Minnesota Trails the Nation in Encouraging Residential Preservation

Small Home Gazette, Winter 2010

Minnesota Trails the Nation in Encouraging Residential Preservation

We talked to preservation consultant Robert Vogel, co-founder of Pathfinder CRM, after his presentation to the Twin Cities Bungalow Club in November 2009. Vogel worked with the City of Edina to help shape their bungalow designation program and has completed more than 400 historic preservation projects during his career.

Small Home Gazette: Why should we preserve residential property at all?

Robert Vogel: One of the basic philosophical tenets of historic preservation is that
preservation is about people, not things. So the houses where people live account for where most of history happened, and they are very important to historic preservation. Homes also represent the largest group of historic things out there in the world.

SHG: Why should government play a role in preserving residences?

Vogel: Well, government is the big destroyer of historic things—government at all levels. They destroy historic buildings directly as a result of publicly financed construction like roads and airports and dams and so forth. And government destroys historic things indirectly by incompatible regulation and misinterpretation of building codes, resulting in the loss of untold thousands of historic buildings every year. So government turns out to
be—especially local government—one of the real choke points in historic preservation. It’s where you can get a lot of things done; where a lot of key decisions get made.

Historic preservation by local government is one of the real initiatives of the late 20th
century. There were only a few dozen communities doing historic preservation until the 1970s, and now there are 1,800 units of local government that participate in the federal preservation program. And there are another 3,000 to 4,000 cities, counties, townships and so forth that do some kind of historic preservation.

SHG: Is residential preservation growing within the overall preservation movement?

Vogel: Yes, and for the reason that it’s where historic preservation started. If you read any of the standard texts about North American historic preservation, it starts out with George Washington’s home at Mount Vernon and moves on from there. Most of the early American landmarks recognized as worth preserving were the homes of great men or the homes where important things happened—the farmhouse at Appomattox where the surrender of the Confederate army took place, for example. And now, since the rest of the historic preservation movement has expanded in the last generation, there’s more attention to common, everyday buildings and many of those are houses. Small houses, large houses, architecturally-enriched, one-of-a-kind houses, and also ordinary, mass-produced kinds of houses like bungalows—each has its own constituency and is a subset of the larger preservation movement.

Actually, there is no single preservation movement within the United States. It’s really multiple movements and all kinds of impulses that result in preservation of historic property. It’s really much more of a widespread phenomenon today that it was years ago.

SHG: Other states outside of Minnesota are doing a variety of things to promote the preservation of residential property. What are some of the things being done?

Vogel: I think 30 of the 50 states have some kind of state-sanctioned financial incentives program on the books. They run the gamut, from tax credits tied to individual income tax payments to property tax abatement programs to combinations of these. Some states, like Florida, adopted these huge, multi-year state bond supported programs that have many program initiatives that private homeowners can take advantage of. And they run from loans to grants to different kinds of tax benefits.

And then there’s always been a small conservation tax deduction that’s on your federal income tax form. It’s where you subtract the value of things that you donate for charitable
purposes. And one of the things that you can donate is an easement to your building. And some communities have many more options than others for allowing property owners to donate an easement to their historic home to a nonprofit organization. Once the value of that is determined, the homeowner can deduct a percentage off their federal income tax bill.

Another benefit that’s available at the federal level, but only for income producing
property such as a bed and breakfast, is a rehabilitation tax credit. There’s a proposal moving through Congress to expand it for all residential properties, and the chances of it passing are looking better. Where it’s been encouraged, it’s stimulated investments in home improvements—and just about everybody could use some credits toward the amount of federal income tax they owe.

SHG: Is that the kind of program that’s been proposed for Minnesota?

Vogel: Yes. What Minnesota has been pushing, and I’ve lost count of how many times it’s been introduced, but the most recent version introduced in the state legislature mirrors Missouri’s state income tax investment credit. It would allow you to deduct 25 percent of the value of certified rehabilitation expenses in a historic property. In contrast, Michigan, a state that is basically bankrupt, enacted the legislation this past year. But Minnesota, somehow, can’t get off the dime.

Minnesota is one of a tiny handful of states that doesn’t have an operating state incentives program. Minnesota used to have the This Old House Act, which was a complicated way to reduce some of the property tax increase that resulted when people would invest large amounts of money in the rehabilitation of older properties. But that was allowed to expire a few years ago, so we have nothing.

However, we do have the legacy amendment money, and theoretically some of that legacy money could trickle down to residential scale preservation projects even though
none of the grants that have been awarded seem to address those kinds of things. But right now in Minnesota, if you invest money in residential historic preservation, you’re doing it for other reasons than economic—at least in the short term.