Decline of McMansions

This weekend I read about the decline of McMansions – the average house size has begun to decline with the crash of the housing market. (The new home builders have really been hurt by the current housing market – they built and promoted the McMansion “lifestyle”).

I was reading about the housing trends and thinking about how this could help or benefit the preservation/restoration niche of the building industry when I started to read the comments section. I was glad to read about people making smaller spaces work when I read a comment from someone who had been sadly misinformed about older homes and energy efficiency. The comment is copied here:

Listed: MSN Real Estate’s daily blog – MSN Real Estate: “p.s. The modern McMansions actually use about the same amount of energy to heat and cool as our tiny premodern depression era house. Oh I can’t wait to update the horsehair board insulation and large *original* windows. We’ve learned our lesson about buying older unimproved houses, let me tell you….”

The preservation/restoration community has a lot of information about the truth of older building energy efficiency in print and on the Internet – but obviously we are missing a large number of older building owners.

The argument that a 900 sq. ft. house (referenced in her first post) uses less energy than a McMansion at 7,000 plus square feet doesn’t even make sense from a logic stand point and goes to show the marketing for the new building products is working.

A few facts (based on her comment):

  • Buildings built from 1950 through 1970 are the least energy efficient (actually the federal government has done studies on their older buildings and they consistently use less energy than their newer buildings).
  • Heat rises – it makes more sense to insulate the roof than the walls in an older home
  • Plaster is not insulation – it is a wall finish
  • It has been scientifically proven that well maintained wood windows with a storm window (either interior or exterior) are as energy efficient as replacement windows. The energy savings is $0.60 per year – the replacement windows will last at the most 30 years. Will the money saved balance with the amount the windows cost?

The National Trust for Historic Preservation recently launched a website devoted to providing “green building” resources to home and business owners.

The site includes:

Tips for homeowners
*10 green things for under $10
*wood window facts (to educate yourself when the replacement window salesperson knocks on the door)
*energy efficiency tips

There is also information for businesses, about the reuse of buildings, green news, research, and other green building/preservation resources.

This is a valuable site to continue your education about preservation and sustainability be sure to visit and revisit often http://www.preservationnation.org/issues/sustainability/.

Last Saturday, June 7, Chuck, Lois, and Danielle drove to Bellefonte, Pennsylvania (right above State College) to conduct a seminar for the Borough of Bellefonte as part of their wood window seminar day in the park. There were various other exhibitors (replacement windows, storm windows, and stained glass window experts with booths) as part of the window fair.

It was a hot day with high humidity on top of the heat – I would describe it as oppressive. We made do with the weather (which impacted the turn out) and moved our presentation into the park gazebo where there was shade and benches for the attendees.

Despite the small crowd we had a good time discussing the importance of wood windows to a historic building, the replacement cycle (caused by inferior new growth wood and modern construction practices – the replacement window salesman was not happy with this aspect of the discussion), and storm window options (interior and exterior). We also covered energy efficiency of wood windows, with support from the University of Vermont Wood Window Report (showing the energy savings is less than a dollar a year when wood windows are replaced with modern replacement windows), how to make wood windows more energy efficient, and a demonstration of the steps to repair wood windows.

We enjoyed sharing our knowledge with the few concerned homeowners and the Borough of Bellefonte’s available HARB members. We look forward to visiting this Victorian city again in the near future.

A few months ago I came across an article from DWM Magazine (DWM = Door and Window Market) about a lawsuit filed on Oklahoma against Pella Corp by a homeowner that alleged the Architect Series windows have design and manufacturing defects as result they are leaking and causing premature wood rot and damage.  You can read the article here: https://www.dwmmag.com/lawsuit-alleges-pella-architect-series-windows-were-defective/

Replacement windows come in a wide range of options and price points – unfortunately paying more doesn’t always equal greater quality when choosing a replacement window (and if you have your original windows they most likely can be repaired and as energy efficient as replacement windows – science backs this.)  You can read more here:  http://practicalpreservationservices.com/put-replacement-windows-to-shame-what-that-nice-salesperson-doesnt-want-you-to-know/

Reading the article about the lawsuit against Pella I wasn’t surprised by the issue the homeowner had.  They had purchased aluminum clad (wood wrapped in aluminum) ‘designed and manufactured to protect the wood’ and I’m sure they also tout the maintenance free aspect of the design.  The complaint alleges, “[An] investigation revealed that the defendant’s Architect Series windows aluminum exterior cladding had design and manufacturing defects allowing rain water to drip in to the interior wood and that the rain water dripping in to the interior wood over the years resulted in rotted wood  internal destruction of the windows.”  This is a common issue when wrapping wood (I won’t even get into the fact that the pine they are using is inferior to old growth wood) and is one of the reasons the Secretary of the Interior advocates for NOT wrapping wood in metal or synthetic siding: https://www.nps.gov/tps/how-to-preserve/briefs/8-aluminum-vinyl-siding.htm

“Since aluminum and vinyl sidings are typically marketed as home improvement items, they are frequently applied to buildings in need of maintenance and repair. This can result in concealing problems which are the early warning signs of deterioration. Minor uncorrected problems can progress to the point where expensive, major repairs to the structure become necessary.

If there is a hidden source of water entry within the wall or leakage from the roof, the installation of any new siding will not solve problems of deterioration and rotting that are occurring within the wall. If deferred maintenance has allowed water to enter the wall through deteriorated gutters and downspouts, for example, the cosmetic surface application of siding will not arrest these problems. In fact, if the gutters and downspouts are not repaired, such problems may become exaggerated because water may be channeled behind the siding. In addition to drastically reducing the efficiency of most types of wall insulation, such excessive moisture levels within the wall can contribute to problems with interior finishes such as paints or wallpaper, causing peeling, blistering or staining of the finishes.”

Trapping the water behind the metal and against the wood is the same issue that is being alleged as a design fault in the Pella lawsuit.  The lawsuit also alleges that the company had known this was a design defect since 2006 (there had been previous class action litigation).  The complaint sums this up, “[Pella] breached its duty to disclose to plaintiff that its Architect Series windows had a substantial risk of leaking because of design and manufacturing defects and that the leakage would result in rotted wood and that after the purchase of the windows defendant breached its duty to inform plaintiff that defendant’s Architect Series windows had a very high likelihood of leaking that would result in rotted wood”.

As I stated previously I wasn’t surprised by the cladding causing wood rot and I do think a window manufacturer should understand this and design to avoid the condition, but most people move every 7 years and if the previous homeowner paid the expense of replacement windows when the windows begin to fail it is a ‘necessary’ cost of maintaining a home and the replacement cycle continues.

 

THIS IS A RE-POST OF A PODCAST INTERVIEW WE ORIGINALLY POSTED FEBRUARY 2019:

John Walters from LeWalt Consulting Groupe joined me to discuss how tax strategies can help with land and property preservation efforts.

We covered:

John’s contact information and additional resources:

LeWalt Consulting Groupe, LLC
https://www.facebook.com/LeWaltConsulting

727-388-9024

Tax Codes Referenced:
Conservation Easements
Historic Preservation Tax Incentives
Energy Incentives

Bio:
John is an Enrolled Agent, Certified Tax Coach, Best Selling Author, Instructor and Speaker at the firm LeWalt Consulting Groupe, LLC located in St. Petersburg, Florida.
He is known on LinkedIn as:
“Florida’s Leading Pro-Active Tax and Financial Change Agent for your Diverse needs and Individual Lifestyle”
At LeWalt Consulting Groupe, LLC our PASSION is creating “Tax Alpha” that helps you, as the Entrepreneur and Business Owner, live the “Ultimate”​ TAX-FREE lifestyle you desire using the complexities written into the Internal Revenue Service Tax-Code to your favor!
After all… We believe those numbers on your TAX FORMS is your “REAL” money, why not protect, preserve, and keep it for you and your family?
How may we Help You Live a Life that is less taxing…?
________________________________________________________________________

Transcript:

Announcer: Thank you for tuning into the Practical Preservation podcast. Please take a moment to visit our website practicalpreservationservices.com for additional information and tips to help you restore your historical home. If you’ve not yet done so, please subscribe to us on iTunes, Stitcher, and Sound Cloud, and also like us on Facebook.

Announcer: Welcome to the Practical Preservation podcast hosted by Danielle Keperling. Keperling Preservation Services is a family-owned business based in Lancaster, Pennsylvania dedicated to the preservation of our built architectural history for today’s use as well as future generations. Our weekly podcast provides you with expert advice specific to the unique needs of renovating a historic home, educating by sharing our from-the-trenches preservation knowledge and our guests’ expertise, balancing modern needs while maintaining the historical significance, character, and beauty of your period home.

