can apply, but that takes extra time. Rule number 2 is to follow the Secretary of the Interior’s Standards for Rehabilitation. This is a set of “dos and don’ts” for historic preservation that should be consulted even if you don’t want a tax credit. ESSENTIALLY, THE STANDARDS SAY THAT YOU NEED TO RESPECT THE ORIGINAL CHARACTER OF THE HISTORIC PROPERTY AS MUCH AS POSSIBLE BY LEAVING THE OLD AND HISTORIC FEATURES OF THE BUILDING INTACT, AND NOT CREATING A FALSE SENSE OF HISTORY. IN OTHER WORDS, DON’T ADD FUNNY THINGS THAT WE IN THE PRESERVATION WORLD CALL “YE OLDE.” DON’T TAKE OUT THE OLD PLASTER IF IT CAN POSSIBLY BE SAVED. REUSE ALL THE OLD FLOORS AND MOLDINGS IN PLACE. DON’T KNOCK OUT LOTS OF WALLS. DON’T EXPOSE BRICK THAT WAS NEVER SUPPOSED TO BE SEEN, NO MATTER HOW COOL YOU THINK IT LOOKS. I DON’T HAVE ROOM HERE TO LAY OUT ALL THE SECRETARY’S STANDARDS, BUT YOU CAN VISIT THE NATIONAL PARK SERVICE’S WEB SITE AT...[]..AND READ THEM FOR YOURSELF. THERE IS A FORM TO FILL OUT FOR THIS PART TOO, IN ORDER TO SHOW THE BUREAUCRATS THAT YOU ARE PLANNING TO DO THE RIGHT THING. [emphasis added]
Rule number 3 is to take LOTS of photographs before you start anything. Take all outside elevations of the building, including broad views and details; take shots of the house with the neighborhood in the background; take every interior space, no matter how seemingly insignificant; take every room from every angle; and take interesting details in every room, like a mantle piece, or a medallion, or a cornice molding, or pocket doors. You cannot have too many photos. Even if you don’t need them all for your tax credit application, in the end you will forever regret not taking them. And with today’s digital cameras, there is no excuse for being stingy with the number of shots you take. Just save them on your computer whether you print them all or not.
Rule number 4 is don’t start your work before you get approval from the State and Federal guys. They get kind of ticked off about that, and you don’t want to have to undo something that costs you time or money. This can get you in trouble, so do your homework and be patient. It could make a big difference with the bottom line.
There are some other rules too, but I would suggest that you visit a couple of websites for further reading: Georgia Historic Preservation Division at www.gashpo.org and the National Park Service at www.cr.nps.gov/tax.htm.
Historic Augusta can help you with all of these processes. We like to give advice before you start a project and can help you understand and follow the rules. We have all the forms, although they can be downloaded and printed from your home computer from the above websites.
We also offer consulting services for a fee at a rate of $90 per hour. After an initial consultation, a proposal can be submitted to you for the work that will be required. As a rule of thumb, these services can cost between $2,500 and $10,000 depending on the size and complexity of the project.
Give us a call if you are thinking about rehabbing a historic building. And the sooner the better. Historic Augusta is the go-to source for all things related to historic preservation in Augusta. And if we don’t know, we will find someone who can tell you and us both! ~EM"

David Parker
7923
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David Parker 02/01/12 - 10:35 am
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Historic Preservation should

Historic Preservation should be concerned with preventing qualified structures from further degradation and loss. If that premise can be accomplished, then further efforts can be geared toward improving the state of said structures. Doing this in reverse is most certainly going to leave some properties out in the cold and eventually they succumb or at the very least you get into debate on how much resource to allocate for this building over that building and so on. Preservation is not improving but maintaining the current state.

raul
4638
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raul 02/01/12 - 11:38 am
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@countyman/Mike71345. Thanks

@countyman/Mike71345. Thanks for the information.

mike71345
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mike71345 02/01/12 - 12:09 pm
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You're welcome, Raul, and I

You're welcome, Raul, and I agree with you that it is ludicrous for Historic Augusta to be helping to turn old houses into apartment buildings. It really gives the lie to the common preservationist assertion that historic regulations encourage owner-occupied housing in historic districts (just try searching this paper for "owner occupied" and "historic" to get a partial list of such assertions).
By the way, this house stands in a historic district. It doesn't really need "preservation-minded buyers" to preserve the exterior of the building in accordance with the Secretary of the Interior's Standards. No buyer would be allowed by law to do anything else. If you ask why it is, then, that so many neglected, crumbling buildings stand in Augusta's historic districts, I can just say that that is a very good question.

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