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Tax breaks help remodels happen

Programs help in sprucing up Juneau historic buildings

Posted: Tuesday, February 13, 2001

It was a family reunion of sorts as many MacKinnons toured the building bearing the family name.

The third-generation Juneauites got a chance during an open house last week to tour the newly revamped MacKinnon Apartments, built by their grandfather in the 1920s.

It was one of the first apartment buildings in Juneau and is listed on the National Register of Historic Places. But the building, at Third and North Franklin streets downtown, was showing its age and something needed to be done.

"The overhead started to eat us alive," said Steve Morrison, who owns the building with Steve Maitland.

The building, like the El Sombrero restaurant and other buildings around town, took advantage of a tax credit program to keep the antique looks while modernizing the interior. The major renovation was only possible through taking advantage of several tax credits, Morrison said.

One program was a federal tax break for renovations of buildings on the National Register of Historic Places. The incentive provides 20 percent tax credit for costs directly associated with renovations. Morrison also took advantage of a low-income housing tax break, which means the apartments will be rented to people below Juneau's median income.

"(The tax credits) allow you to put more money into it than you can really get out of it," Morrison said. If he went to a bank, there would have been no way to pay a loan with income from the apartments, he said.

The historical properties tax break applies only to commercial buildings, said Judith Bittner, head of the state's Office of History and Archeology. For owners of National Register-listed homes, grants will be available for the first time in 15 years to assist with renovations, she said.

National Register sites can qualify in one of four ways. Most of the Alaska sites, like the 23-unit MacKinnon Apartments, qualify because they show the general pattern and growth of the community, Bittner said.

Normally, a site has to be more than 50 years old or represent a major historical event, she said.

The process to get a property listed can be pretty long, Bittner said. First, information has to be gathered about the building, then submitted the Alaska Historical Commission, which makes a recommendation to her office. The application then makes its way to Washington, D.C., for final approval.

Morrison said it took him a year to get the MacKinnon Apartments listed. Getting the listing didn't mean he forfeited his options of property use.

"You don't lose any private property rights being on the list," said Gary Gillette, a historic planner for the city.

It's a common misconception that when a property is listed the owner can't change it, Bittner said. It's just that to stay on the list, a building has to conform to the guidelines that got it listed.

Buildings that are remodeled within a district have to conform to the city's version of adhering to the historic aesthetics. They can't be a detriment to the district, such as a company that might want to have a couple of big, flashy neon signs downtown, Gillette said.

The time of renovations and amount of original material play a part in historic status determination, he said.

There is also a much smaller tax break that renovators can get from the city. The city won't count up to $20,000 of a renovation in the assessed value of a property for four years, Gillette said.

"We haven't had very many people who've taken advantage of it," Gillette said.

That may be because some property owners don't know about the tax break.

For the owners of the El Sombrero restaurant, what started out as plumbing problems turned into buying the property and doing a major renovation. When the Mexican restaurant revamped its building seven years ago, its owners weren't aware of federal or city tax breaks. Their accountant brought the federal program to their attention and a neighboring property owner made them aware of the city break, said Ted Lehrbach, a co-owner of the restaurant.

The job wasn't without its snags. The El Sombrero falls within the Juneau Downtown Historic District, one of four in Juneau, and is subject to district rules. The district runs roughly from Franklin Street around the old ferry terminal to Second, Seward, Front, Shattuck and Ferry Way. The major remodel kept the shell, but little else, Lehrbach said. So the building had to conform to the rules, while replacing nearly everything.

A balcony was added that wasn't a historic trait of the building. But with some modifications, it fell within the city's historic guidelines.

"I think it worked pretty well," Gillette said. "They did a really nice job."

The MacKinnon Apartments was a bit harder to remodel. Southeast Remodel owner Tim Hulse, whose company reworked the building, was challenged with keeping historic quirks while bringing the building up to code. The building had wiring that may have dated back to the 1920s. It also had a steam boiler providing heat, an inadequate foundation, asbestos insulation and lead paint, Hulse said.

Some codes were grandfathered into the building. In keeping the original hallways, there isn't a fire door between floors and there isn't an elevator to make it compliant with the Americans with Disabilities Act.

Morrison is happy with the outcome. The eight months of actual construction work was completed on schedule and $200,000 under budget, he said.

The main hallways were kept pretty much intact, but a few of the details were modified. The hallways featured a grocery drop-off door for each apartment and windows that provided kitchen ventilation. Both still look like they're there, but are not functional because of fire codes.

For some of the MacKinnons, the hallways brought back memories. J. Allan MacKinnon remembered the windows in the hallway when he delivered newspapers there as a child, he said.

"You could smell (dinner) from one apartment to the next," he said.

Mike Hinman can be reached at mhinman@juneauempire.com.



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