Why We Need The Federal Historic Tax Credits.

I'm back after watching Brazil get their heads handed to them by Germany.  Let the post mortem begin.  Alright onto more serious things

http://blog.preservationleaderforum.org/2014/06/25/historic-tax-credit-rypkema/#.U6tDXY1dVYx

"Catalyst for Change: The Federal Historic Tax Credit"
blog.preservationleadershipforum.org

Hello Everyone:

Now we can get back to some level of sanity.  If you're reading this in Germany, congratulations.  If you're reading this Brazil, so sorry for your loss. The following post is based on an article by preservation economist Donovan Rypkema on the subject of federal historic federal tax credits.  On June 23, the National Trust for Historic Preservation gave the HTC watch status on its annual list of America's 11 Most Endangered Historic Places.  As part of its Prosperity through Preservation, dedicated to protect and enhance the HTC, the NTHP and its subsidiary the National Trust Community Investment Corporation has retained the services of Mr. Rypkema in order to quantify the ways that the HTC can act as a catalyst for economic development.  This is a vital part of ongoing tax reform discussions in Congress, threatened with elimination or restriction.  If you support this blog and preservation you should become well-versed in the power in the HTC.

For years preservationist have been leading the charge, claiming that rehabilitating old buildings is an instrument for spurring activity within the surrounding community.  According to Mr. Rypkema, there is an excellent reason for this-it true.  Alright not the great epiphany you were expecting.  "Someone takes a white elephant building that's been sitting empty for two decades, uses the historic tax credits to rehabilitate it, and all of a sudden the property owner next door reinvests in her building; a new business moves in across the street, someone acquires the vacant lot nearby and builds a mixed-use new structure..."  I could go one with numerous other examples but until recently, no has done a systemic study of this phenomena.

American Can Company
Ogden, Utah
en.wikipedia.org

 PlaceEconomics (Donovan Rypkema's firm) recently completed a study for the Government Relations and Policy Department of the NTHP which examined projects that used the Federal Rehabilitation Tax Credits.  These projects were located in six cities in three states: Georgia, Maryland, Utah.  The point of the study was to understand the catalytic effect by looking at a range of projects: geographically, scale-wise, and the nature of use.  One example is the American Can Company in Ogden, Utah.

The building had been sitting vacant and deteriorating for years.  However, after a $12 million investment, the former canning company complex is now home to a school, architectural firm, climbing gym, and other offices.  The catalyst-new construction in the immediate area, an increase in property value and tax base, and more rehabilitation projects.  In Salt Lake City, two historic rehabilitation projects anchor opposite corners in a neighborhood once considered too risky for investment, but not so risky for a a construction firm and Artspace-a non-profit live/work space for artists.  Since their completion, the market value for host community properties has increased 22.5 percent, in contrast to a 17 percent decrease in Salt Lake City city-wide.  The city went on to establish a Tax Increment Financing District and the available funds from this program have nearly doubled since these two buildings were rehabilitated.

Miller's Court
Baltimore, Maryland
millerscourt.com

Baltimore is a lovely city with many fantastic neighborhoods.  My favorite is Fell's Point and the downtown area.  The rightly nicknamed "Charm City" also has neighborhoods that could use an injection of new: businesses, residents, investment, and activities.  This was the very kind of community where Miller's Court developed in a one-time manufacturing complex.  This development includes forty-loft style apartments catering to Baltimore-area teachers by offering monthly rent discounts.  Los Angeles and San Francisco are you paying attention?  The on-site coffee house has become a neighborhood meeting place.  Two years before Miller's Court opened, there were just two residential building permits issued in the area.  In the three years since its opening, the number of permits issued has shot up to seventeen.

National Park Seminary
Silver Spring,  Maryland
eya.com

The National Park Seminary in Silver Spring, Maryland languished for years under the stewardship of the federal government-no big surprise.  The vacant Seminary was a target for vandalism and sustained water damage.  The neighbors came to the rescue, insisting that something be done.  The result was a $120 million project that, when completed, will encompass the rehabilitation of all twenty-three buildings on the 32-acre site and new, compatible infill work.  In the hands of government, the property generated no revenue to cover teacher, police, and fire fighter salaries.  Thanks to the neighbors demanding that something be done, $60 million has been added to the property tax base in Montgomery County.  Still have an issue with Federal Historic Tax Credits?

Ponce City Market
Atlanta, Georgia
rentcafe.com

Perhaps the biggest historic tax credit projects in the United States is in progress in Atlanta, Georgia. The former Sears Building is being transformed in the Ponce City Market.  This proposed 2.1 million square-foot is slated as a mixed-used development, representing a $280 million investment with an anticipated opening date sometime next year.  Even before completion, the Ponce City Market has become a catalyst for development in the surrounding area.  Two years before the acquisition of the historic Sears Building, there were a total of two building permits issued in the community.  Two years later, the number of permits issues skyrocketed to thirty-eight.  More important, there were eight times as many building permits issued for alterations, conversion, and repair than demolition in this inner-city area.

Warehouse Lofts
Macon, Georgia
livedowntownmacon.com

If the Ponce City Market development is example of the catalytic affect of a large-scale project, the Warehouse Lofts in Macon, Georgia show how a smaller sized project can make a difference.  This more modest $385,000 project generated more than $16 million in additional private investment projects in downtown Macon.  Two years before the Lofts opened their doors, there was a grand total of two new business licenses issued for the area.  In the three years since then, the number of new business licenses has increased to fifty-seven.

Federal HTC-assisted rehabilitation
preservationnation.org

Although these projects don't have very much in common in terms of scale and undertaking, they do have three things in common:

1) historic buildings were the center of development;
2) in each case, the FHTC was used;
3) every project generated additional investment in the surrounding neighborhood.

Why did all of these projects act as catalysts for nearby development?  By taking an older building out of the category of "vacant, deteriorating, white elephant," the risk of private investment in the neighborhood was significantly reduced.  Second, these project present case studies that demonstrate the ability of older buildings to be repurposed through adaptive reuse, introducing other property owners to the possibilities around them.  That's a very a cool thing.

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