As one local development group continues to push forward with the rehabilitation of two historic buildings in downtown Charlotte Amalie, preservation officials are hoping others will be inspired to follow suit — and are making sure developers and property owners know exactly how to do it.
The recent work by local development group Fifteenand9Main, the group behind the restoration of 15 Main and Wimmelskaft Gade 9, marked a major milestone for St. Thomas: their project became one of the first in Charlotte Amalie to be approved for the Federal Historic Preservation Tax Credit program. But as Sean Krigger, director of the Virgin Islands State Historic Preservation Office, points out, the opportunity isn’t limited to just one group.
“This is a really good program,” Krigger said. “It’s important that the community understands the full spectrum of how the program runs — we just want our potential developers and our property owners to know.”
The program offers a 20% income tax credit for the rehabilitation of income-producing historic buildings.
For developers or property owners interested in the Federal Historic Preservation Tax Credit, Krigger says the first step is surprisingly simple: just Google “Federal Historic Tax Credit.” The National Park Service’s Historic Preservation Tax Incentives page should be one of the first search results — and that’s a great place to start.
“Once they’ve done that, they pursue the website. The next step — give the Virgin Islands State Historic Preservation Office a call, because that’s where we want to start the conversation. We want to start the partnership,” Krigger said.
The State Historic Preservation Office, he said, works with developers and consultants to confirm the building’s history, help draft the historical narrative, and formally submits the required application forms to the National Park Service for review.
“We are the ones that officially upload those applications,” Krigger said. “And I have to prepare a certification review for it.”
“So that’s the first step. Part one, getting it certified, and then it moves on to part two and three.” Krigger said.
The tax credit program operates through a three-part process:
Part 1: confirms that a building is historically significant.
Part 2: evaluates the developer’s proposed rehabilitation plans.
Part 3: ensures the completed project meets federal preservation standards.
In addition to the Federal Historic Preservation Tax Credit, developers in the Virgin Islands may also qualify for additional benefits through the Virgin Islands Economic Development Authority, Enterprise Zone Commission Program, designed to encourage investments in historically significant yet economically distressed areas like Christiansted and Frederiksted.
“So if you have a property owner or a developer that has the good fortune of not only having a building in the historic district, but also it falls into one of the enterprise zones — they can combine those credits,” Krigger said.
Enterprise Zone benefits may include tax credits for construction and rehabilitation work, reduced gross receipts taxes, and property tax exemptions.
“The federal historic (credit) is towards your income tax. The enterprise zone (program) could be either income tax or gross receipts,” Krigger said. “If they’re pursuing income tax, they could potentially have a credit up to like 40% based on their investment. So that’s a significant return.”
“You have to have the capital to do the work to earn the credit,” Krigger said.
This can be a major roadblock for many developers, especially for nonprofit organizations. To overcome it, some turn to tax credit syndication, a way to make money in which banks purchase the approved tax credits in advance, providing immediate funding to projects in exchange for future tax benefits.
“If they (nonprofits) go through the certification process and they get certified, they could potentially sell the credits. It’s not gonna be dollar for dollar of course. But what it means is that that nonprofit entity can use that as a capital raising effort to fund their historic rehabilitation project.” Krigger said.
Krigger encourages anyone interested in learning more to reach out to their local State Historic Preservation Office with any questions.
Krigger emphasized that at its core, the Federal Historic Preservation Tax Credit Program is about preserving the Virgin Islands’ cultural heritage and history. The more accessible the process becomes, the greater the chance these historic buildings will be protected for generations to come.