Hawaii Passes Historic Preservation Tax Credit

How does Historic Preservation work in Hawaiʻi?

The framework for historic preservation in the United States can in be traced back to the creation of the National Park Service in the early part of the 20th century. Significant structures from the Kingdom of Hawaiʻi were preserved prior to statehood, and indeed, prior to the passage of the 1966 National Historic Preservation Act and the 1976 passage of Hawaiʻi Revised Statues Chapter 6E. This created a statewide historic preservation program and an agency framework to implement its goals.

The Hawaiʻi preservation tax credit legislation just signed into law by the governor supplements federal tax incentives to encourage private owners to rehabilitate certified historic properties.

Hulihee Palace in Kailua Kona was home to Hawaiian royalty. It was purchased by the Territorial Government and preserved beginning in 1927 by the Daughters of Hawaii.  Photo credit: Michael Gordon /

What is a “Historic” Building or Property?

For the most part, Hawaii Lifeʻs work in the domain of Conservation and Legacy Lands is not concerned with historic preservation or preservation of historically designated structures. Our efforts currently are directed mainly at the preservation of cultural landscapes and traditional cultural properties, along with environmentally sensitive and important agricultural lands. But there are also homes and commercial structures that represent essential aspects of the stateʻs more recent, post-contact past, and the newly passed historic preservation state tax credit is intended to provide an incentive for the rehabilitation of some of these properties.

The criteria for designation of a property as historic are slightly different under the National Register, and the Hawaiʻi State Register, which adds one additional criterion. To simplify:

  • Must be over 50 years old in Hawaiʻi; the national register would require “exceptional significance” if younger.
  • Must meet one or more of the “significance” criteria: Historical Events and Patterns, Association with Important Person, Architecture/Engineering (e.g. famous architect), Information Potential for contributing to our understanding of history, and, in Hawaiʻi only, important value to the native Hawaiian people or another ethnic group due to association with cultural practices, those associations being important to the groupʻs history and cultural identity.
  • Must demonstrate “integrity,” meaning the ability of the property to convey the historic significance. It cannot have been substantially modified or its significant features obscured.
Kohala Old Courthouse

Kohala District Courthouse is on the National Register of Historic Places. Photo shows a scene from the annual Kamehameha Day commemoration.

If a structure meets these criteria, it still must go through the process of nomination through the State Historic Preservation Division, review and approval for the Hawaiʻi Register, and then forwarding to the National Park Service for consideration of inclusion on the National Register, if desired.

What Historic Properties Qualify for Federal and Hawaiʻi Rehabilitation Tax Credit?

While traditional cultural communities and cultural landscapes can also be registered, the federal and state rehabilitation tax credits are specific to commercial properties that will generate income for a period of at least five years following the rehabilitation. Historic properties also qualify for county property tax relief, and non-commercial properties may be eligible for various grant programs including State grants in aid.

The Hawai‘i state tax credit is only enabled by the legislation, and then the program will be detailed in rules promulgated by both the Department of Taxation and the Department of Land and Natural Resources.

Kohala Club Hotel

Once a gentlemanʻs club, this hotel still operates as a B&B (MLS 626997). Could the tax credits help to fund its renovation?

If you think you have a property that might qualify for this process, the Historic Hawaii Foundation website, seminars and staff are a great place to start your education. Iʻm putting on my thinking cap for properties on the market whose need for rehabilitation might make them candidates for these tax credits.

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Palmira Stroinski

August 27, 2019

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