Unlocking Potential (and Avoiding Pitfalls): Historic Preservation Regulations in Philadelphia Real Estate

Philadelphia, a city steeped in history, offers a unique and often lucrative landscape for real estate investors. From charming row homes in historic neighborhoods to grand Victorian mansions, the opportunities are vast. However, investing in historic properties comes with a unique set of challenges and regulations. Navigating Philadelphia’s historic preservation laws is crucial for any investor looking to buy and renovate these properties successfully. This guide will walk you through the key aspects of these regulations, helping you unlock the potential of historic properties while avoiding costly mistakes.

Understanding Historic Designation in Philadelphia

Before diving into buying and renovating, it’s essential to understand how a property becomes historically significant in Philadelphia. Designation can occur at three levels:

• National Register of Historic Places: While listing on the National Register offers recognition and potential tax benefits, it typically doesn’t impose direct restrictions on property owners in terms of renovations. However, projects using federal funding often require adherence to the Secretary of the Interior’s Standards for Rehabilitation.
• Philadelphia Register of Historic Places: This is where things get interesting. Properties listed on the Philadelphia Register are subject to the jurisdiction of the Philadelphia Historical Commission (PHC). Any proposed work that affects the building’s exterior or significant interior features requires PHC review and approval.
• Local Historic Districts: These districts, often encompassing entire neighborhoods, have even stricter guidelines. Work within a historic district requires a deeper level of scrutiny and must adhere to specific design standards aimed at preserving the district’s overall character.

How to Determine if a Property is Historically Designated: The best way to determine a property’s status is to use the City of Philadelphia’s Office of Property Assessment (OPA) website or contact the Philadelphia Historical Commission directly. A title search can also reveal historical designation information. Knowing this before you even consider making an offer is absolutely vital.

Buying a Historic Property: Due Diligence is Key

Once you’ve identified a historic property, the due diligence process becomes even more critical. Here are some key considerations:

• Thorough Inspection: Historic buildings often have unique structural issues, hidden problems, and aging systems. A general inspection isn’t enough. Hire specialists experienced in historic building assessments to identify potential problems like asbestos, lead paint, foundation issues, and deteriorated roofing.
• Review Existing Permits and Documentation: Obtain any available permits, surveys, or historical documentation related to the property. This information can provide valuable insights into previous renovations, existing conditions, and potential restrictions. Contacting the Philadelphia Historical Commission directly can help you access relevant records.
• Understanding the Certificate of Appropriateness (COA) Process: Any proposed work that affects the exterior or significant interior features of a historically designated property requires a Certificate of Appropriateness (COA) from the Philadelphia Historical Commission. Familiarize yourself with the COA process and the types of projects that typically require review.
• Title Insurance Considerations: Review the title insurance policy carefully. Ensure that it covers potential claims related to historic preservation regulations, such as unforeseen restrictions or violations of previous agreements.
• Budget Realistically: Renovating historic properties often costs more than renovating modern buildings. Materials may be more expensive, specialized labor is required, and unexpected repairs are common. Build a contingency fund into your budget to account for these potential overruns.

Navigating the Renovation Process: Permits, Approvals, and Best Practices

Renovating a historic property in Philadelphia requires careful planning and adherence to specific regulations. Here’s a breakdown of the key steps:

1. Pre-Application Consultation with the PHC

Before submitting a formal application for a Certificate of Appropriateness, it’s highly recommended to schedule a pre-application consultation with the Philadelphia Historical Commission. This meeting allows you to discuss your proposed project, receive feedback from PHC staff, and identify potential issues early on. This proactive approach can save you time and money in the long run.

2. Preparing Your COA Application

The Certificate of Appropriateness (COA) application is the formal request for permission to perform work on a historically designated property. The application must include detailed drawings, specifications, photographs, and other documentation that clearly illustrates the proposed work. The level of detail required depends on the scope of the project. For minor alterations, a simple drawing may suffice. For major renovations or additions, a comprehensive set of architectural plans is typically required.

