Revitalization

St. Louis Developers Using Tax Credits to Fill the "Hole in the Donut"

Posted on: June 11th, 2010 by National Trust for Historic Preservation

 

Written by Erica Stewart

The Laurel, as it looks today.

The Laurel, as it looks today.

To read the papers today (yes, thank you, I still do), with their dire news about climbing unemployment, paltry job growth and dry capital markets,  there are plenty of reasons to think an adaptive use project like The Laurel could never happen in today's economy. Yet it is. And given its eye-popping economic impact numbers, St. Louis can't really afford for it not to.

The 660,000 square foot property—formerly known as the Stix Baer and Fuller, then the Grand Leader, and later still, Dillard's—housed a series of department stores from the time it was originally built in 1906. It anchored the east end of Washington Avenue's retail district, which was, for the first several decades of the 20th century, one of the largest and most vibrant retail districts in the country.  But as retail and residences flocked to the suburbs, the property withered along with the rest of downtown.  It was one of the largest vacant properties in the central business district, and given its location next to the St. Louis Convention Center and the Edwards Jones Dome, was a vexing, highly visible, eyesore.

The story of how the old Dillard's building in downtown St. Louis began its $162 million transformation into a 212-suite hotel, 205 residential units and 32,000 square feet of ground-floor retail,  is a story of tax credits—specifically the federal historic tax credit, the Missouri state historic tax credit and the New Markets Tax Credit.

Without going into mind-crushing detail, a quick and dirty on what we're talking about here:

The federal historic tax credit, enacted in 1976, has been instrumental in catalyzing historic real estate development, economic growth, and job creation in all 50 states. (See this recent report by Rutgers University for complete statistical information.)  It operates as a dollar-for-dollar reduction in taxes owed, and can be earned if the rehabilitation of a designated historic building conforms to a set of standards defined by the Secretary of the Interior.  The credit is equal to 20% of the qualifying rehabilitation costs of the project.

The Missouri state tax credit equals 25% of qualifying rehab expenses and has been very effective in attracting private investment in the state's historic resources. The credit was widely regarded as a model policy, until this year when legislators capped the credit, meaning the state Treasury has an annual limit on its payout.  (Shout-out to Missourians: please tell your elected state officials what a poor decision that was. See below for ample evidence on the importance of state historic tax credits.)

The New Market Tax Credit is notoriously complicated, but the upshot is that this 39% tax credit is available to investors who provide capital to Community Development Entities (special entities) that have been allocated New Markets Tax Credits (such as NTCIC, the Trust's for profit subsidiary), which in turn invest that capital in qualifying low income businesses located in low-income census tracts.

Phew!  Are you with me? The larger message to take home here is that if a historic rehabilitation project is considered a qualifying low income business, and that if say, US Bank provides capital to NTCIC for its investment in a historic rehab located in low-income census tract, US Bank receives an additional return on its investment, which spurs it to make a larger initial contribution of funds. The equity boost is a significant additional source of funds for the project, and helps offset the more difficult economics associated with developing historic properties in low-income areas.

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The National Trust for Historic Preservation works to save America's historic places. Join us today to help protect the places that matter to you.

National Trust for Historic Preservation

National Trust for Historic Preservation

The National Trust for Historic Preservation, a privately funded non-profit organization, works to save America's historic places.

Little Tokyo Service Center at the Heart of the Transformation of an L.A. Neighborhood

Posted on: May 21st, 2010 by National Trust for Historic Preservation

 

Written by Erica Stewart

The Far East Building is again the focal point of the Little Tokyo community following a $4.2 million rehab by LTSC, assisted by a Save America’s Treasures grant. (Photo:  Discover Nikkei)

The Far East Building is again the focal point of the Little Tokyo community following a $4.2 million rehab by LTSC, assisted by a federal Save America’s Treasures grant. (Photo: Discover Nikkei)

My list of reasons for wanting to hop on a cross-country flight to Los Angeles just got longer.

I had the privilege of talking with Erich Nakano of the Little Tokyo Service Center last week about the history and revitalization of a four-block district that is the symbolic heart and soul of the city’s Asian-American heritage. The Little Tokyo Historic District is a National Historic Landmark located tucked between Skid Row, the Arts District, and the Civic Center in downtown L.A. The area became known as Little Tokyo after the arrival of two thousand Japanese immigrants who were recruited from northern California to lay tracks for the Pacific Electric Railway in 1903. The residents were later joined by thousands more from San Francisco following the 1906 earthquake and the racial tensions that ensued. The area has since experience waves of demographic changes, at times drawing a largely African-American population, and later, Latino. Its status as a vibrant, eclectic, and close-knit community has remained constant through its history.