Danielle: Thank you for joining us on the Practical Preservation podcast. Today, we have John Walters speaking with us about some tax tools that you can use to help preserve buildings. John is an Enrolled Agent, Certified Tax Coach, best-selling author, instructor, and speaker at the firm LeWalt Consulting Groupe, LLC. located in St. Petersburg, Florida. He is known on LinkedIn as Florida’s leading proactive state and financial change agent for your diverse needs and individual lifestyle.

Danielle: “At LeWalt Consulting Groupe, LLC., our passion is creating tax alpha that helps you as the entrepreneur and business owner live the ultimate tax-free lifestyle you desire using the complexities written into the Internal Revenue Service tax code to your favor. After all, we believe those numbers on your tax form is your real money. Why not protect, preserve and keep it for you and your family? How may we help you live a life that is less taxing?”

Danielle: So John, thank you for joining us and sharing your knowledge about the tax code and how that can be used to help us preserve buildings.

John: Well, thank you Danielle. I enjoy talking to people about taxes even though, I’m sure for most, it seems like a boring subject, but it’s one of the most things you’re going to pay all of your life and you might as be able to control it to your best ability.

Danielle: And understand it the best you can. I know I don’t feel I understand everything as much as I probably should. But yeah, I think the protections that people don’t understand that are written into tax code are really interesting because they can help you finance a project, they can help you make sure the building is preserved. Those things, I don’t think people necessarily think that those are tax code things, but they are. So thank you for sharing that knowledge with us.

John: Sure, no problem.

Danielle: I know one of the things that most people don’t either understand or are aware of is the tax conservation easement. If you could talk to us a little bit about that and help us understand. I understand a little bit from a preservation standpoint that the easement means that the outside can’t be changed because it’s protected, but I don’t understand what the tax ramifications of that is.

John: Okay. In the Internal Revenue Code, there’s a section called 170(h) and it talks about land conservation strategies, especially for federal and state taxes. What a land conservation strategy is designed to do is it’s designed to meet basically the tax payer’s – in this case, your client or whoever you’re working for – financial goals and take into heart their charitable desires.

John: In essence, it’s to preserve their properties and realize their most favorable economic outcomes, and actually, you get some tax savings out of it too. You become part of what we call the ready to conserve your assets for individuals and enjoy the related tax savings possible and the income opportunity in the property’s amenities.

John: In essence, what you want to do is let’s say you have a piece of property, but you don’t want it to be built on or you want to preserve it for generations to come and things like that. There are provisions in the tax code under the land conservation easement strategies is to actually give that land away. In essence, you’re giving it away for the purposes of being able to develop it or use it for some other commercial purpose to the government and you have official documents that tell you that you can do that. In turn, there are charitable deductions that you can take for that conservation.

John: With that, your land is preserved. Basically, you still retain rights to it, but you just can’t use it for other purposes, intended purposes.

Danielle: So it almost restricts you? Yeah, it restricts what you do with it. Okay.

John: Exactly. You have basically a deed of restriction, but that land can be used for whatever thing that you set it up for.

John: For instance, let’s say that you have land and you want to preserve it for hunting and you don’t want anybody to build anything on it. You could have a land conservation easement for that property; it could still be used for hunting and you can use for that purpose. You can even build a structure on there like a lodge or something like that and people could use it for hunting, but they wouldn’t be able to use for some other commercial development.

Danielle: [crosstalk 00:06:17] Yeah.

John: Yeah. In turn, when you take that conservation easement, the government’s giving you a tax deduction and it can be up to 50% of your adjusted gross income. Let’s say for every dollar this property is valued at, you go get it appraised and stuff, sometimes you can get to four to five times the benefit. In essence, what you’re telling is, well, if I built it commercially, this is what it would be valued at. But if I-

Danielle: So if you develop the property, that’s why they use as your [crosstalk 00:07:00]

John: Right.

Danielle: Okay, that makes sense.

John: So if I was going to put a housing development on it, it would be worth X. But if I say, “I don’t want to allow that on there,” they’re going to take that value of the housing development, it’s appraised out, subtract what the land is worth right now, and you get the difference in the tax credits.

Danielle: Okay. Okay, and then is that an actual credit onto … I’m trying to think about what I’m familiar with preservation easements. You usually then donate that to a nonprofit, is that correct? Or is the conservation a little bit different?

John: Yeah, it’s actually donated to the government, per se, because it’s under tax code. Now, there’s the charitable contributions fall under the federal tax code, but you can also get state tax credits too, depending on what state you’re in and the property.

Danielle: Yeah, I know. Yeah, the preservation tax credits are very dependent on which state you’re in, how robust they are.

John: Mm-hmm (affirmative), exactly.

Danielle: Yeah. So this benefits the person that’s doing the easement by reducing their taxable income. Is that pretty much what the goal is?

John: Right. You can reduce your actual tax that you would owe by between 30 and 50% of your adjusted gross income.

Danielle: Okay.

John: Now, let’s say it exceeds 50% of your gross income in that particular year, those charitable credits can be carried over for many years into the future until you can use them up.

Danielle: Okay.

John: Yeah, so typically, if you don’t have a whole lot of income in that particular year, it will just carry over until you can use those up.

Danielle: Use it up, so there’s not a time limit. I was thinking there’s a difference – and now this is telling you what I don’t understand about taxes. There’s a difference between a credit and a deduction, is that correct? So the credit is like just straight money to you, it’s not based on any kind of scale, correct? Is that what-

John: Well, yeah. There are credits that are basically a one-to-one dollar reduction in your taxes. Now, in the credit world-

Danielle: Okay, so [crosstalk 00:09:27] a percentage. Yeah.

John: Exactly. In the credit world though, you have two types of credits. You have what we call non-refundable, meaning that it can reduce your income, your taxes to zero. Then after that, if you still have more credit, you can’t use it anymore. You won’t get additional money back. But if they’re refundable, that means that you could have zero income tax that you owe, and still get a refund back from the government. Now-

Danielle: Oh, okay. Makes sense. Yeah.

John: And with the deductions, they are a percentage, depending on what your marginal tax bracket is. So in essence, a deduction, if you’re in the 25% tax bracket, then you’re going to get 25% or 25 cents back on the dollar for every dollar you deduct.

Danielle: Okay, okay. I know I see, in this area, a lot of conservation easements for farmland.

John: Exactly.

Danielle: Where the families want to preserve their farms from development but they still want to be able to use them and farm them. The easement doesn’t stop you from being able to use it from how you’ve been using it; it’s how you write the easement. Is that correct?

John: Right. So for an example like that, in farming and ranching, Ted Turner, which we all know from the broadcasting world and everything else, he has huge tracks of land in Wyoming and Montana that he has easements on. He still allows – there’s wild buffalo that run on there. He has cattle that graze and everything so it can still be used for ranching, but no one can actually develop it into a housing development or any commercial purpose.

Danielle: Okay, okay. Very, very interesting. Thank you. So then when you go to do the charitable deduction, then they figure out what the amount would be if they developed and then they give you … Is it the difference? Is that pretty much what your credit is?

John: Yeah. So for instance, let’s say it would be valued, appraised, at a million dollars if it was fully developed, but right now in your hands, ownership, it was worth really only $100,000, per se, in undeveloped land and everything else. So in fact, you could probably get a deduction for the $900,000 difference there.

Danielle: Because you’re not using it to develop it completely. It is a benefit then to the community too. That does make sense to me as to why it would be a tax credit also because you’re agreeing to leave it the way it was. It’s not [crosstalk 00:12:20].

John: Right, yeah.

Danielle: Yeah. So what are the risks to somebody who wants to use an easement or a land conservation easement to preserve their property? What would the risks be to that?

John: Well, a couple risks, not necessarily to the owner of the land. There are people that actually don’t own the land but want to invest in the ownership of that property with the original owner to get these tax credits.

Danielle: Oh, right.

John: So some of the risk there would be basically you may not get the asset protection as a limited partner instead of the ownership of it. Operating reserves set aside at a closing. There may be monies that are needed in excess of that property for the conveyance of it and the deed. Could be additional capital calls if other risks – or not risks but unknowns are known about the property. Maybe there was so encumbrances on the property that you didn’t know about and stuff, so money would have to become available to take those encumbrances away so that deed could be unrestricted.

