Funding for Historic Preservation

Funding Matters
By Heather MacIntosh, Preservation Advocate

Governments have incentivized historic preservation activity since the 1980s, but in recent years, the costs of rehabilitation and capital outlay for preservation activity in Seattle have reduced the impact of existing programs. Funding for bricks and mortar activity, in the form of low interest loans or outright grants is low, relative to the costs of potential projects. The following are existing programs dedicated to preservation activity:

1. King County Special Valuation. This program rewards owners of landmark properties who seek to rehabilitate by taxing improved properties at pre-improvement rates for 10 years.
2. Federal Tax Credit Program. This program, co-administered by the National Parks Service and the Internal Revenue Service, provides a property tax credit of up to 20% for improvements to income earning properties deemed historically significant by local and/or state preservation offices.
3. Federal Affordable Housing Tax Credit. Linked to the aforementioned program, this allows for additional tax relief for rehabilitations that provide affordable housing in historic properties.
4. Historic Preservation Fund. A federal program, administered by the State Historic Preservation Office, that provides grants for architectural, engineering, and project management services for the rehabilitation of historic properties. This program provides limited "bricks and mortar" funding.
5. (Temporary) City of Seattle Office of Housing. Low interest loan program for historic residential hotels in the International District and Pioneer Square that will be rehabilitated into affordable housing.
6. (Temporary) Historic Seattle and the Office of Economic Development. Technical assistance program providing funding for architectural and engineering fees, and property management assistance on qualified rehabilitation projects.

Potential New Programs

• Revolving Low-interest Loan program. Many cities and nonprofit preservation organizations around the country have revolving loan programs that help offset repair costs for historic buildings.
• Technical Assistance Services. Preservation architect and historic preservation consultant services provided free of charge by nonprofit organizations dedicated to historic preservation. This would include landmark nomination research and writing.
• Bricks and Mortar Grant Program. Limited grant funding for bricks and mortar activity in Seattle, used as a match for other grants or owner contribution.

Historic preservation needs to be better connected to formulas the city employs to evaluate economic development. Making a case for greater subsidization (or not), or new policies, requires a better understanding of the economic impact of historic preservation activity in our city, and the effectiveness of existing aid programs.

What do the 2001 Mayoral Candidates think about Funding for Historic Preservation?

The following is an excerpt from the October 2nd Mayoral Candidates Forum on Historic Preservation co-sponsored by Historic Seattle. To read the entire transcript, click here.

Walt Crowley (moderator): Good evening, welcome to this forum for our mayoral candidates, our finalists, sponsored by Historic Seattle and the AIA. My name is Walt Crowley, I'm director of HistoryLink.org and have a checkered career in public affairs and journalism which is why I'm here, apparently. We have with us Mark Sidran and Greg Nickels who are the survivors of the primary election, and we're going to be talking about their visions for the urban fabric of Seattle, its future, and I think a lot about its past, and how best to preserve and interpret and educate on the basis of that past.

We have a great deal to celebrate, in terms of heritage and historic preservation in this community, but there's still a lot more that needs to be done that we hope the next mayor of Seattle will be a leader in helping get those things done.

What we're going to do here, is I'm going to ask each candidate to speak for a few minutes to articulate his vision of the urban fabric of Seattle, its future, and his perception and priority for the role of historic preservation and heritage in that vision.

Greg Nickels: Well thank you, and good evening everyone, I want to thank the sponsors for putting on this forum tonight and giving us a little opportunity to talk about our heritage, something we all have in common, and where we go in the future in preserving and celebrating that heritage.

I've been very pleased as a member of the King County Council for the last 14 years to have had a chance to lead that Council in a number of different areas related to preserving our heritage, and celebrating the heritage of our communities. I was a Council member during the Washington Centennial, and had the opportunity that day to ring the bell at the historic Star Lake School which was in my district at that time. (I ) Visit(ed) small former towns such as Thomas, which also was in my district at one point, and learn(ed) the history of many of the communities of this great County of ours.

I've had a chance to provide for funding for heritage programs. In the year 1999 as we prepared the 2000 budget for King County we were facing a real challenge because of something called Initiative 695. But I thought it was important given that we were approaching our county's centennial -- sesquicentennial -- and our city's sesquicentennial -- it took me three years to pronounce it, but now I can actually spell it. I thought it was important to set aside a small amount of sustained funding for heritage organizations. What I've found is that there are a lot of organizations, nonprofit organizations in our community, that celebrate and understand the roots of this community and a very small amount of funding is leveraged a long way. And so we created that and in this past year we had to fight to maintain it.

And I enjoy bringing together heritage organizations into a coalition and actually having that coalition work hand in hand with arts organizations, so that even in the face of 695, we had an opportunity to make an advance it that area. It's not big dollars. It's leadership. It's bringing people together to solve problems. It's what I refer to as the Seattle Way, and I think its something that the city needs to return to.

Mark Sidran: Thank you Historic Seattle for sponsoring this event and giving us the opportunity to talk about these issues. I would like to start at first with a little broader perspective about the future of our city, and of course the future is in part a reflection of the past. I think we are in a different world and a different city after September 11th than we were before. In many ways that tragedy has united our country and our community. All the typical divisions that divide us such as race, and class and political party were overcome by the unity that we see in the underlying values we feel as Americans and I think (it) is the underlying source of diversity that we share in this community and in America.

