Incentives

Encouraging building renovation and business expansion are primary goals of the Jacksonville Main Street program. Financial incentives may assist property and business owners achieve these objectives, which enhance the local economy, quality of life, and appearance.

Financial incentives fall into four major categories: federal tax credits, local incentives, low-interest loans, and grants. Tax credits reduce the amount of federal tax owed by owners whose efforts meet certain criteria. Local incentives encourage specific renovation programs. Low-interest loans usually enable owners to borrow money for rehabilitation work at reduced interest rates. Grants often target specific types of work, involve stringent criteria, and may be competitive.

Tax Credits

FEDERAL REHABILITATION INVESTMENT TAX CREDITS

Investment Tax Credits (ITC) - credits applied to owner's federal taxes owed or to future tax liabilities
Credit is typically worth a percentage of renovation costs
Expenditures eligible for only one tax credit
Claiming credits may draw attention to your tax return by the IRS - consult with experienced accountant or attorney
For commercial and income-producing properties
Passive Activity Limitations, Alternative Minimum Taxes, and At-Risk Rules all affect the amount of credit an individual can claim in one year
For individual/business owners paying federal income tax
About $9,000 maximum credit for individual claims in any one year; larger credits may be amortized & carried over

10% Rehabilitation Tax Credit for Non-Historic

Commercial Buildings Built Before 1936
Administered by IRS; does not involve IHPA review: Visit IRS website to download Form 3468 and instructions: www.irs.gov Contact IRS: 800-829-1040
Receive credit of 1O% of cost to rehab a non-historic building built before I936
Only non-National Register buildings are eligible
Income-producing residential and owner-occupied housing are not eligible
Must be substantial rehabilitation; spend over $5,000 or adjusted basis during a 24-month period
Eligible work includes masonry repair, exterior painting, interior remodeling, and mechanical work
Ineligible work includes building additions, appliances, furniture, and fixtures
Must pass a physical retention test: Retain 50% of exterior walls as exterior walls, & Retain 75% of exterior walls as exterior or interior walls, & 75% of building's internal structure must remain
No IHPA, NPS, or other formal design-review process
No application fee
Applicant submits form to the IRS
Documentation of renovation expenditures must be retained

20% Rehabilitation Tax Credit for Historic Buildings

Administered by the Illinois Historic Preservation Agency (IHPA), National Park Service (NPS), and Internal Revenue Service (IRS). Contact IHPA: 217-785-4512
Only for depreciable property (Properties rehabbed for commercial, agricultural, industrial, rental residential)
Owner-occupied housing is not eligible
Building must certified historic structure: Listed on National Register - individual or contributing building within a National Register district; or Located in certified local historic district
Individually listed certified local landmarks ineligible
Project must be certified by NPS to meet Secretary of the Interior's Standards for Rehabilitation
Requires preservation of as many of the existing historic features and materials as possible
Does not require restoring building or features to their original appearance; Non-historic features may be kept
May add new, compatible alterations/additions, but their costs excluded from amount submitted for credit
Must be substantial rehabilitation; spend over $5,000 or adjusted basis during a 24-month period
Eligible rehabilitation expenditures may include: Construction costs on the historic building; Soft costs that are depreciable rather than taken as a one-time expense: A/E fees, survey, legal, development fees, construction-related costs; Ineligible expenditures include acquisition, landscape/site improvements, new additions, or furnishings
Owners may qualify for a 60-month phased project and must have completed plans in advance
May apply for credits after work begins & up to 36 months after completion; advise applying before work begins to avoid costly mistakes or certification denial
Building must be placed in service
Owner must retain building for five years
NPS charges a sliding fee for review, ranging from free (for projects with budgets of under $20.000) to $2,500 (for projects with budgets in excess of $1 million)
Must fill out 3-part application for review by IHPA & NPS

50% Disabled Access Tax Credit

Administered by IRS; visit IRS website to download Form 8826 (Disabled Access Credit) & instructions: www.irs.gov
Tax credit for eligible small business that pays or incurs expenses to provide access to persons with disabilities
Expenses must be to enable eligible small business to comply with the Americans with Disabilities Act of 1990
For rehabilitation of buildings housing small businesses: Less than $I million in gross receipts in preceding year; or Less than 30 full-time employees in preceding year
Work must meet current ADA Standards declared by the Secretary of the Treasury; Design approval must be obtained from the Office of the Secretary of Treasury
50% credit of amount spent making business accessible
May take credit on work costs between $250 and $I0,250
Maximum $5,000 credit may be taken each year
Documentation of expenditures must be retained
Eligible expenses include installing elevators, walkways, restrooms, ramps, & redesign of entry/interior circulation
Only claim work necessary for accessibility for tax credit
New buildings are not eligible
May claim credits in more than one tax year provided the expenses claimed were made in the current tax year

OTHER TAX INCENTIVE PROGRAMS

Property Tax Assessment Freeze Program

Administered by IHPA
For non-commercial, residential-only buildings
Building must be a certified historic structure: Listed on National Register (individually or as a contributing building in National Register district; or Located in certified local historic district; or Individually designated a certified local landmark
Assessment frozen for 8 years at pre-rehabilitation rate, then raised in steps to current level over next 4 years, until current rate is reached
Only one level of design review by IHPA; IHPA certify project meets Secretary of Interior's Standards
Eligible properties include: Single-family owner occupied; Six-flats if one unit is owner occupied; Co-ops & condos