John: Sometimes there’s a taxation risk basically due to audits because sometimes these things are not put together correctly. Lately, there’s been a little bit of talks in the IRS about making this what they call a listed transactions, where they still allow it, but you would have to list it there of what the transaction was and basically have your, per se, ducks in a row if you wanted to-

Danielle: [crosstalk 00:14:19] yeah.

John: Yeah. Of course, as always, anything in the code is subject to abuse.

Danielle: Right.

John: You may be working with unscrupulous people, a.k.a. crooks, that want to take your money basically and don’t do it properly so the whole deal falls apart.

Danielle: Yeah. That and I know that when we talk to home owners about it, people are nervous about restricting their deeds. I don’t know if you have that knowledge if it … Does it lower the value of the property or is it usually somebody who would be interested in conservation, is that something that would be appealing to them?

John: Oh, it would be very appealing to someone because most of us do have a charitable gift to us or want to do something, either that, preserve it for nature or actually for our legacy and stuff like that. But even if you end up selling the property or whatever, that easement and everything else can convey to the next group of people in ownership.

Danielle: Yeah, it attaches to the deed. Yep. Then they then have to … As far as I know, that is the only preservation tool that actually restricts what you can do because even being on the National Register, that building can still be torn down if you take the appropriate steps and get approval. You know what I mean?

John: Right.

Danielle: So that doesn’t protect it as much as the easement does. I know of a project here in Lancaster that they were going to develop. It was where Thaddeus Stevens had his offices in Lancaster. They were going to tear it down and then the nonprofit that held the easement came forward and said, “No, you can’t. We have an easement on this property.” And they actually ended up, it’s really a cool building to look at now because they incorporated the modern construction around this building. It’s marrying that old with the new, but they had to keep the original building there because they did hold the easement.

Danielle: That’s the only preservation tool that I know guarantees that the building will not change and have to stay the way it has been. So very, very [crosstalk 00:16:51].

John: Yeah, exactly because you are actually accepting a deed of restriction that permanently prohibits some sort of commercial exploitation and rights to the real estate property and stuff. You’re absolutely right. That’s pretty much the most ironclad vehicle there to be able to preserve something.

Danielle: Right, okay. And then I know you had given me some notes. I have that you would talk about the energy efficient property credits.

John: Sure, sure.

Danielle: Those are being extended, which is kind of exciting for people who are wanting to maybe put some green energy to use in their homes.

John: Yeah. The wind and solar credits have actually been extended to 2024 because our government sees the value of doing that and making us less reliant, basically, on fuels like oil and gas and things like that. The interesting thing is for these types of credits, you can qualify up to 30% of the eligible cost, which in fact, I just did one for a client this tax season.

John: They invested in a solar roof. They spent $52,000 on the roof. They ended up getting a $17,000 tax credit back, so it kind of wiped out all of their tax that they owed. Yeah and they’ll actually get to carry some over into the subsequent years because they used up all the taxes that they had this particular year.

John: So yeah, the beauty about theirs is … They were so excited because they started getting checks from the power company. In fact-

Danielle: Oh, that is exciting.

John: Yeah! They got a $400 check back from Duke Energy, which is the provider in the area. They were so elated because now the power company owes them money.

Danielle: Yeah. I know that when we started talking, you and I had started talking about doing this podcast topic, we had just been talking about the Tesla roof material. Those are individual solar cells. They picked all things that would be traditional materials and you can’t tell the difference. I’ll be curious to see how those are embraced, once they do their full roll-out, by the preservation community because those solar panels, the types of [crosstalk 00:19:42] they chose-

John: Oh, the new shingles?

Danielle: Yeah, but they chose slate and tile, those are not inexpensive roofing materials anyway. So if somebody’s going to do that, I’ll be curious to see how it’s embraced by the preservation community because there’s definitely that intersection of green and then traditional-looking materials at least.

John: Right.

Danielle: I think that’s pretty exciting.

John: Yeah. A lot of those things are coming out from the world of the Tesla vehicles and all of that to Elon Musk and producing new types of materials.

John: Yeah, that was the thing is people, they liked the idea of the solar, but they didn’t want to have these what they would consider ugly panels on their roof. So now-

Danielle: [crosstalk 00:20:29], yeah, yeah.

John: Yeah. It’s probably going to be in your world, open up a lot more opportunity and people to want to do that because yeah, now they can more look like the original property that we’re trying to preserve and everything, and get the efficiency out of it of modern energy systems.

Danielle: Yeah, definitely. I think that’s something exciting to definitely keep an eye on.

Danielle: The other thing and something that I think that people know about but it’s kind of like they don’t know a lot about it is the rehabilitation credits. I know the federal government has theirs, and then the State of Pennsylvania has some. There’s not a lot of money in the state. The tax credits here are very new for rehabilitation. I think they’re only a couple of years-old. I know that the federal tax credits have been around for a while and they’ve actually shown good economic development benefits, but if you could talk a little bit about the Rehabilitation Credits in the tax code.

John: Yeah, there’s rehabilitation credits.

Danielle: That’s a tough word.

John: Yeah, I know. That’s under Internal Revenue Code Section 47. There are actually two of them. One, it’s a 10% of the qualified rehabilitation expenditures, or whatever you spend, with respect to the qualified rehabilitated building. Other than a certified – it doesn’t have to be a certified historic structure in this case, okay?

Danielle: Right.

John: You can still get 10% of that. Now, in the second case, you can get 20% of the qualified rehabilitation expenditure, or cost, if it is a certified historic structure. So there, you can benefit even more.

John: Basically, the federal government is telling us, “Look, we understand you want to keep these buildings. They’re great buildings or whatever like that. They just need some tender love and care. We’re going to help you lower the cost to go ahead and rehab these buildings, especially if you’re going to keep them in order, use them for an economic purpose.”

John: So what we’re kind of looking at too is, okay, what’s in it for the government? Well, obviously if you’re going to be able to use that building, rehab it, for its use or just bring it back up to code so you can keep using it, well, they’re going to get more tax money, right?

Danielle: Right, right.

John: Because you’re going to remain in business and use that building. Well, the states, obviously, are still going to benefit because they’re going to get additional property taxes and they’ll probably reassess it on the rehabbed cost of it because, oh, it’s gone up in value because you rehabilitated it. There’s two benefits there.

John: Now, obviously the states benefits aren’t as rich as the federal government because, as we know, our government’s got plenty of money to throw around. Right?

Danielle: Right. Maryland has a really good rehabilitation credit system though. Theirs is, I think if you combined the federal and Maryland’s, you can get up to 50%.

John: Yeah.

Danielle: Yeah, so some of the states have a really good system.

John: I think it’s great. And so basically, it’s something to take into benefit there if you have a building that would meet those criteria. There again, you might get a little bit if it’s not a historic building, but still, it might be in your benefit to do it.

John: Now, like everything that we do in the tax code, there’s good and bad things. Well, the good thing is, yes, you could get some assistance there for doing it. The bad thing is you might have to jump over some hurdles, some paperwork, this and that, and everything else. But I found that once you do it, it’s well worth it.

Danielle: Yeah, I agree. It is a process to get through that because at first, you have to be approved by the State Historic Preservation Office, and then you go. They actually, once they have everything that they need, then they forward it onto the National Park Service for review. But typically, it is a lot of paperwork, but most people can get through it. It’s just having to stay on top of it.

Danielle: I do know one thing that is, and the tax benefits, one thing that’s kind of frustrating to homeowners that this is mostly or it is just for income-producing properties. So you’ve either gotta be a business or a bed and breakfast or rental unit, something like that.

John: Right.

Danielle: One other thing that I learned that’s very interesting is the tax credits on your passive income. Well, most people don’t have a lot of passive income. So I sat through a presentation. I’m like, “Oh, that makes so much sense.” Banks are willing to pay, buy the tax credits from you, because they have passive income and they can use them. The credits are transferrable. I didn’t know that.

John: Yeah, yeah.

Danielle: When I heard that, I was like, “Oh my goodness. I never would have thought to shop my tax credits to anybody,” but there are people who do it.

John: That’s an interesting point that you bring up. You know, a lot of people say, “Well, if I can’t use them, I lose them.” No, they actually have benefit and people are willing to use them. The other thing too is you’ve heard of those called carbon tax credits for pollution and everything else?

Danielle: Yeah, yeah.

John: Well, let’s say you have a business and you get X amount of tax credits, but your business is pretty efficient, non-polluting, and everything else. You get these credits but you don’t use them all the way or whatever like that. Well, there’s certain other businesses that are more polluting and they need more credits than they actually get from whatever they’re producing, so they’ll buy those credits from you and that helps them out too. There is a market for that.