The Little Tokyo Service Center (LTSC) is, in many ways, is the common thread woven throughout much of the district’s modern history, promoting the economic revitalization of the district while fighting for the survival of its cultural and historical fabric. Its three thoughtful historic rehabilitation projects have brought affordable housing, community gathering spaces, and the arts to Little Tokyo, including a Save America’s Treasure project, the Far East Building and Café, which was a beacon of hope during the dark days of Japanese-American interment during World War II.

LTSC came on the scene in 1979 to provide essential assistance to the district’s Japanese-speaking senior citizens, including transportation, translation and consumer education services. Its mission expanded greatly in the mid-1980s when the city announced a redevelopment plan that would demolish many of the neighborhood’s city-owned buildings, displacing Asian-American businesses and low-income residents. Led by LTSC, the community rallied against the threat and convinced the city to protect thirteen sites from future development.

Their work was far from over.

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The National Trust for Historic Preservation works to save America's historic places. Join us today to help protect the places that matter to you.

National Trust for Historic Preservation

National Trust for Historic Preservation

The National Trust for Historic Preservation, a privately funded non-profit organization, works to save America's historic places.

Save America's Treasures Takes Center Stage in a Theatre's – and a Town's – Recovery

Posted on: February 26th, 2010 by National Trust for Historic Preservation

 

Written by Erica Stewart

The Colonial Theatre in Pittsfield, MA.

The Colonial Theatre in Pittsfield, MA.

When looking for irrefutable evidence that the Save America’s Treasures program is much too valuable a job-generating and community-building program to lose, look no further than Pittsfield, Massachusetts. You would be hard-pressed to find anyone familiar with this post-industrial city who does not credit the 2006 rehabilitation of the historic Colonial Theatre as the catalyst that launched Pittsfield’s rebirth. And it is no exaggeration to credit the SAT program—including a visit by First Lady Hillary Clinton—with being the spark plug that jumpstarted the campaign to save the theatre and the city.

When General Electric moved out, (leaving a toxic legacy behind) urban decay, drug trafficking, blight and abandonment moved in. Pittsfield in the 1980s was a city whose residents had literally given up hope of recovery. But amid the ruin, and surviving relatively intact, was the 1903 Colonial Theatre, designed by noted theater architect J.B. McElfatrick. After a storied run as a Vaudeville theatre—its acoustics rivaling the best showplaces in the world—and a less-successful stint as a movie house, the Theatre came up for auction in 1952.

The interior of the Colonial Theatre in Pittsfield, MA.

The interior of the Colonial Theatre in Pittsfield, MA.

Fortunately, the theatre sold to George Miller, actually the lowest bidder, who set up an art supply store at that location. For fifty years customers of Miller’s Art Supply Store browsed paint selections amid ornate columns that sprung out of the floor and vanished into a drop ceiling. But it was that drop ceiling and those temporary wall partitions that effectively protected the theatre interior and ultimately made it possible to return the theater to its Gilded Age grandeur.

In 1998, First Lady Hillary Clinton’s Save America’s Treasures Tour rumbled into Pittsfield on a scorching July day. Despite the oppressive heat and a schedule delay caused by bus trouble in New York, much of Pittsfield turned out to greet the entourage, waving flags and cheering wildly. The scene was electrifying, and the visit helped catapult forward the grassroots effort to restore the theatre, led by the Friends of the Colonial Theatre. A $400,000 SAT grant followed in 2000, providing a huge boost in credibility and financial leverage to the campaign, and in 2001 the Colonial Theatre Association purchased the theatre with plans for a complete makeover.

Five years and $21.5 million later (including $7 million in federal historic and New Markets Tax Credits and settlement money from GE), the reborn Colonial Theatre held its Grand Opening in August 2006. It is truly a show-stopper, earning worldwide renown for both the quality of the work and for the dramatic impact the theatre’s reopening has had on the revitalization of the entire community.

