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What is a revolving fund program?
The inspiration behind a revolving fund program is very simple; a pool of capital is created for the sole purpose of saving endangered historically and architecturally significant properties from demolition or neglect. Once the endangered structure has been acquired it is sold to a sympathetic owner who undertakes its restoration. The money from the sale is put back into the revolving fund and used over and over to buy more endangered historic properties.
Why are revolving fund programs needed?
Virginia is the home to much of the oldest and finest architecture in America, but many historic properties are rapidly disappearing. As they vanish, we're losing an important part of our heritage.
APVA Preservation Virginia, the oldest statewide historic preservation organization in the nation, has worked for over 100 years to save threatened historic homes and buildings in Virginia that might otherwise have been destroyed.
When did APVA Preservation Virginia's Revolving Fund Program begin?
Prior to 1999, APVA Preservation Virginia purchased and sold buildings to save them from demolition or neglect but did not have a separately staffed revolving fund program. In 1999, the Commonwealth of Virginia's Historic Resources Historic Properties Revolving Fund Program was transferred to APVA Preservation Virginia. This state financed trust fund was established in 1989 by the Virginia General Assembly and is valued at approximately $1.5 million in cash, investments and properties.
How are properties selected for acquisition by APVA Preservation Virginia's Revolving Fund Program?
Strategic purchases are essential to keep money from being tied up in difficult to sell properties and preventing other buildings from being saved. Before purchasing or accepting the donation of a property the following items must be considered:
- Significance -- Is the building listed or eligible for listing on the Virginia Landmarks Register or the National Register of Historic Places? Does it retain its architectural integrity?
- Level of Threat -- Is the structure slated for demolition? Is it vacant and deteriorating?
- Community Preservation Considerations -- Can local preservation groups be called on for help? Will the purchase of this property be a catalyst for restoration in a specific area?
- Project Feasibility -- Is the building for sale? Will the property owner donate the property to the fund? Is it beyond saving? What are the chances for resale? Can the fund recoup its investment?
How does APVA Preservation Virginia's Revolving Fund Program acquire properties?
Through the Revolving Fund Program, APVA Preservation Virginia helps protect and preserve publicly significant historic properties by using options to purchase, direct acquisition, or deed of gift to acquire threatened or endangered properties.
Options to Purchase: APVA Preservation Virginia may obtain an option to allow time to find an appropriate buyer. When a buyer who agrees to protect the historical value of the property is located, APVA Preservation Virginia will exercise its option and sell the property.
Donation/Deed of Gift: A deed of gift ensures that the property will be preserved, and the owner is eligible for tax deductions. It also provides capital to allow other properties to be saved through the fund.
Bargain Sale: If a property is sold for less than the appraised fair market value, the owner may be eligible for tax deductions. The property can be preserved through easements and covenants, and the bargain sale will provide more funds that can be used to save other properties.
Direct Acquisition: APVA Preservation Virginia may choose to purchase eligible property outright, but this is rarely done.
Are there requirements for property purchased by the Revolving Fund Program?
Yes. The Program has certain requirements that must be met. In order to qualify, the property must be eligible for one of the following:
- Individually listed in the National Register of Historic Places.
- Located within a registered historic district and certified as a contributing structure.
- Individually listed on the Virginia Landmarks Register.
- Deemed eligible for listing on the Virginia Landmarks Register or the National Register of Historic Places by the Virginia Department of Historic Resources.
Also, before a property, acquired by the Revolving Fund Program, is sold the following protections are put on the properties:
- Protective easements are placed on the property which are written and held by the Virginia Department of Historic Resources.
- The buyer of the property signs a rehabilitation agreement with the Virginia Department of Historic Resources.
What is an easement?
Protective easements are legally binding agreements between a property owner and a governmental body that places limited restrictions on the property. All easements written for properties sold through APVA Preservation Virginia's Revolving Fund Program are tailored to each individual property and prevent character defining features of the buildings from being altered or destroyed. The easements can be written to ensure the protection of specific architectural elements like mantelpieces, woodwork, or outbuildings, for example. In most cases, the easements prevent the subdivision of the structure's surrounding acreage. The easements also require that any restoration work must comply with guidelines established by the Secretary of the Interior's Standards for the Rehabilitation of Historic Properties. The easements "run with the land" and transfer from owner to owner, thus the building is protected in perpetuity.
The Revolving Fund Program staff will help buyers understand the implications of these easements and how they affect the restoration process.
- Click here to see a sample easement.
- Click here for a link to the Virginia Department of Historic Resources' easement program.
- Click here for a link to the Secretary of Interior's Standards for the Rehabilitation for Historic Properties.
What is a rehabilitation agreement?
To ensure that the property will be restored in accordance with appropriate guidelines and in a timely manner, prior to closing, purchasers must sign a rehabilitation agreement. Like easements, rehabilitation agreements are tailored for each property. The agreement ensures that work will begin and end during a mutually agreed upon time frame and covers what architectural elements will be restored and what restoration techniques are used. The owner agrees to restore the property in compliance with the secretary of interiors Standards for Historic Restoration.
- Click here to see a sample rehabilitation agreement.
What are Rehabilitation Tax Credits?
Purchasers may be eligible for Rehabilitation Tax Credits if applied for before the restoration begins. APVA Preservation Virginia can provide guidance about how to apply for and receive applicable credits.
Placement on the Virginia Landmarks Register and the National Register of Historic Places not only allows a structure to be recognized for its historic and architectural significance, but enables the owner to apply for rehabilitation tax credits. The rehabilitation tax credit program provides a wonderful incentive for restoration by providing a tax credit on approved restoration work.
Rehabilitation Tax Credits provide a dollar-for-dollar reduction on income taxes for property owners who rehabilitate historic buildings. Credits can be obtained through the State of Virginia and federal government. The amount of the tax credit depends on the rehabilitation costs. The federal program provides a 20% tax credit on eligible rehab costs. The state tax credit provides a 25% tax credit on eligible restoration costs. The state and federal tax credits can be combined if the taxpayer qualifies for both programs given a 45% tax credit on eligible expenditures.
- Click here for information on Rehabilitation Tax credits.
How do I find out about property for sale though APVA Preservation Virginia's Revolving Fund Program?
Properties for sale are advertised on the APVA Preservation Virginia web site, www.historicproperties.com and in newspapers and magazines, and in publications specializing in historic preservation such as Preservation Magazine and the APVA Preservation Virginia newsletter.
Contact APVA Preservation Virginia's Revolving Fund Program manager Sarah Cooleen at scooleen@apva.org or 804-648-1889 ext. 320 for information on properties available for sale through the fund, and details on their condition, history and restoration possibilities. The Revolving Fund Program Staff helps potential buyers understand the process involved in purchasing and protecting historic property.
Does the APVA Preservation Virginia Revolving Fund Program offer financial assistance for buying or restoring historic property?
At this time the Revolving Fund Program does not offer grant or financing assistance.
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