Danielle: Yes, I would have never even thought that until I was sitting in that presentation. I’m like, “That makes so much sense.” Because most people, even if they’re high-income people, don’t have a lot of passive income, but banks do. I thought that was a really, really interesting thing that I learned.

John: Yeah. And the thing most people don’t understand is you have to match up the types of income and losses to be able to take them. For what you’re just saying there, if you have passive income, you have to have passive losses to match up against them. You can’t take income that you earned from your job and actually offset passive income or investment income in there. That’s a key.

John: What we try to do there is if we do have a client that does have lots of passive losses, we try to find some passive incomes. We call it a PIG PAL strategy. Passive activity losses matched up with passive income generations.

Danielle: Oh, okay. Very cool. Yeah, you understand how to maximize these strategies. I thank you for sharing your knowledge with me and our listeners. Could you tell me, unless, did you have anything else you wanted to share or anything that we didn’t care that you wanted to?

John: Well, I think that’s pretty good.

Danielle: Oh, okay. Very good.

John: There’s so much embedded in there.

Danielle: There is.

John: Yeah.

Danielle: And I’ll definitely, the tax codes or sections that you referenced, on the website resource section, I will definitely put those there so people can go and read them.

John: Okay.

Danielle: And your information will definitely be on the website too, but how can our audience get a hold of you if they have specific questions or they want to use your expertise to help preserve their buildings?

John: Well, they can actually call my office if they want. My phone number directly is 727-388-9024. If, by chance, somebody doesn’t answer the phone, leave a message and we get back to you in a short amount of time.

John: You can also go to my website it’s www.lewaltconsultinggroup.com and leave a message there or we have lots of information on the website that you can contact us or find out some other information about the different tax codes. I think you’ll probably put our website on your-

Danielle: I will, yeah, I’ll definitely make sure that gets put on the website too. We’ll have links, and I’ll have the additional information, and anything else that we think that would be good resources for all of our listeners.

Danielle: Thank you so much for joining us today.

John: Okay, well, yeah. It was a pleasure talking here and one last thing.

Danielle: Oh, sure.

John: With the broadness of the tax code, people think, “Oh, it’s just in general,” or whatever. There’s really something for everybody in there, we just have to sometimes dig deep for you. If you employ certain people, there’s tax credits for employing certain groups of people.

Danielle: Right, yeah. We had just learned that we could get a Made in America tax credit because we manufacture. I never even thought about what we do as manufacturing, but it is! There’s always something in there that you might not even think would apply to you.

John: Yeah, so every situation, individual situation, is different. Don’t think that there’s nothing in there for you. There may be, depending on what you want to do. Hey, it’s worth a phone call or a short email conversation. We can see what we can do for you.

Danielle: Okay, very good. Thank you so much again.

Announcer: Thanks for listening to the Practical Preservation podcast. The resources discussed during this episode are on our website at practicalpreservationservices.com/podcast.

Announcer: If you received value from this episode and know someone else that would get value from it as well, please share it with them. Join us next week for another episode of the Practical Preservation podcast.

Announcer: For more information on restoring your historic home, visit us at practicalpreservationservices.com

 

John Walters from LeWalt Consulting Groupe joined me to discuss how tax strategies can help with land and property preservation efforts.

We covered:

John’s contact information and additional resources:

LeWalt Consulting Groupe, LLC
https://www.facebook.com/LeWaltConsulting

727-388-9024

Tax Codes Referenced:
Conservation Easements
Historic Preservation Tax Incentives
Energy Incentives

Bio:
John is an Enrolled Agent, Certified Tax Coach, Best Selling Author, Instructor and Speaker at the firm LeWalt Consulting Groupe, LLC located in St. Petersburg, Florida.
He is known on LinkedIn as:
“Florida’s Leading Pro-Active Tax and Financial Change Agent for your Diverse needs and Individual Lifestyle”
At LeWalt Consulting Groupe, LLC our PASSION is creating “Tax Alpha” that helps you, as the Entrepreneur and Business Owner, live the “Ultimate”​ TAX-FREE lifestyle you desire using the complexities written into the Internal Revenue Service Tax-Code to your favor!
After all… We believe those numbers on your TAX FORMS is your “REAL” money, why not protect, preserve, and keep it for you and your family?
How may we Help You Live a Life that is less taxing…?

Tran

Announcer: Thank you for tuning into the Practical Preservation podcast. Please take a moment to visit our website practicalpreservationservices.com for additional information and tips to help you restore your historical home. If you’ve not yet done so, please subscribe to us on iTunes, Stitcher, and Sound Cloud, and also like us on Facebook.

Announcer: Welcome to the Practical Preservation podcast hosted by Danielle Keperling. Keperling Preservation Services is a family-owned business based in Lancaster, Pennsylvania dedicated to the preservation of our built architectural history for today’s use as well as future generations. Our weekly podcast provides you with expert advice specific to the unique needs of renovating a historic home, educating by sharing our from-the-trenches preservation knowledge and our guests’ expertise, balancing modern needs while maintaining the historical significance, character, and beauty of your period home.

Danielle: Thank you for joining us on the Practical Preservation podcast. Today, we have John Walters speaking with us about some tax tools that you can use to help preserve buildings. John is an Enrolled Agent, Certified Tax Coach, best-selling author, instructor, and speaker at the firm LeWalt Consulting Groupe, LLC. located in St. Petersburg, Florida. He is known on LinkedIn as Florida’s leading proactive state and financial change agent for your diverse needs and individual lifestyle.

Danielle: “At LeWalt Consulting Groupe, LLC., our passion is creating tax alpha that helps you as the entrepreneur and business owner live the ultimate tax-free lifestyle you desire using the complexities written into the Internal Revenue Service tax code to your favor. After all, we believe those numbers on your tax form is your real money. Why not protect, preserve and keep it for you and your family? How may we help you live a life that is less taxing?”

Danielle: So John, thank you for joining us and sharing your knowledge about the tax code and how that can be used to help us preserve buildings.

John: Well, thank you Danielle. I enjoy talking to people about taxes even though, I’m sure for most, it seems like a boring subject, but it’s one of the most things you’re going to pay all of your life and you might as be able to control it to your best ability.

Danielle: And understand it the best you can. I know I don’t feel I understand everything as much as I probably should. But yeah, I think the protections that people don’t understand that are written into tax code are really interesting because they can help you finance a project, they can help you make sure the building is preserved. Those things, I don’t think people necessarily think that those are tax code things, but they are. So thank you for sharing that knowledge with us.

John: Sure, no problem.

Danielle: I know one of the things that most people don’t either understand or are aware of is the tax conservation easement. If you could talk to us a little bit about that and help us understand. I understand a little bit from a preservation standpoint that the easement means that the outside can’t be changed because it’s protected, but I don’t understand what the tax ramifications of that is.

John: Okay. In the Internal Revenue Code, there’s a section called 170(h) and it talks about land conservation strategies, especially for federal and state taxes. What a land conservation strategy is designed to do is it’s designed to meet basically the tax payer’s – in this case, your client or whoever you’re working for – financial goals and take into heart their charitable desires.

John: In essence, it’s to preserve their properties and realize their most favorable economic outcomes, and actually, you get some tax savings out of it too. You become part of what we call the ready to conserve your assets for individuals and enjoy the related tax savings possible and the income opportunity in the property’s amenities.

John: In essence, what you want to do is let’s say you have a piece of property, but you don’t want it to be built on or you want to preserve it for generations to come and things like that. There are provisions in the tax code under the land conservation easement strategies is to actually give that land away. In essence, you’re giving it away for the purposes of being able to develop it or use it for some other commercial purpose to the government and you have official documents that tell you that you can do that. In turn, there are charitable deductions that you can take for that conservation.

John: With that, your land is preserved. Basically, you still retain rights to it, but you just can’t use it for other purposes, intended purposes.

Danielle: So it almost restricts you? Yeah, it restricts what you do with it. Okay.

John: Exactly. You have basically a deed of restriction, but that land can be used for whatever thing that you set it up for.

John: For instance, let’s say that you have land and you want to preserve it for hunting and you don’t want anybody to build anything on it. You could have a land conservation easement for that property; it could still be used for hunting and you can use for that purpose. You can even build a structure on there like a lodge or something like that and people could use it for hunting, but they wouldn’t be able to use for some other commercial development.

Danielle: [crosstalk 00:06:17] Yeah.