Let me count the ways. The independent research firm Center for Creative Community Development (C3D), conservatively estimates that the theatre sustains a direct economic impact of $4 million and 92 full-time jobs annually in the Berkshires region. In addition to being an economic development engine, it has transformed Pittsfield into an arts and entertainment destination for the entire region and is once again the symbolic center for the community.

The interior of the Colonial Theatre in Pittsfield, MA.

The interior of the Colonial Theatre in Pittsfield, MA.

The accolades are many. Preservation Massachusetts awarded the Colonial Theatre its prestigious Paul E. Tsongas Award in recognition of this preservation and community revitalization achievement. The Society of American Travel Writers gave the Colonial its Phoenix Award, and it is annually recognized by media and residents as “Best Live Theatre”, “Best Venue”, and “Best Restoration” in both the Berkshires and the Albany Capital Region. American music icon James Taylor is among the theatre’s biggest fans, choosing to stage his live CD/DVD recording at the Colonial.

The role of Save America's Treasures to the project’s success and the project’s impact on Pittsfield cannot be overstated. The Honorable James Ruberto, Mayor of Pittsfield, who has overseen much of the city’s revitalization throughout the past eight years, credits the program with much of the credit for our community’s ability to overcome the inertia that kept it locked into a self-destructive cycle. “The opening of the Colonial Theatre really started the cultural renaissance here in Pittsfield. Dozens of new businesses, restaurants, art venues, and even other theaters have been created downtown directly and indirectly because of the investment that Save America’s Treasures and the community put forward to bring back this almost forgotten gem.”

Save America's Treasures, Preserve America, and the other programs cut or underfunded by the proposed federal budget do more than preserve our country's rich heritage – they put Americans to work. Learn more about the National Trust's campaign to restore this critical funding.

Erica Stewart is the outreach coordinator for the National Trust for Historic Preservation’s community revitalization department.

The National Trust for Historic Preservation works to save America's historic places. Join us today to help protect the places that matter to you.

National Trust for Historic Preservation

National Trust for Historic Preservation

The National Trust for Historic Preservation, a privately funded non-profit organization, works to save America's historic places.

HOPE Rewarded

Posted on: January 8th, 2010 by Guest Writer 1 Comment

 

Written by Erica Stewart

You know that old saying about sticking to it, "come hell or high water?" The good folks of Bastrop, Louisiana sure do.

Built in 1927 and expanded in 1931, Bastrop High School was once regarded as one of the best, largest, and most complete school facilities in Louisiana.

Built in 1927 and expanded in 1931, Bastrop High School was once regarded as one of the best, largest, and most complete school facilities in Louisiana.

Their story begins nearly a decade ago. Working with the City of Bastrop and the Morehouse Parish School System, the Bastrop Main Street organization proposed in 2001 a rehabilitation of the 1927 Bastrop High School into roughly 70 independent living apartments for the elderly. After sixty years of proud service to the community, the local landmark had been vacated, gradually becoming the historic district’s most unattractive building and greatest liability. It eventually found its way onto Louisiana’s listing of most endangered historic sites.

Today, nearly ten years after the original plan, word has come that all funding has been secured for the rehabilitation of the historic school building, bringing good news of tremendous economic development to the northeastern corner of Louisiana – a place that saw its largest employer, International Paper, close its plant last year.

The first funds to lift the project off the ground actually came from the National Trust for Historic Preservation through the Byrd Foundation, which helped fund an environmental study to identify what issues might be involved with the restoration. No significant problems were identified. After listing the project on the National Register in 2002, the next big break came in September 2005 when HUD’s HOPE VI Main Street grant program was announced. This federal program was designed to support the creation of affordable housing in the downtowns of smaller-sized cities and towns. 

When news of the funding availability came, Bastrop Main Street quickly assembled a team to undertake the extremely labor-intensive application. Everything was on track when Hurricane Katrina struck New Orleans, particularly affecting the home of Tom Crumley, a key contributor to the application team. The storm sent Tom packing to higher ground only three working days before the submission was due. Working through the Labor Day weekend in Bastrop, the team pulled off a near-miracle and submitted the application on time.

Damaged by the aftereffects of Hurricane Katrina in 2005, the roof of Bastrop High School has been leaking ever since, causing significant water damage inside the building.

Damaged by the aftereffects of Hurricane Katrina in 2005, the roof of Bastrop High School has been leaking ever since, causing significant water damage inside the building.

