Buying a Historic Home Downtown? The City Has Opinions About Your Paint Color, and Arkansas Has a Number for Your Reward
On February 19, 2026, the Hot Springs Historic District Commission sat down in the Board Chambers at City Hall on Convention Boulevard at 8:30 in the morning and worked through four separate requests. Hot Springs Souvenirs and Gifts, doing business as Hot Springs Hat Co. at 348 Central Avenue, wanted to repaint its storefront, add two awnings, and install two illuminated signs. Union Missionary Baptist Church on Gulpha Street needed to replace a roof and windows on its original building and a 1950s addition. The Gift Gallery a few doors down on Central wanted new signage. A homeowner on Grove Street asked for permission to put up a fence and add a small accessory structure in the backyard.
None of that work could get a building permit until the commission said yes.
That single fact is the piece most buyers of historic property downtown don't carry into a purchase, and it's the piece worth understanding before you write an offer on anything inside the Central Avenue Historic District or the surrounding blocks that trade on their age and character. The rules that slow you down and the tax credit that can offset your costs both trace back to the same regulatory framework, and neither one shows up in a standard listing sheet.
Hot Springs is one of 22 Arkansas cities certified as a Certified Local Government under the state's historic preservation program, a status that comes with a Historic District Commission empowered to review exterior changes before they happen. In a locally designated historic district, most exterior work needs a Certificate of Appropriateness, commonly shortened to a COA, before the city's Planning and Development office will issue a building permit at all.
The list of what gets reviewed is broader than most buyers assume:
What typically does not require review is interior work and anything that qualifies as ordinary maintenance, meaning repairs that don't change the design, materials, or appearance of the structure. Repainting the exact same color in the exact same spot is generally a non-issue. Repainting a different color, replacing wood windows with vinyl, or adding a rear deck is a different conversation, and it's the commission's conversation to have before yours with a contractor.
The Hot Springs commission meets monthly, and your application has to be on that month's agenda to get a hearing at all. Miss the cutoff and the next opportunity is a month away. Every historic commission in Arkansas builds in a similar lead time between application and hearing, even if the exact number of days varies by city. That single scheduling reality is the most underestimated line item in a downtown renovation budget, because it sits ahead of the building permit, which sits ahead of the contractor's start date, which sits ahead of your actual move-in or resale timeline.
For a buyer closing on a historic property with plans to update the exterior, that means the clock doesn't start when you get keys. It starts when your COA application lands on staff's desk in time for the next scheduled hearing. For a seller who has already done exterior work, a completed and filed COA is worth mentioning to your agent and worth having ready for a buyer's file, because it removes a step the next owner would otherwise have to repeat.
Here's the part that almost nobody walking into a downtown purchase knows, and it's the reason the regulatory friction is worth sitting through.
Arkansas created its Historic Rehabilitation Income Tax Credit in 2009 as a flat 25 percent credit on qualified rehabilitation expenses for certified historic properties. Beginning in fiscal year 2024, the state restructured the credit for income-producing rehabilitation projects into a tiered system based on the population of the city where the project sits.
City population | Credit rate |
|---|---|
Under 10,000 | 40% |
10,000 to 50,000 | 35% |
Over 50,000 | 30% |
Hot Springs sits comfortably inside that middle bracket. A rehab of an income-producing historic building here, the kind of project common downtown where a ground-floor retail space sits under upper-floor residential lofts, earns a 35 percent credit rather than the 30 percent a comparable project would earn in Little Rock or Fayetteville, and better than the flat 25 percent the whole state used to receive regardless of location. On $200,000 in qualified rehabilitation expenses, that's the difference between a $60,000 credit and a $70,000 one, purely a function of which city the deed sits in. The credit applies up to a project cap of $1.6 million in qualified expenses for projects starting on or after July 1, 2017, and the state issues no more than $8 million in these credits statewide per fiscal year, which makes it a capped, competitive pool rather than an automatic entitlement. The program is currently authorized through June 30, 2030.
If the property in question is a personal residence rather than an income-producing building, a separate and smaller state program applies. Owner-occupied rehabilitations can earn a 25 percent credit on qualified expenses, with a minimum spend of $5,000 to qualify and a cap around $100,000 in qualified expenses, meaning a maximum credit near $25,000 per property. That program did not move with the 2024 tiering change. It's worth knowing the two programs exist side by side and worth confirming with a tax professional which one applies before you budget a renovation around either figure.
Either credit requires the paperwork to happen in sequence with the work, not after it. The state's process runs in three parts: certifying the property, submitting photo documentation and proposed plans before work begins, and certifying the completed rehabilitation once it's done. Starting demolition before that first step is filed is the fastest way to forfeit the credit entirely.
Hot Springs published its first formal citywide Heritage and Historic Preservation Plan in 2025, developed with planning firm MKSK and funded through a Certified Local Government grant from the state's historic preservation program. The plan was recognized with the state's Award for Outstanding Preservation Publication, an honor named for longtime Eureka Springs preservationist Ned Shank. That's not a filing-cabinet detail. It signals a city actively updating its preservation framework rather than one running on decades-old guidelines nobody enforces, which matters if your plan for a downtown property depends on the commission looking the other way.
If you're buying, ask early whether any exterior work you're planning will trigger COA review, and ask the seller or their agent whether any prior exterior changes to the property already went through the commission. A property with a clean COA history for its existing exterior is one fewer step for you. If your project involves income-producing space, the population-tiered credit is worth pricing into your renovation budget from day one, and it's worth starting the state's Part 1 certification conversation before you're deep into demolition, not after.
If you're selling a historic property with completed and documented exterior work, that documentation is worth handing to your agent as part of the listing file. It answers a question a serious buyer is going to ask anyway.
None of this makes historic downtown property a harder buy than it's worth. It makes it a buy where the paperwork sequence and the state's credit structure both reward knowing which city you're standing in before you start planning the work.
Does simple repainting or basic repair need a COA? Not if it counts as ordinary maintenance, meaning it doesn't change the design, materials, or appearance of the structure. A new color, new material, or new configuration typically does require review.
Does the tiered tax credit apply if I'm renovating my own home to live in, not to rent out? No. Owner-occupied residential rehabilitation falls under a separate program with a flat 25 percent rate, a $5,000 minimum spend, and a cap near $25,000 in total credit. The population-based tiering applies to income-producing rehabilitation.
Can I do the renovation first and apply for the tax credit afterward? No. The state's certification process requires documentation before and during the work, with final certification after completion. Filing after the fact typically forfeits eligibility.
If you're weighing a historic property downtown and want a clear read on where it stands with the city and what the numbers actually look like for your situation, 501 House to Home has spent two decades working these transactions block by block. Reach out before you write the offer, not after.
When you work with Jeff Kennedy and his team, you benefit from professionals who understand your needs and will work their absolute hardest to ensure excellent results for you and your family. Give Jeff a call today and discover the difference he can make for you!