John: Yeah. In turn, when you take that conservation easement, the government’s giving you a tax deduction and it can be up to 50% of your adjusted gross income. Let’s say for every dollar this property is valued at, you go get it appraised and stuff, sometimes you can get to four to five times the benefit. In essence, what you’re telling is, well, if I built it commercially, this is what it would be valued at. But if I-

Danielle: So if you develop the property, that’s why they use as your [crosstalk 00:07:00]

John: Right.

Danielle: Okay, that makes sense.

John: So if I was going to put a housing development on it, it would be worth X. But if I say, “I don’t want to allow that on there,” they’re going to take that value of the housing development, it’s appraised out, subtract what the land is worth right now, and you get the difference in the tax credits.

Danielle: Okay. Okay, and then is that an actual credit onto … I’m trying to think about what I’m familiar with preservation easements. You usually then donate that to a nonprofit, is that correct? Or is the conservation a little bit different?

John: Yeah, it’s actually donated to the government, per se, because it’s under tax code. Now, there’s the charitable contributions fall under the federal tax code, but you can also get state tax credits too, depending on what state you’re in and the property.

Danielle: Yeah, I know. Yeah, the preservation tax credits are very dependent on which state you’re in, how robust they are.

John: Mm-hmm (affirmative), exactly.

Danielle: Yeah. So this benefits the person that’s doing the easement by reducing their taxable income. Is that pretty much what the goal is?

John: Right. You can reduce your actual tax that you would owe by between 30 and 50% of your adjusted gross income.

Danielle: Okay.

John: Now, let’s say it exceeds 50% of your gross income in that particular year, those charitable credits can be carried over for many years into the future until you can use them up.

Danielle: Okay.

John: Yeah, so typically, if you don’t have a whole lot of income in that particular year, it will just carry over until you can use those up.

Danielle: Use it up, so there’s not a time limit. I was thinking there’s a difference – and now this is telling you what I don’t understand about taxes. There’s a difference between a credit and a deduction, is that correct? So the credit is like just straight money to you, it’s not based on any kind of scale, correct? Is that what-

John: Well, yeah. There are credits that are basically a one-to-one dollar reduction in your taxes. Now, in the credit world-

Danielle: Okay, so [crosstalk 00:09:27] a percentage. Yeah.

John: Exactly. In the credit world though, you have two types of credits. You have what we call non-refundable, meaning that it can reduce your income, your taxes to zero. Then after that, if you still have more credit, you can’t use it anymore. You won’t get additional money back. But if they’re refundable, that means that you could have zero income tax that you owe, and still get a refund back from the government. Now-

Danielle: Oh, okay. Makes sense. Yeah.

John: And with the deductions, they are a percentage, depending on what your marginal tax bracket is. So in essence, a deduction, if you’re in the 25% tax bracket, then you’re going to get 25% or 25 cents back on the dollar for every dollar you deduct.

Danielle: Okay, okay. I know I see, in this area, a lot of conservation easements for farmland.

John: Exactly.

Danielle: Where the families want to preserve their farms from development but they still want to be able to use them and farm them. The easement doesn’t stop you from being able to use it from how you’ve been using it; it’s how you write the easement. Is that correct?

John: Right. So for an example like that, in farming and ranching, Ted Turner, which we all know from the broadcasting world and everything else, he has huge tracks of land in Wyoming and Montana that he has easements on. He still allows – there’s wild buffalo that run on there. He has cattle that graze and everything so it can still be used for ranching, but no one can actually develop it into a housing development or any commercial purpose.

Danielle: Okay, okay. Very, very interesting. Thank you. So then when you go to do the charitable deduction, then they figure out what the amount would be if they developed and then they give you … Is it the difference? Is that pretty much what your credit is?

John: Yeah. So for instance, let’s say it would be valued, appraised, at a million dollars if it was fully developed, but right now in your hands, ownership, it was worth really only $100,000, per se, in undeveloped land and everything else. So in fact, you could probably get a deduction for the $900,000 difference there.

Danielle: Because you’re not using it to develop it completely. It is a benefit then to the community too. That does make sense to me as to why it would be a tax credit also because you’re agreeing to leave it the way it was. It’s not [crosstalk 00:12:20].

John: Right, yeah.

Danielle: Yeah. So what are the risks to somebody who wants to use an easement or a land conservation easement to preserve their property? What would the risks be to that?

John: Well, a couple risks, not necessarily to the owner of the land. There are people that actually don’t own the land but want to invest in the ownership of that property with the original owner to get these tax credits.

Danielle: Oh, right.

John: So some of the risk there would be basically you may not get the asset protection as a limited partner instead of the ownership of it. Operating reserves set aside at a closing. There may be monies that are needed in excess of that property for the conveyance of it and the deed. Could be additional capital calls if other risks – or not risks but unknowns are known about the property. Maybe there was so encumbrances on the property that you didn’t know about and stuff, so money would have to become available to take those encumbrances away so that deed could be unrestricted.

John: Sometimes there’s a taxation risk basically due to audits because sometimes these things are not put together correctly. Lately, there’s been a little bit of talks in the IRS about making this what they call a listed transactions, where they still allow it, but you would have to list it there of what the transaction was and basically have your, per se, ducks in a row if you wanted to-

Danielle: [crosstalk 00:14:19] yeah.

John: Yeah. Of course, as always, anything in the code is subject to abuse.

Danielle: Right.

John: You may be working with unscrupulous people, a.k.a. crooks, that want to take your money basically and don’t do it properly so the whole deal falls apart.

Danielle: Yeah. That and I know that when we talk to home owners about it, people are nervous about restricting their deeds. I don’t know if you have that knowledge if it … Does it lower the value of the property or is it usually somebody who would be interested in conservation, is that something that would be appealing to them?

John: Oh, it would be very appealing to someone because most of us do have a charitable gift to us or want to do something, either that, preserve it for nature or actually for our legacy and stuff like that. But even if you end up selling the property or whatever, that easement and everything else can convey to the next group of people in ownership.

Danielle: Yeah, it attaches to the deed. Yep. Then they then have to … As far as I know, that is the only preservation tool that actually restricts what you can do because even being on the National Register, that building can still be torn down if you take the appropriate steps and get approval. You know what I mean?

John: Right.

Danielle: So that doesn’t protect it as much as the easement does. I know of a project here in Lancaster that they were going to develop. It was where Thaddeus Stevens had his offices in Lancaster. They were going to tear it down and then the nonprofit that held the easement came forward and said, “No, you can’t. We have an easement on this property.” And they actually ended up, it’s really a cool building to look at now because they incorporated the modern construction around this building. It’s marrying that old with the new, but they had to keep the original building there because they did hold the easement.

Danielle: That’s the only preservation tool that I know guarantees that the building will not change and have to stay the way it has been. So very, very [crosstalk 00:16:51].

John: Yeah, exactly because you are actually accepting a deed of restriction that permanently prohibits some sort of commercial exploitation and rights to the real estate property and stuff. You’re absolutely right. That’s pretty much the most ironclad vehicle there to be able to preserve something.

Danielle: Right, okay. And then I know you had given me some notes. I have that you would talk about the energy efficient property credits.

John: Sure, sure.

Danielle: Those are being extended, which is kind of exciting for people who are wanting to maybe put some green energy to use in their homes.

John: Yeah. The wind and solar credits have actually been extended to 2024 because our government sees the value of doing that and making us less reliant, basically, on fuels like oil and gas and things like that. The interesting thing is for these types of credits, you can qualify up to 30% of the eligible cost, which in fact, I just did one for a client this tax season.

John: They invested in a solar roof. They spent $52,000 on the roof. They ended up getting a $17,000 tax credit back, so it kind of wiped out all of their tax that they owed. Yeah and they’ll actually get to carry some over into the subsequent years because they used up all the taxes that they had this particular year.

John: So yeah, the beauty about theirs is … They were so excited because they started getting checks from the power company. In fact-

Danielle: Oh, that is exciting.

John: Yeah! They got a $400 check back from Duke Energy, which is the provider in the area. They were so elated because now the power company owes them money.

Danielle: Yeah. I know that when we started talking, you and I had started talking about doing this podcast topic, we had just been talking about the Tesla roof material. Those are individual solar cells. They picked all things that would be traditional materials and you can’t tell the difference. I’ll be curious to see how those are embraced, once they do their full roll-out, by the preservation community because those solar panels, the types of [crosstalk 00:19:42] they chose-

John: Oh, the new shingles?