Their superhuman effort was quickly rewarded with a $500,000 grant for the project. The timing was perfect, as rains from Hurricane Katrina had wreaked more damage on the Bastrop High School building, causing roof leaks that spurred further deterioration of the historic structure. HOPE VI funds were used to cover architectural and environmental expenses while additional funding was sought.

Fast forward to 2009, and the high school – despite all previous fundraising efforts – remained largely untouched due to a huge financing gap. It wouldn’t be until December 21, 2009, that local and federal lawmakers would announce the procurement of more than $13 million in state, federal, and private funds for the project. Approximately 55% of the project’s funds came from two new programs created by the American Recovery and Reinvestment Act to help spur projects stalled by the economic recession. The Tax Credit Exchange Program and the Tax Credit Assistance Program, both administered by the Louisiana Housing Finance Authority, allocated $6.4 million and $871,000 respectively, to the rehabilitation. 

With these funds in place, the project will break ground in July 2010, with a late 2011 opening expected. Optimism is sky high after reaching this huge milestone through ten years of hard work. Bastrop Mayor Betty Alford-Olive is excited by the catalytic potential of the project: “With other property near the site available for development, we believe investors will see the opportunity to serve the facility and create new jobs in the community.”

So, please stay tuned; despite the long prologue, this story has just begun.

Learn more about Bastrop High School and the role of the Bastrop Main Street in orchestrating this project.

Erica Stewart is the outreach coordinator for the National Trust for Historic Preservation's community revitalization department.

The National Trust for Historic Preservation works to save America's historic places. Join us today to help protect the places that matter to you.

Guest Writer

Although we're always on the lookout for blog content, we encourage readers to submit story ideas or let us know if you've seen something that might be interesting and engaging for a national audience. Email us at editorial@savingplaces.org.

I Brake for Old Buildings: A Preservationist’s Tour of Baltimore, East and West

Posted on: November 16th, 2009 by National Trust for Historic Preservation

 

Written by Erica Stewart

NTCIC staff and friends listen to what is possible at the Dayspring Block building project in a rough part of East Baltimore.

NTCIC staff and friends listen to what is possible at the Dayspring Block building project in a rough part of East Baltimore.

As someone whose job involves a significant amount of writing, my work gets infinitely easier when I trade the confines of my desk (and the bounds my imagination) for the actual streets and buildings where historic preservation meets the road.  So I jumped at the chance to join a tour of historic rehabilitation projects in Baltimore, a city where the National Trust's Community Revitalization department and its for-profit subsidiary, NTCIC, have a long and rich history of involvement.  It was a stimulating day spent among preservationists and development professionals, full of photo ops and personal stories from the field that are pure manna for a desk jockey like me.

The afternoon tour took us past some of the city's toniest streets as well as sidewalk scenes straight out of HBO's crime drama, The Wire.  I had the chance to witness a diverse range of project types  -- from a world-class performing arts space, to services for the city's neediest -- stages of completion, and socio-economic context.

A former Masonic Temple is now the stunning Tremont Grand conference and event space.

A former Masonic Temple is now the stunning Tremont Grand conference and event space.

The first stop on the tour was lunch at the Tremont Grand (an amazing adaptive reuse story) and the main course was a discussion of tax credits, specifically the Maryland state historic tax credit.  The message that stayed with me much longer than the chocolate torte served for dessert was that the Maryland credit has done more than any other economic development tool to revive large chunks of Baltimore city.

The credit, which is available for both owner-occupied residences and for commercial buildings, made the economics work for homeowners rehabbing homes in neighborhoods that offered proximity to parks and public transportation but that had been mothballed for oh, a few decades.  The tax incentive helped homebuyers update existing homes in a historically-sensitive fashion, serving to retain the city's older housing stock and ensuring its role in the city's rebirth.  The commercial use of the credit, meanwhile, helped developers finance the reuse of the city's great industrial, office, and mixed-use buildings, bringing a wave of jobs and neighborhood-serving businesses to residents. These amenities, housed in evocative historic buildings, helped attract additional residents to the city, creating a powerful positive feedback loop that helped reverse Baltimore's population decline for the first time in a decade.

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The National Trust for Historic Preservation works to save America's historic places. Join us today to help protect the places that matter to you.

National Trust for Historic Preservation

National Trust for Historic Preservation

The National Trust for Historic Preservation, a privately funded non-profit organization, works to save America's historic places.