3. Review and Approval by the PHC

Once your application is submitted, the PHC staff will review it to ensure that it complies with the applicable regulations and guidelines. The staff may request additional information or revisions. Depending on the nature of the project, the application may be reviewed by a PHC committee or by the full Commission. The PHC considers various factors when reviewing applications, including the historical significance of the property, the impact of the proposed work on the property’s character, and the compatibility of the proposed work with the surrounding historic district.

4. Adhering to the Secretary of the Interior’s Standards for Rehabilitation

The Philadelphia Historical Commission often references the Secretary of the Interior’s Standards for Rehabilitation as a guideline for evaluating proposed work. These standards provide a framework for preserving and rehabilitating historic buildings while allowing for necessary updates and modifications. Key principles include:

• Preserve Character-Defining Features: Identify and protect the architectural features and materials that contribute to the property’s historical significance.
• Avoid Demolition of Historic Materials: Repair rather than replace historic materials whenever possible.
• Use Compatible Materials and Techniques: When replacement is necessary, use materials and techniques that are similar to the original materials and techniques.
• Design New Additions that are Compatible: Ensure that new additions are compatible with the existing building in terms of scale, materials, and design.
• Document Changes: Keep accurate records of any alterations or additions made to the property.

5. Common Renovation Challenges and Solutions

Renovating historic properties presents unique challenges. Here are some common issues and potential solutions:

• Asbestos and Lead Paint: These hazardous materials are common in older buildings. Hire qualified professionals to safely remove or encapsulate them.
• Deteriorated Roofing: Replacing a historic roof requires careful consideration. Research appropriate materials and techniques that match the original roof as closely as possible.
• Window Restoration vs. Replacement: Historic windows often contribute significantly to a building’s character. Consider restoring existing windows rather than replacing them, if possible. If replacement is necessary, choose windows that match the original style and materials.
• Masonry Repairs: Repointing brick or stone requires using the correct type of mortar to avoid damaging the historic masonry. Consult with a qualified mason experienced in historic preservation.
• Energy Efficiency Upgrades: Balancing energy efficiency with historic preservation can be challenging. Explore options like adding insulation, installing energy-efficient windows, and upgrading HVAC systems without compromising the building’s character.

Financial Incentives for Historic Preservation

Fortunately, various financial incentives can help offset the costs of renovating historic properties. These incentives include:

• Federal Historic Tax Credit: This credit provides a 20% tax credit for qualified rehabilitation expenses for income-producing properties listed on the National Register of Historic Places.
• State Historic Tax Credit: Pennsylvania offers a similar state historic tax credit that can be combined with the federal credit.
• Local Grants and Loan Programs: The City of Philadelphia and various non-profit organizations offer grants and loan programs to support historic preservation projects.
• Facade Easements: Donating a facade easement to a qualified organization can provide a tax deduction while ensuring the preservation of the building’s exterior.

The Importance of Working with Qualified Professionals

Navigating Philadelphia’s historic preservation regulations can be complex and time-consuming. It’s essential to work with qualified professionals who have experience in historic preservation. This includes:

• Architects: Hire an architect with expertise in historic preservation to design your renovation project and prepare the necessary drawings and specifications.
• Contractors: Choose a contractor with experience in working on historic buildings. They should be familiar with the techniques and materials used in historic construction.
• Engineers: Engage a structural engineer to assess the building’s structural integrity and design any necessary repairs or reinforcements.
• Attorneys: Consult with an attorney who specializes in historic preservation law to advise you on legal issues and navigate the regulatory process.

Conclusion: Embracing the Past, Building the Future

Investing in historic properties in Philadelphia offers tremendous potential, but it requires a thorough understanding of the city’s historic preservation regulations. By conducting thorough due diligence, working with qualified professionals, and adhering to the applicable guidelines, you can successfully navigate the renovation process and unlock the hidden value of these unique properties. Embracing the past while building for the future is key to creating successful and sustainable real estate investments in Philadelphia’s historic landscape.