In a prior generation of Americans, when my parents came to Seattle in World War II, they met the challenges of Pearl Harbor not only by winning that war but by coming home and making Seattle a better place for people to live. So they cleaned up Lake Washington, brought us the Worlds Fair and left us the legacy of Seattle Center, passed Forward Thrust, left us the legacy of capitol improvements throughout the County. And they began the process of historic preservation of Pioneer Square, and the fights over the preservation of the public market.

We have challenges too, and those challenges include not only the uncertainty of our personal security, but, great uncertainty about our economic security and I noticed that many of the questions that we'll be talking about tonight, in terms of public policy and the mayors role and historic preservation have as part of their theme, money.

One of the challenges that our next mayor will face (is) that they have to cut the city budget. That is more true after September 11th than any of us could have imagined. And so we will be facing difficult choices. In terms of my own values, I think that historic preservation, having been born and raised in Seattle, is something that matters to our sense of community, and what defines us, whether it the Market or Pioneer Square or here in Chinatown International District, or the historic theaters and buildings throughout the city that have been preserved thanks to the efforts of Historic Seattle and other preservationists throughout the city.

But it's also an important part of our economy and we need to keep that in mind, as we face these hard times, when we think about cultural tourism and the assets that are reflected in these historic entities help generate resources, jobs, and ultimately tax revenue is something that we have to bear in mind, at least in next years budget, and in years to come. I welcome your thoughts in balancing these competing priorities.

WC: Thank you. Let me toss out a follow up question. There is, as you may be aware, no dedicated funding for preservation in Seattle, in fact, no heritage program per se, certainly nothing comparable to what the County does with Hotel/Motel tax revenues. What are your visions, particularly in funding in such a tough budget year? What are your ideas about the funding of both the city landmarks preservation program and a potential expansion to do heritage programming with neighborhoods, for example, possibly with Neighborhood Matching Funds that can open up that fund in a more purposeful way than they have been available.

MS: Well I think the only realistic prospect in the foreseeable future, and of course much depends upon what's happening in the economy, is to focus on effective programs, incentive programs that rely on the private sector, property owners, nonprofits, to carry this load. As much as I would like to sit here and tell you that there's a realistic prospect for increased city funding for heritage programs, I find that to be a daunting challenge given the current environment.

To give you some perspective of where the city budget is going, we have seen up until this year 3% or 4% real growth after inflation in the city's sales tax and tax revenues which is 50% of our general fund which would be the source of funding for these kinds of programs and for many other city programs. Our property tax is another 25% to our general fund and the rest comes from miscellaneous sources. So we've only had 3% to 4% real growth for a number of years, 5 or 6 years, all that money in the bank has been spent, for good purposes or not. It has been spent,and created a wave of unsustainable spending growing forward for a variety of programs, instead of 4% real growth. Instead, the city up until September 11th actually had zero growth in its revenue. We weren't even growing at the rate of inflation. Now we're flat, that is, and now its turning negative, so to be perfectly honest it seems to me that as much as I value heritage and historic preservation, we will have to hope that our assets and heritage can weather this, and be with us, because we're going to be facing cuts in basic services making it extraordinarily difficult, yet depending on how long this downturn runs, for us to do much, again this is dependent upon the economy.

But when the rebound comes, we should take that opportunity to increase city spending, we need to look at investing in historic preservation and heritage, that is serves an important purpose in the community and I would support that.

GN: The difference between my friend Mark and I is that I actually have experience balancing a large budget. I was the Chair of King County Council's budget committee during a very tough time, when expenses at the County for jails and courts and police were going up rapidly and the revenue from property tax was going down. Even with a Republican majority on our Council, I chaired that committee and put together a bipartisan coalition that did balance the needs for public safety and jails with the opportunity to invest in people's lives through human services programs and invest in arts and heritage and cultural life.

I think that's an important budget to maintain. In a city budget that is now 650 million dollars in general funds, I think you can squeeze out a drop or two to preserve the heritage of this community. I think that its important because if we respect the past, if we preserve the best from the past and teach our children to respect what came before them, they might very well treat us with respect when we are historic artifacts. I think that's an important value for our society to have. So when I've had the opportunity when I was a leader on our budget, I've made sure we've taken care of those things. The city doesn't have the kind of heritage program like we started, (like) they have at the county, and I think they should. I don't know if it will happen right away. But I will, at some point, start a sustained heritage program. A very small amount of money goes a long way for community-based organizations.

Secondly, I think the Neighborhood Matching Grant should be used to preserve the heritage of our neighborhoods. I'm from West Seattle. I think it's the greatest neighborhood anywhere. I think one of the strengths of the city is that someone has challenged me and said that this is the best neighborhood anywhere. The things that make our neighborhoods special, we need to hold onto. The Neighborhood Matching Fund is a place to do that.

Finally, the County has done a good job in heritage and arts with the Hotel/Motel Tax. That's going to go away, as a result of the deal on the football stadium. We should begin working today to replace that revenue. We should make sure that we have the opportunity, not only at King County, but also our cities to participate. I made sure when I sponsored legislation at the county level, for us to provide low interest loans to heritage organizations to preserve some of our historic sites, that we provide help to our small cities that wouldn't have help otherwise. I think that's an important aspect as well.