Portland’s Proposed URM Mandate and Historic Rehabilitation: What Building Owners Can Do Now

By Hennebery Eddy

As part of a comprehensive renovation, the exterior walls of this historic building were seismically reinforced using shotcrete. 1. The walls are prepared with rebar. 2. Rebar close-up with exposed brick prior to shotcrete application. 3. The finished shotcrete walls. 4. The exterior of the historic building retains its character, essential for a designated historic structure.

Regardless of whether the City of Portland adopts a mandate requiring the seismic retrofit of unreinforced masonry (URM) buildings, the realities of a probable major seismic event in the next 50 years are sobering — with life-altering, social, financial and economic implications for everyone in the region. For many building owners, a retrofit requirement may seem financially infeasible if they lack the liquidity to pay for potential retrofits and cannot secure funding from risk-averse lenders. Though it may be months or even years before the city finalizes or implements a mandate, building owners can and should start evaluating now the potential costs of seismic retrofits to protect life and property — and whether federal, state or other grant money may be applied to offset these costs.

According to the city’s URM Building Policy Committee Report, Portland’s URM building inventory includes more than 550 historic buildings, including those listed on the National Register of Historic Places, local landmarks, those that contribute to historic districts, and buildings located in conservation districts. Additionally, most of Portland’s more than 1,500 total URM buildings were constructed prior to 1960, meaning by age, they are potentially eligible for listing as historic structures.

The Vivian Apartments, historically known as the Alco Apartments, constructed in 1912 and located in NE Portland. As part of a larger renovation effort, which includes seismic reinforcement of the URM structure, Hennebery Eddy is completing Federal Tax Credit and State of Oregon Special Assessment applications for the property. Hennebery Eddy helped list the property on the National Register of Historic Places in 2016. Image courtesy of the Oregon Historical Society.

Each building will first need an assessment to determine the appropriate retrofit scope, approach, and costs. Depending on the scope, owners of designated historic or potentially register-eligible properties may benefit from federal tax credits that offset the cost of building upgrades, of which seismic retrofit efforts may be a part. Federal rehabilitation tax credits permit owners of designated historic structures to reclaim 20% of building rehabilitation hard and soft project costs. Another similar program allows for a 10% credit for non-designated commercial buildings predating 1936. These tax credits are available now and are not dependent on the city’s URM policy.

Tax credits are only one aspect of financial incentives available to historic property owners; another option includes the State of Oregon Special Assessment property tax incentive, which “freezes” taxes for 10 years at the current assessed property value. During the 10-year tax freeze, owners must make investments of at least 10% of the property’s current market value, without an increase in assessed value, and must do so in the first five years of the 10-year window.

Owners and developers may not be looking for substantial design changes to their buildings, and therefore may plan to consult directly with structural engineers. However, engaging experienced historical design professionals is essential if a building’s historic status, features, or eligibility are in question, or need to be considered before any changes are made to ensure assessments, applications, and documentation are conducted properly, in the correct sequence, and in accordance with local, state and federal guidelines.

Hennebery Eddy’s specialized Historic Resources Group has deep experience with the complexities and benefits of rehabilitating historic buildings and offers a breadth of historic preservation services, including National Register of Historic Places nominations, Section 106 and Section 110 compliance, historic preservation tax incentives, and historic building surveys and assessments. Our team can help you make your building more resilient while protecting your investment and following the guidelines for historic properties. Connect with us to find out what options may be available for your historic property.