Danielle: Yeah, but they chose slate and tile, those are not inexpensive roofing materials anyway. So if somebody’s going to do that, I’ll be curious to see how it’s embraced by the preservation community because there’s definitely that intersection of green and then traditional-looking materials at least.

John: Right.

Danielle: I think that’s pretty exciting.

John: Yeah. A lot of those things are coming out from the world of the Tesla vehicles and all of that to Elon Musk and producing new types of materials.

John: Yeah, that was the thing is people, they liked the idea of the solar, but they didn’t want to have these what they would consider ugly panels on their roof. So now-

Danielle: [crosstalk 00:20:29], yeah, yeah.

John: Yeah. It’s probably going to be in your world, open up a lot more opportunity and people to want to do that because yeah, now they can more look like the original property that we’re trying to preserve and everything, and get the efficiency out of it of modern energy systems.

Danielle: Yeah, definitely. I think that’s something exciting to definitely keep an eye on.

Danielle: The other thing and something that I think that people know about but it’s kind of like they don’t know a lot about it is the rehabilitation credits. I know the federal government has theirs, and then the State of Pennsylvania has some. There’s not a lot of money in the state. The tax credits here are very new for rehabilitation. I think they’re only a couple of years-old. I know that the federal tax credits have been around for a while and they’ve actually shown good economic development benefits, but if you could talk a little bit about the Rehabilitation Credits in the tax code.

John: Yeah, there’s rehabilitation credits.

Danielle: That’s a tough word.

John: Yeah, I know. That’s under Internal Revenue Code Section 47. There are actually two of them. One, it’s a 10% of the qualified rehabilitation expenditures, or whatever you spend, with respect to the qualified rehabilitated building. Other than a certified – it doesn’t have to be a certified historic structure in this case, okay?

Danielle: Right.

John: You can still get 10% of that. Now, in the second case, you can get 20% of the qualified rehabilitation expenditure, or cost, if it is a certified historic structure. So there, you can benefit even more.

John: Basically, the federal government is telling us, “Look, we understand you want to keep these buildings. They’re great buildings or whatever like that. They just need some tender love and care. We’re going to help you lower the cost to go ahead and rehab these buildings, especially if you’re going to keep them in order, use them for an economic purpose.”

John: So what we’re kind of looking at too is, okay, what’s in it for the government? Well, obviously if you’re going to be able to use that building, rehab it, for its use or just bring it back up to code so you can keep using it, well, they’re going to get more tax money, right?

Danielle: Right, right.

John: Because you’re going to remain in business and use that building. Well, the states, obviously, are still going to benefit because they’re going to get additional property taxes and they’ll probably reassess it on the rehabbed cost of it because, oh, it’s gone up in value because you rehabilitated it. There’s two benefits there.

John: Now, obviously the states benefits aren’t as rich as the federal government because, as we know, our government’s got plenty of money to throw around. Right?

Danielle: Right. Maryland has a really good rehabilitation credit system though. Theirs is, I think if you combined the federal and Maryland’s, you can get up to 50%.

John: Yeah.

Danielle: Yeah, so some of the states have a really good system.

John: I think it’s great. And so basically, it’s something to take into benefit there if you have a building that would meet those criteria. There again, you might get a little bit if it’s not a historic building, but still, it might be in your benefit to do it.

John: Now, like everything that we do in the tax code, there’s good and bad things. Well, the good thing is, yes, you could get some assistance there for doing it. The bad thing is you might have to jump over some hurdles, some paperwork, this and that, and everything else. But I found that once you do it, it’s well worth it.

Danielle: Yeah, I agree. It is a process to get through that because at first, you have to be approved by the State Historic Preservation Office, and then you go. They actually, once they have everything that they need, then they forward it onto the National Park Service for review. But typically, it is a lot of paperwork, but most people can get through it. It’s just having to stay on top of it.

Danielle: I do know one thing that is, and the tax benefits, one thing that’s kind of frustrating to homeowners that this is mostly or it is just for income-producing properties. So you’ve either gotta be a business or a bed and breakfast or rental unit, something like that.

John: Right.

Danielle: One other thing that I learned that’s very interesting is the tax credits on your passive income. Well, most people don’t have a lot of passive income. So I sat through a presentation. I’m like, “Oh, that makes so much sense.” Banks are willing to pay, buy the tax credits from you, because they have passive income and they can use them. The credits are transferrable. I didn’t know that.

John: Yeah, yeah.

Danielle: When I heard that, I was like, “Oh my goodness. I never would have thought to shop my tax credits to anybody,” but there are people who do it.

John: That’s an interesting point that you bring up. You know, a lot of people say, “Well, if I can’t use them, I lose them.” No, they actually have benefit and people are willing to use them. The other thing too is you’ve heard of those called carbon tax credits for pollution and everything else?

Danielle: Yeah, yeah.

John: Well, let’s say you have a business and you get X amount of tax credits, but your business is pretty efficient, non-polluting, and everything else. You get these credits but you don’t use them all the way or whatever like that. Well, there’s certain other businesses that are more polluting and they need more credits than they actually get from whatever they’re producing, so they’ll buy those credits from you and that helps them out too. There is a market for that.

Danielle: Yes, I would have never even thought that until I was sitting in that presentation. I’m like, “That makes so much sense.” Because most people, even if they’re high-income people, don’t have a lot of passive income, but banks do. I thought that was a really, really interesting thing that I learned.

John: Yeah. And the thing most people don’t understand is you have to match up the types of income and losses to be able to take them. For what you’re just saying there, if you have passive income, you have to have passive losses to match up against them. You can’t take income that you earned from your job and actually offset passive income or investment income in there. That’s a key.

John: What we try to do there is if we do have a client that does have lots of passive losses, we try to find some passive incomes. We call it a PIG PAL strategy. Passive activity losses matched up with passive income generations.

Danielle: Oh, okay. Very cool. Yeah, you understand how to maximize these strategies. I thank you for sharing your knowledge with me and our listeners. Could you tell me, unless, did you have anything else you wanted to share or anything that we didn’t care that you wanted to?

John: Well, I think that’s pretty good.

Danielle: Oh, okay. Very good.

John: There’s so much embedded in there.

Danielle: There is.

John: Yeah.

Danielle: And I’ll definitely, the tax codes or sections that you referenced, on the website resource section, I will definitely put those there so people can go and read them.

John: Okay.

Danielle: And your information will definitely be on the website too, but how can our audience get a hold of you if they have specific questions or they want to use your expertise to help preserve their buildings?

John: Well, they can actually call my office if they want. My phone number directly is 727-388-9024. If, by chance, somebody doesn’t answer the phone, leave a message and we get back to you in a short amount of time.

John: You can also go to my website it’s www.lewaltconsultinggroup.com and leave a message there or we have lots of information on the website that you can contact us or find out some other information about the different tax codes. I think you’ll probably put our website on your-

Danielle: I will, yeah, I’ll definitely make sure that gets put on the website too. We’ll have links, and I’ll have the additional information, and anything else that we think that would be good resources for all of our listeners.

Danielle: Thank you so much for joining us today.

John: Okay, well, yeah. It was a pleasure talking here and one last thing.

Danielle: Oh, sure.

John: With the broadness of the tax code, people think, “Oh, it’s just in general,” or whatever. There’s really something for everybody in there, we just have to sometimes dig deep for you. If you employ certain people, there’s tax credits for employing certain groups of people.

Danielle: Right, yeah. We had just learned that we could get a Made in America tax credit because we manufacture. I never even thought about what we do as manufacturing, but it is! There’s always something in there that you might not even think would apply to you.

John: Yeah, so every situation, individual situation, is different. Don’t think that there’s nothing in there for you. There may be, depending on what you want to do. Hey, it’s worth a phone call or a short email conversation. We can see what we can do for you.

Danielle: Okay, very good. Thank you so much again.

Announcer: Thanks for listening to the Practical Preservation podcast. The resources discussed during this episode are on our website at practicalpreservationservices.com/podcast.

Announcer: If you received value from this episode and know someone else that would get value from it as well, please share it with them. Join us next week for another episode of the Practical Preservation podcast.

Announcer: For more information on restoring your historic home, visit us at practicalpreservationservices.com

 

Our Philosophy

Using a holistic approach when approaching work on your older building helps to ensure that the repairs, reconstructions, or maintenance activities we perform are a long-term solution rather than a temporary fix. Our understanding of how the various building systems interact helps us to ensure that the project we complete is not simply a band-aid solution but rather that the sequence of repairs we suggest ensures that the work that is completed is protected from future damage from the underlying problem.

