Archive for the 'Building Permits' Category
Parks and Rec
This morning I was at a local town hall visiting the Assessor and Building departments when I saw the sign below. Unfortunately I did not see Ron Swanson or Leslie Knope. This saddened me. And now I feel like I need to eat some breakfast meat.
Historic Homes Rehabilitation Tax Credit
The West End of Hartford contains multiple Historic Districts, which include just about all the properties in the neighborhood. In addition to recognizing the architectural importance of the collection of homes, and helping protect the properties from inappropriate modifications, the Historic District designation also creates opportunities for owners.
One interesting incentive is the Historic Homes Rehabilitation Tax Credit. This past month I had an opportunity to sit down with Lucas Karmazinas, an independent consultant in the field of architectural history, to learn more about the tax credit and how it can benefit homeowners.
Tax Credit Basics
Owners of single-family through four-family homes in certain areas of Connecticut are able to apply for a tax credit to help maintain or renovate their properties. Examples of projects that may qualify for the credit include most exterior work (foundations, porches, walls, doors, windows, roof, gutters, chimney, etc.), mechanical systems (HVAC, plumbing, electrical), and interior work (structural systems, floor plans, floors, walls, ceilings, stairs, decorative elements, door/window casings, etc.).
Since Hartford is one of the “Targeted Areas,” and so much of the West End is in a Historic District, owners simply have to follow the application process and live in the property as their primary residence for at least five years after project completion in order to qualify.
The main benefit to working within the program is that a homeowner can receive up to 30% of the renovation costs back, with a cap at $30,000 per dwelling unit. Since there is also a minimum project size, the practical result is that the program targets renovations with total budgets of between $25,000 and $100,000 for a single-family home.
The “tax credit” language is a little misleading. Homeowners technically do receive a tax credit voucher at the end of the project, but it’s not one that they can apply to their personal tax liability. Only certain businesses are allowed to utilize the credits, so homeowners end up selling the vouchers and pocketing the cash independent of their tax filing.
Because the credits are not used directly by owners, they don’t receive the absolute maximum benefit. Mary Dunne, who helps oversee the program at the State Historic Preservation Office, conservatively estimated that vouchers generally sell for at least 80% (and often more) of their face value. She also noted that she has never heard of a homeowner who was unable to find a buyer among the 30+ vouchers that are distributed each year.
Applying for the Credit
The tax credit is managed through a written application that is broken down into different parts to reflect a project’s various stages. Part One simply confirms that a home qualifies for the program. The only noteworthy reason why an owner-occupied home in one of the West End Historic Districts would not qualify is that the building itself is not historic, that it doesn’t contribute to the historic character of the District.
Part Two describes the rehabilitation work in detail, capturing the current condition and articulating the proposed rehabilitation. Photos and drawings are encouraged. During our conversation, Lucas emphasized that in order for the renovation work to count towards the credit it must follow the Secretary of the Interior’s Standards for Rehabilitation. The application instructions summarize the criteria, while the website above provides illustrated guidelines for rehabilitating historic buildings. Part Two also includes the proposed project budget. Cost estimates must be from qualified pros, and qualified rehabilitation expenses are separated from non-eligible costs.
Mary said that her group is required to respond to an application within 30 days, though they try to turn them around in about 2 weeks. Ultimately it will depend on the scope and complexity of the project.
Part Three of the application is the request for certification of the completed work. In addition to demonstrating that the work was completed as planned, the other major component is the final accounting of the project costs. The tax credit is then calculated as 30% of either the approved budget or the actual expenses, whichever is less.
Application Assistance
Lucas assured me that it was possible for a homeowner to successfully work through the application process on their own. He said that the staff overseeing the tax credit was quite helpful, though it would take patience, time, and an interest in the subject matter since there are guidelines to learn and follow.
Some homeowners may not want to take on both a major renovation and the tax credit application/process. It’s possible that there are general contractors out there who would be willing to handle the application within their overall project management responsibilities.
Another option is to hire Lucas, or someone else like him, to help with the application process. Lucas said he is flexible in how he works with individual homeowners. In some cases it makes the most sense for him to charge a flat fee and handle all aspects of the application. In other cases the homeowner may want to do much of the documenting, describing, and photographing, so Lucas could bill hourly for his contributions — consulting as needed and interacting with the State Historic Preservation Office.
Resources
No matter how a homeowner approaches the credit, it’s a good way to take advantage of living within one of the West End’s Historic Districts. Here are some additional resources to help get started.
