In 1985, the State Legislature passed a law which allows a local option of Special Valuation, a program of real estate tax reduction for certain historic properties within the state. The purpose of this program is to encourage rehabilitation of historic properties. In 1987, Everett implemented this state program and made the Special Tax Valuation available to Everett property owners. The Everett Historical Commission was given the responsibility of approving applications for Special Valuation.
Special Valuation review and monitoring regulations for the City of Everett can be found in the Everett Municipal Code, Title 2, Chapter 96.
Under special valuation, qualified expenses for rehabilitation of a historic property are deducted from the assessed value of a property for tax purposes for up to 10 years.
To qualify for special valuation, a property must meet the following criteria:
- It must be listed on the Everett Register of Historic Places or be identified as contributing to an Everett Register historic district.
- The cost of rehabilitation must total at least 25% of the most recent assessed valuation of the structure (not including the value of the land) prior to rehabilitation.
- The work must be conducted within 24 months of the date of application for Special Valuation.
- The work must comply with the Washington State Advisory Council's Standardsby not adversely affecting those elements which qualify the property as historically significant.
To receive special valuation, property owners must sign an agreement with the Historical Commission that guarantees they will meet the following standards for 10-years:
- The property must be maintained in good condition
- Further improvements or changes to the property must be approved by the Historical Commission
- The property must be visible from the right-of-way or made available to the public once a year
Qualified Rehabilitation Expenditures
In general, qualified rehabilitation expenditures are amounts properly chargeable to a capital account. They do not include the cost of acquisition of a property or any enlargements of an existing building. Only work to the original structure is eligible to be considered a qualified expenditure.
Qualified expenditures include:
- Direct construction costs
- Architectural and engineering fees
- Construction permits and other code-related expenses
- Development management fees
- Construction loan interest and fee
- Utilities, taxes and insurance for the construction period
- State sales tax
The following are not qualified expenditures:
- Any costs related to the acquisition of the property
- Any expenditure attributable to enlargement of the building
- Any costs of valuation and permanent financing of the property
- Overhead costs or other costs of doing business