Preservation (maintaining what is existing) is the original green building solution.
  Many new products are being introduced as green building – we would argue that existing buildings are inherently green and have many sustainable features, such as, durable and repairable materials not found in modern construction.  The embodied energy within an existing building is lost when we tear-down to create a new green building.  The reuse/repair of buildings also creates a smaller carbon footprint than building a new green building.  Many of the modern building solutions retro-fitted into older buildings have caused our older buildings to become less efficient by reversing these modern changes (using the traditional building features in the manner in which they were intended) we can help rethink the assumptions generally made about older buildings and their efficiency.

Restoration activities (recreating what has been lost through neglect, damage, or modernization) can also be a green activity by reusing materials that have been salvaged from buildings being demolished.  
Many of the visible features we use are salvaged materials from wide-board flooring with its original patina to the first growth White Oak used to create our reproduction window and door frames.  Using these materials in our restoration projects helps to ensure that the building materials have been kept out of the land-fill and are reused as the ultimate form of recycling.

The architectural design and essence of the home when it was built should not be, and does not need to be, compromised to enjoy modern materials and conveniences. Our complimentary approach using traditional building methods together with modern materials and current problem solving methods (when appropriate) are the best of what our built heritage and modern progress has to offer.

An exchange of ideas between all parties in a project is the fertile ground needed to nurture the best solutions.   Whether you choose to work with your own architect for the design of your project or use our own Design/Build system, we have the ability to carry out your vision for your space.  And we believe that the flow of ideas between everyone in your project is what will produce the best end result.

Our homes are more than mere shelter, where and how we live reflects who we are. Homes much like our personal lives change and evolve. Architecture is the snapshot of place and time past and present. As good stewards to our environment our duty is to establish, where needed, and retain practices that will allow us to enjoy the heritage of those who have come before us.

We believe that restoration of our vintage homes is a necessity if we are to thrive as a nation and that the past is our legacy to the future.

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THE WOMEN OF HISTORIC RESTORATIONS, c. 2012

From the Left: Katie, Lois, Karri, and Danielle 

With all our posts, articles, education, and discussion on Women’s History month, would you have expected any less of us?  Of course not!  And we are always happy to meet (and then exceed!) expectations.  So without further ado, let’s bring these lovely ladies out into our preservation spotlight and let you get to know the wisdom, grace, talent, ability, grace, expertise, and all-around general fabulousity of these strong women.

“I’m a woman.  Phenomenally.  Phenomenal woman, that’s me.”
-Maya Angelou

“Right-Hand Rosie” Lois

Lois Groshong

The original lady of Historic Restorations, Lois radiates the quiet, centered wisdom that makes you want to fold your legs in under yourself and sit and listen in her quiet for a week or two.  Born to a father bearing the name of Apollo, would you have expected her to be any less of a goddess than she is?

Raised in a Victorian farmhouse in Nebraska by her parents Apollo and Evelyn, Lois and her older brother Thomas spent their days ripping through the fields and orchard playing cowboys and indians and pretending to be an assortment of superheroes, letting their wild imaginations create the world in the unique way that only unfettered childhood can do.

Lois’ Mother had different desires than mud and muck for her daughter.  Initially Lois resisted her Mother’s efforts to turn her into a lovely lady looking sweet in pink, lacy outfits – but eventually Lois blossomed into that lovely young lady indeed.  And while her tastes may not have run along the lines of pink lace, Lois’ original aspiration was to be a fashion designer and she pursued that interest in aesthetic design by majoring in art in college, flexing her creative muscles and rounding out that creativity with a minor in psychology.

Lois may have mimicked a variety of superheroes, but she had a host of real-life superheroes to ground her in the firm reality that heroes and she-roes are not merely for the makings of myths and childhood play.  Lois says, “My heroes are my family members. One of my uncles was the first African America to graduate from Creighton University School of Dentistry, and many of my aunts and uncles (and now siblings and cousins) are doctors, lawyers, in the teaching profession (college level and school administration), and entrepreneurs.  My Mother programmed computers for her job with Farmers Union Insurance Co. for over 20 years.”

With such a strong framework of determination, accomplishment, capability, and obvious worth, Lois’ family were the perfect stewards for the growing goddess.  Stewardship that impacted her strongly and helped her develop the determination she would need to face the world.  “I was told at a very young age that no one was ‘better’ than me, and that I might have to work twice as hard to be recognized as equal, but to never, never give up or ‘they’ win,” Lois says.

And apparently Lois Groshong doesn’t like to lose, because her quiet determination is as solid as the historic buildings she works to save and bring back to life.

“As a child I was creative, curious, and a tom boy.  As a teenager I was creative, introspective, and goofy.  As a young adult I was creative, searching, blooming.  As an adult I am creative, spiritual, traditional, and sometimes everything I was as a child, teenager, and young adult!” she says.

Obviously creativity is a running theme in Lois’ life, and that creativity suits her role in the Historic Restorations team.  As our “Right-Hand Rosie”, Lois facilitates our projects in a variety of ways and in any way necessary to keep the business, clients, and the other team members positive, organized, and focused.  Clients have been known to refer to our goddess as the “remodeling psychologist”.

And that suits her just fine.  “The most satisfying aspect of what I do is knowing that our talents and principles go against the accepted and typical building practices of today, and that what we do will be around long after we are gone,” Lois says.  “Historic preservation is all about conservation as well as preservation and our legacy will be that we shared something that is greater than ourselves and left this world a better place.”

Lois believes the biggest challenge to women in business is simply, “They are not men.  In the building business men are reluctant to have a positive reaction to women directing them in how to do anything.”  But Lois doesn’t let that stop her and simply continues on her way, knowing she has as much ability and right as the next person.  Encouraging other women to do the same, Lois also encourages us all to support women in business by judging businesses by the quality of the service and product they offer.  “Shop at women-owned business not just when you can, but when you should,” she says.

What does the future hold for our (still growing) goddess?  “My future is full of continuing to put my creative talents to good use,” Lois says.  “This little light of mine, I’m gonna let it shine.”

“Riveting Phenomenon” Danielle

Danielle Groshong-Keperling

If Lois was something of a tom boy, her daughter Danielle was an even bigger one.  Born in Denver, Colorado, her early life was spent following in her Father’s footsteps – figuratively and literally.  Danielle recalls a photo of her at age two where she is wearing her Dad’s work boots and carrying his lunch box, fully prepared to go to work. “I wonder if that picture was a harbinger of things to come,” she says both with a laugh, and in all seriousness.

(And those of us who know Danielle don’t doubt for a second that even at age two, she really would have accompanied him right into work, fully prepared to pitch right in and get to work!)

“By the time I was in Middle School, I would help him clean the shop on weekends to spend time with him, sometimes I would even make wooden plugs,” says Danielle.

Danielle may have inherited a penchant for all things shop-related and a work ethic from her Dad, but she was born with an innate thirst for knowledge.  (Winnie the Pooh once asked Danielle, “Did you ever stop to think, and forget to start again?”  Danielle patted his head and offered him more honey.)

At the age of 11, Danielle migrated to Lancaster County, PA with her parents, where she began her long and lustrous career of educating herself.  She attended private Catholic grade schools and graduated from Lancaster Catholic High School.  After which she studied Culinary Arts and Restaurant Management at HACC and then completed her Organizational Leadership degree in 2009 at Eastern University.  In late 2011 she graduated with a Masters in Business Administration from Eastern University as well.

While she very much values her formal education, Danielle notes, “Real life eamples and experience have always been the ‘best’ teacher for me, which is one reason I did not feel as comfortable in a traditional college setting.  After all, my first ‘college’ experience was people that brought their real life experience to the ‘class room’.”

And believe it or not, she uses both her Culinary Arts education and her business education to this day.  As Chief Operating Officer at Historic Restorations and as a pastry chef at Byers Butterflake Bakery in Leola.

“I wanted to be a social worker until my senior year of high school when I had the revelation that I could not, in fact, save the world (or even, failing my saving of the world, just bring all the unwanted children home with me).  One day I was home from school sick with wisdom teeth, saw a commercial for a pastry arts program and decided that is what I wanted to do,” Danielle says.

Chief Operating Officer by “day”….  Wedding Cake Decorator by “night”….

And she could rivet too. 

That is indeed our Danielle.  Not having any interest in being anyone but herself, Danielle is funny, creative, decisive, determined, quirky, educated, and sharp.  So smart, we’re pretty sure we’ve seen tacks bow to her as she passes by them in the office.