Historic Homes Rehabilitation Tax Credit
Secretary of the Interior’s Standards for Rehabilitation
Lucas Karmazinas, Historic Resources Advisor
FuturePastPreservation(at)gmail(dot)com, 860-428-7982
More on Demographics and Real Estate
Below is another article about demographics and other real estate trends that builds on the research of Arthur C. Nelson. It came to my attention after being posted by City of Hartford COO David Panagore. This continues on the themes of Mr. Condon’s piece from Sunday and our take on specific neighborhoods that may benefit from the market shifts.
I’ll be honest, I couldn’t get through the whole thing in the first sitting, but when I finally did, it seemed worth the effort.
The Next Real Estate Boom: How Housing (Yes, Housing) Can Turn the Economy Around
Patrick C. Doherty and Christopher B. Leinberger
Washington Monthly, November/December 2010
A New Home for Steve Jobs
Steve Jobs, Apple CEO and technology visionary, has a gift for designing things. People have been going bananas over Apple’s various portable devices for the past decade, and he is credited with many of their important design principles.
Although gadgets are fun, we’re more about the real estate on this site. And this news piece definitely caught our attention – Steve Jobs is going to be building a new home! And the site plans are available on the internet!
The story of this property is too long and complicated for us to fully understand the details, but there seems to be two interesting themes – historic preservation and design.
Jobs bought the estate in 1984, lived in it for a while, rented it for a while, and let it sit vacant for a while. The existing structure is a 30 room Spanish Colonial Revival mansion with 14 bedrooms and 13.5 baths over multiple structures on 6 acres. Although Jobs has wanted to demolish the home for years, local preservationists have successfully intervened on the property’s behalf, working to either save the structure or move the home to a different site. In 2006 someone made their way onto the vacant property and took these pictures, which show significant neglect. There seems to have been rulings in favor of each side, with the most recent victory being for Jobs when the preservationists dropped their lawsuit seeking to prevent demolition. At this point, the demolition is on.
The other interesting subplot is about what the new home will look like. Jobs has the resources to build anything he wants, so what will it be? Conceptual plans for the new home were submitted to the Woodside Town Council, and they have reached the interwebs. I haven’t found images that I can zoom in on (please post a link in the comments if you find some), but these small images and the accompanying commentary give a good flavor for the space. The basic conclusions of those who have studied the plans in detail are that Jobs is sticking with the clean, simplified aesthetic popularized by Apple products. Also, that he won’t be throwing large parties at his house, it’s designed more as a peaceful retreat than a showpiece property.
Jobs has won the most recent battle with the preservationists, but will it be the end of the war? And if he actually follows through with his plan, will the final product truly be as restrained as the current plans? Only time will tell.
Following Building Code
The New Haven Register recently reported that a West Haven home owner was arrested for allegedly violated building codes, illegally altering a multi-family home from a 2-family to a 3-family without city approval. This arrest comes in the wake of the recent deaths of two firefighters who were responding to a fire at a multi-family home in Bridgeport. That home was altered from a 2-family to a 3-family but public records show that Bridgeport officials never approved plans and no permits were ever issued to add an apartment on the third floor where the firefighters perished.
City and town building codes are in place for a reason. They keep us safe. Period. The purpose is to make sure that workmanship was performed in the proper manner and corners were not cut. Additionally, there must be appropriate egress points in all homes and going through the permit process ensures this.
When buyers are looking at properties and thinking about making modifications they often ask us if they need to pull permits for the work that they’d like to do. This question is typically asked because in many cases people are afraid their property taxes will increase if the town or city knows they’ve made improvements to their home. The majority of people seem to want to live in as nice a home as possible, or get as much rent as possible in a multi-family conversion, but pay as little in taxes as possible.
This reality causes some people to cut corners. They don’t pull the building permits themselves or tell their contractor not to pull the permits because they don’t want the town to find out about the work they’ve done. In cases where a home is increasing the number of apartments, there is typically a zoning approval process that should be followed as well. This also does not happen in certain cases because their plan would potentially not be approved for various reasons (improper egress points, neighborhood opposes, etc.) so they just circumvent the system and ignore the legal process they should follow.
The tragedy in this case is that it has to get to the point of people dying before a city or town chooses to take more aggressive actions to enforce their building and zoning codes. Municipalities are typically short staffed in these areas and efforts are focused on inspecting the jobs where people actually did pull permits and follow the law, rather than hunting down those that have chosen to evade it. It is frustrating, to say the least.
There are many folks out there that do follow the law and go through the necessary steps that need to be taken when doing renovations or trying to increase the number of units in a dwelling. These people should be applauded. They understand the system is there for a reason and go along with it even though it may cost them some more money or time down the line. Purposely ignoring building code and laws is just asking for trouble, whether it’s when you go to resell or if some type of tragedy occurs. In the end, will it really be worth it if something horrible happens?