Easements

An easement is a voluntary legal agreement to protect part or all of a building (or other historic resource) in perpetuity. Under terms of an easement, a property owner grants a portion of, or interest in, his property rights to an organization whose mission includes historic preservation. In return, the owner receives a substantial tax deduction because he has theoretically reduced the value of his structure by reducing his and any future owner's ability to alter/demolish significant features protected by the easement. The portion of the donated building property rights are monitored and protected by the preservation organization.
For more information, contact Landmarks Preservation 312-922-1742

Investment Tax Credit for Low Income Housing

The Tax Reform Act of I986 established a credit for low income housing acquisition, construction, & rehab
For information, contact Illinois Housing & Development Authority (IHDA) 312-836-5200
Architectural & Transportation Barrier Removal Deduction
Deduction (not a credit) of costs of removing barriers to the disabled and elderly
Administered by IRS; For more information, visit IRS website for Form 8826 & instructions: www.irs.gov See also Publication 535, Business Expenses

Loan Programs

JEZDC LOW INTEREST LOAN PROGRAM

Up to $10,000 repaid over 5 years at 3% interest
Only for permanent building improvements, including: Structural repairs & improvements, interior partitions; Mechanical, electrical, and/or plumbing systems; Painting, awnings, window/door repairs, lighting; Façade repairs, slip cover removal, storefront rehab; Site work, paving, tuck pointing, roofing; ADA upgrades, restroom construction/rehab
Not for inventory, business operation, building purchase, gap financing, or refinancing of existing debt
Requires mortgage & owner approval of improvements
Administered by JEZDC (Jacksonville Enterprise Zone Development Corporation), a Jacksonville Main Street subsidiary; 217-245-6884

FACADE IMPROVEMENT LOAN PROGRAM

Up to $25,000 repaid over 5 years at 1% below current lending interest rate
Improvements limited to building face, such as: Tuck pointing, brick repair, painting, awnings, window/door repairs, lighting, signage, storefront rehab, slip cover removal, limited parapet/roof repairs or ADA upgrades
Not for inventory, business operation, building purchase, gap financing, or refinancing existing debt
Administered by participating local bank; project approval by Jacksonville Main Street at 217-245-6884

CITY REVOLVING LOAN PROGRAM

For business development & operating costs, as well as rehabilitation expenses to develop business
Requires business plan submission
Loans up to $10,000 per full time job, not including owner
Loan rate of 3 to 5%
Administered by City of Jacksonville 217-479-4610

TRI-COUNTY ECONOMIC DEVELOPMENT CORPORATION

Provides gap financing for acquisition or improvements matching rate from the bank
Contact Jacksonville Regional Economic Development Corporation at 217-479-4627

STATE & FEDERAL LOAN PROGRAMS

Experience Illinois Program: Short-term, low-cost loan to develop/enhance tourism-based projects; Illinois State Treasurer 217-524-4010
STEP Small Business Loan Program: A low-interest business loan with a bank, backed by Illinois State Treasurer (217-524-4010)
HUD 203(k) Rehabilitation Loan program: US Department of Housing & Urban Development long-term loan for acquisition & rehab of older homes based on future property value; inquire at lending institution
Other Federal Loan Programs are also available for large-scale projects that may be combined with certain tax credits; inquire at National Main Street (www.mainstreet.org)

Local Incentives

TAX INCREMENT FINANCING DISTRICT (TIF)

Administered and pre-approved by City Community Development Department at 217-479-4620
Provides reimbursement for qualifying major expenses on larger scale projects that provide living spaces, employment opportunities, and/or significant rehabilitation to downtown property

ENTERPRISE ZONE SALES TAX ABATEMENT

For commercial construction within the Enterprise Zone that normally requires a building permit
No sales tax paid on materials for permitted work
Call Community Development Department 217-479-4620

Grants

SIGNAGE GRANT PROGRAM

Still under development - not yet available, but certain projects may be grandfathered in if pre-approved by Design Committee
Reimbursement up to $500 on pre-approved signage that is appropriate for building and district, and unique to business
Back-lit plastic or blown signage is ineligible
May include lighting, awnings, or banners
Requires Jacksonville Main Street Design Committee approval; call 217-245-6884

FAÇADE IMPROVEMENT GRANT PROGRAM

Reimbursement up to $5,000 at 80/20 rate on pre-approved improvements to building face, including: Tuck pointing, brick repair, painting, awnings, window/door repairs, lighting, signage, storefront rehab, slip cover removal, limited parapet/roof repairs or ADA upgrades
Proposal must be submitted, with cost estimates, to the Design Committee for approval before work commences
Work completed prior to approval ineligible
Work must be preservation-based
Limited to commercial Plaza properties with canopies removed
Improvement must be significant
Owner labor or non-billed work ineligible
Work must be completed within 1 year of approval
Subject to review by Design Committee upon completion
Administered by Jacksonville Main Street 217-245-6884