In her spare time, when she’s not intimidating the office supplies, Danielle can be found reading, watching MSNBC or reality TV, helping friends, working in the community, or working on her master plan for world domination as she belts out her theme song – The Gambler by Kenny Rogers.

Danielle pulls from all these strengths, her work history, and her education in her daily management of Historic Restorations’ operations, working hard towards good stewardship of our collective built history – the most rewarding part of what Historic Restorations does for Danielle.  “My favorite quote points out that we are only on this planet for a short period of time, how we care for and preserve our history is a legacy for for future generations,” she says.

“Like people, houses are created, live, and grow old.  Like us, they eventually disappear.  Houses that survive to be studies, explored, and admired by distant generations should be regarded as emissaries from another time, as gateways into our past.”

 By Jack Larkin in WHERE WE LIVED: Discovering the Places We Once Called Home, The American Home from 1775 to 1840

But it’s only one of the legacies Danielle is working on leaving behind.  As a strong woman in a male-dominated field, she faces daily challenges in her career.  She says that while she does believe things are changing for women in construction, they still have to work a little bit harder and know their “stuff” a little bit better to get respect.  “I don’t know how many men get winked at during a project meeting for knowing the right answer…. but I bet it’s not as many as me,” she says with a laugh.

She advocates for women in business to be supportive of other women in business by sharing stories and providing information, helpful resources, guidance, and support.  “I’ve enjoyed reading books about women that have overcome obstacles and paved the way for my generation.  Including Personal History by Katherine Graham (the first woman to lead a Fortune 500 company after her father died), and If You Don’t Have Big Breasts, Put Ribbons on Your Pigtails: And Other Lessons I Learned from My Mom by Barbara Corcoran (who built her real estate empire with a $1,000 loan),” she notes.

So what does the future hold for Danielle?

“Babies, more puppies, penguins, teaching on the college level, a pygmy hippo, who knows?  I am waiting for my crystal ball to arrive – it has been back ordered for awhile now.”

“Office Maven” Katie

Katie O’Brien

Our newest addition to the Historic Restorations team, Katie, is a Lancaster County native (though her parents are originally from Pittsburgh, where they now live again).  Active in dance and sports in childhood, Katie was adventurous, friendly, and eager to learn as a child, “rebellious, active, and confused” as a teenager, and now finds herself solidly in “happy, independent, world traveler” as a young adult.

Katie graduated from Clarion University of PA with a B.S.BA and a focus on marketing.  She also studied abroad in Dublin, Ireland and attended Dublin Business School, as well as interned for a non-profit organization while in Dublin.

“Traveling, studying, and working in Europe heavily influenced who I am today.  I don’t believe I would have gotten this far in my career without that asset,” says the frank Katie.

In her free time, Katie enjoys spending time with family and friends, watching movies, listening to music, being outside, and reading.  She brings many strengths to the table, but isn’t one to over-estimate herself.  “My strengths are that I am easy to get along with, a quick learner, and I am always interested in learning and doing something new.  But I procrastinate sometimes and always have multiple to-do lists going on at once,” she says in her straight-forward manner.

But while managing multiple to-do lists may feel like a weakness to Katie, it works as a strength for the important role she plays in the Historic Restorations team.  As our resident “Office Maven”, Katie executes daily administration tasks and marketing strategies with her precision efficiency and organization (and flourishing penmanship).  Quite literally everything and anything might be thrown Katie’s way, and she’s a master at woman-handling it and throwing it right back.  If this she-roe weren’t quite so petite and friendly, it might almost call Paul Bunyan to mind.  And for many, it does anyway.

Katie’s interest in historic preservation stems from her innate value of older buildings.  “It is important to me to preserve these buildings.  If they aren’t, they will be lost forever, and buildings just aren’t built the same anymore – they aren’t as grand as they once were,” she says wistfully.  With a sigh.

When asked about the challenges women in business face, Katie said, “They face discrimination, judgement from others, and are often viewed as being incompetent.  Through my career, I have faced not being respected by older colleagues and being looked down on.”

How does Katie woman-handle that?

“I turn to older colleagues and family members.  It’s easy to feel alone when situations happen, and women can support each other by sharing their experiences and stories.  It’s always good to remember that you’re not the only woman who has experienced challenges in business,” she says.

Katie’s biggest she-roe and influence has been her older sister, Kelly.  An independent woman who is very successful, happily married, and mother to an 18-month-old, Katie values having a strong and capable role model to look up to.

With that same positive outlook on things, Katie says of her future, “I am not certain what my future holds for me, but it is bright!”

“Wordsmith Extraordinaire” Karri

Karri A. Sensenig

Karri is another Lancaster County native we recently added to our (apparently growing) collection of native artifacts.  She’s joined our team as a consultant to help us develop and implement the Historic Restorations newsletter and blog as the solid educational resource we want it to be.

Karri uses her background in journalism, writing and reporting, marketing, education, and construction to pull together educational content for the online community we are building for our customers, colleagues, and the preservation community so they can continue learning, discussing, and sharing historic preservation information.

“I like to talk and teach people about things.  Or type.  Whichever is most accessible for me at the moment.  I’m not terribly picky,” she says.

Married to one of Lancaster County’s few remaining stone masonry artisan craftsmen, and raised in a family of traditional tradespeople, Karri is no stranger to the construction industry.  Raised in a Mennonite family and the traditional Lancaster County culture, historic preservation is as ingrained in her as hanging her wash out to dry and growing her own tomatoes.  (Heirloom varieties, of course.)  Her first full-time job after graduating high school was with a construction company, and over the years she has worked for and consulted with a wide range of small to large construction companies.

In addition to her career activities, Karri has spent the last 15 years homeschooling, home-making, gardening, reading, writing, pursuing her B.A. in Educational Studies, studying and learning.  She’s rather curious about pretty much anything and everything and might surprise you by holding her own in discussions about anything from the best way to knead bread, to the economic impact of current trade policy, to the financial implications of local school district policies.

“I don’t believe in blindly following someone’s opinion – even my own – so I question it all, especially myself. I don’t know that I ever really gets answers to those questions, but I do learn a lot along the way,” she says.

As a child Karri grew up on farms and spent most of her time outdoors, in the fields, woods, ponds, creeks, and occasionally the back yard.  “I was a ‘free range’ kid,” she says, “Organically grown.  But I’m pretty sure there was some genetic modification, so no official organic label.”  As a teenager she continued to spend most of her time outdoors, this time usually on her horse.  As a young adult she poured her energy into mothering the four children she had in seven years.  While getting her B.A. and helping her husband start his own business.

We’re pretty sure they make a medication for people like her, and we’re kind of glad she doesn’t take it.

Now she splits her time between her family and homeschooling her kids and helping Historic Restorations save our history – one building at a time.  She says, “Historic preservation provides us all with a sense of community, a sense of self, a sense of place – all of which is important to me.”

But that isn’t the only thing important to Karri, supporting women in business is just as important.  She says, “The culture I grew up in is a very practical culture, and we don’t like things like wasted space so our glass ceiling was pretty low.  And I’m rather tall, so I kept hitting it.  After enough of bumps, I decided it might be smarter to just raise it.”

How does Karri accomplish that?

“Education.  Knowledge is power, not just because you now have awareness, but because now you can take action.  Without knowledge, the action true change requires could never happen.  So I educate people,” she says.

Will she do that for the rest of her life?  What else will she do?

“I’m not sure I’d know how not to do that!” she proclaims, adding, “I could try, I guess.  But I’d rather try lots of other things first.  Like running a marathon, or better yet an ultra-marathon like the 135-miler in Death Valley.”

May is preservation month the theme of this year is, “Old is the New Green!”. With most people looking for ways to minimize their impact on the environment in their corner of the world it is important to not do anything to a historic building that will damage the historic fabric of the structure.

Historic buildings are “green” because their materials are repairable, durable, and contain embodied energy (energy already expended in construction). Many of these attributes cannot be found in modern “green” solutions.

As part if the National Park Service Technical Preservation Services there is a series of interpretations of The Secretary of the Interior’s Standards for Rehabilitation (http://www.nps.gov/history/hps/tps/tax/ITS/itshome.htm). These are divided into compatible and incompatible treatments with explanations and pictures. If you are going before an historic review board – this is how they will evaluate the changes you want to make.

An interesting article in this section is #54 “Installing Green Roofs on Historic Buildings” – as long as the foliage is not visible from the street scape installing the green roof is acceptable. And somewhat encouraged to enhance the energy-efficiency and sustainability of the building. Interesting thoughts and ideas to join new construction with old buildings in a sensitive manner.