Unintended Consequences (Part 2)

If you have paid attention to the first installment of the State Historic Tax Credit series (gee, I hope so) you realize the incredible financial power of and the unique opportunity we have in Connecticut to encourage historic preservation.  If a building is deemed historic and is vacant and abandoned commercial structure the State Historic Preservation Office (SHPO) can award a tax credit for 25% of the construction cost to rehabilitate it.  The tax credit is redeemable to provide a financial resource for development.  Connecticut is one of a few states to offer a robust tax credit incentive.

Annually Connecticut has allocated $ 30 million in tax credits for commercial projects.  In highlighting the work of the Capital Region Development Authority, I highlighted projects in Hartford which could make financial sense with the addition of the tax credit resource.  In turn this has sparked a renaissance of the urban activity so sorely lacking in downtown.  SHPO reports that throughout the State 1,515 new units of housing have been created since the program’s inception, 797 of these are affordable.  Reuse of abandoned buildings brings an economic engine to help the cities in Connecticut through sales tax on construction materials, income tax revenue for wages paid to all associated with the project; architects, engineers, workers even the coffee vendors who sell items on the sites.  Last but by no means least is the real estate value increase realized by putting a vacant building back into productive use.  Value increases the tax base on which cities generate taxes to operate.  Further, if the vacant building next door suddenly comes to life the value of adjacent properties also improves.  It is not difficult to understand that historic tax credits, as a financial development component, are an incentive of real merit.

What could possibly go wrong with this key resource?  Popularity!  Since the tax credit program was launched interest in utilizing them has increase exponentially.  As developers and investors have grown to rely on the resource demand has grown to outstrip supply.  We work on a fiscal year as do most states which means our year runs from July to June.  SHPO has already announced that the pool of historic tax credits has already committed for the next fiscal year 2017-2018!  In doing its best to accommodate new projects they have made commitments for next year.  This is not able to be sustained and so rather than issue commitments the State has now begun to issue “reservations” which are not treated the same for purposes of assembling a project.  Basically, there is less certainty.  Uncertain of the financial structure of a project causes investors to hold back their commitments.

Since historic tax credits generate financial benefits for communities a logical response would be to call for a larger allocation of these.  As we know the State is struggling with its budget which has been made clear in cuts all of us have realized.  A tax credit means a reduction in revenue to fund the State’s operation.  A profound effort is to be made this Legislative Session to increase the credit allocation.  A benefit analysis is hard to develop because so many subtle components are involved. Take for example the increase of the municipal tax base driven by rehabilitation of vacant and abandoned buildings.  Studies do not exist to make the argument that greater not fewer tax credits are an economic engine.  There are many competing needs which need to be weighed to balance the State’s budget.  Although we in the field of historic preservation feel that the argument is financially practical it is hard to get the opportunity to make the case before our legislators.

What to do?  If urban community economic development is important to Hartford, then your voice needs to be heard by our delegation.  Recall that we have 5,300 deemed to be historic properties here.  Historic tax credits for redevelopment are critical.  We need your help in simply writing a note to your elected officials to voice your support for an increase of the State Historic Tax Credit allocation.  Find your legislator

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Historic Tax Credits in Hartford Economic Development

Hartford, as most major cities in New England, spiraled into a deep real estate decline in the later 80’s.  Developers in anticipation of building commercial projects had purchased many historic buildings in downtown, torn them down and left major swaths of empty lots.  Our Main Street is testament to the destructive acts which tore apart the fabric of the City.  Still today much of this remains leaving surface parking lots where once stood 19th and 20th Century buildings of true architectural merit. The ghosts of buildings never-to-be-built haunts downtown development and stymies the recreation of a tax base on which to operate Hartford.

In its wisdom the Connecticut General Assembly created and capitalized the Central Region Development Authority in June 2012.  Established with the challenge to do the following:

  • To stimulate new investment, provide for multicultural destinations and a vibrant multidimensional downtown
  • Attract major sports, conventions and exhibitions
  • Residential housing development
  • Operate, maintain and market the Connecticut Convention Center
  • Stimulate family-oriented tourism, art, culture, history, education and entertainment
  • Manage designated facilities
  • Stimulate economic development in the Capital region
  • Development and redevelopment property within Hartford
  • Facilitate the relocation of the area State office buildings

This charge has been skillfully managed by Michael Freimuth the CRDA Executive Director, acknowledged as a man of wisdom and vision who has made tremendous contributions to the revitalization of Hartford’s Downtown. He has brought financial resources to a strategic investment policy in projects which have made an impact on the Capitol City bringing new and vital development.  His challenge has been a big one be involved with housing, retail, cultural, tourism and to manage large facilities owned by the State.  For those of us in Hartford doing work to revitalize the city Mike’s presence is felt throughout.  CRDA has become one of the most helpful allies in recognizing that historic preservation contributes to community economic development.

Connecticut has a robust State Historic Tax Credit with both residential and commercial allocations.  These credits have provided a powerful financial tool to reuse and preserve buildings deemed to be historic.  Hartford has many such buildings with an interesting twist defining historic as those 50 years of age or older.  Many of the larger abandoned buildings are surprisingly defined as being historic; many have started their productive life as commercial office space.  Developers have realized that the buildings may be reused as residential properties.  The most striking high-profile development has been the reuse of 777 Main Street, formerly known as the Bank of America Building (originally built for Hartford National Bank), a tall, prominently located building on Main Street, State House Square.  However groundbreaking for Hartford 777 Main Street is only one of several projects to bring people into the City.  CRDA has participated in nine adaptive reuse projects of vacant and abandoned historic buildings.  In a city with a significant low-income population CRDA has been able to navigate successfully the desire to produce affordable housing units matched with an economic development strategy to attract market-rate units.  One excellent example of an adaptive reuse of an historic gem in downtown is the Judd & Root Building at 179 Allyn Street, whose renovation has revitalized a central district.  New tenants relocating to downtown or being attracted to living in Hartford now are creating a retail demand for goods and services, restaurants and entertainment venues.

After decades of decline Hartford is witnessing a true renaissance.  There is life on the streets once again.  Even though many historic buildings have been lost forever there is still sufficient fabric to attract community development.  The concept of adaptive reuse plays a significant role in bringing to life buildings which seemed to have lost their practical opportunities to contribute, and to pay taxes, once again in Hartford.

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A Puzzle

315-capitol-ave-bWe were recently notified of a potential demolition of an historic house located on Capitol Avenue.  In following up we discovered that the owner of the property had purchased it as a preventive strategy to protect its substantial interests next door.  We sought a meeting to discuss opportunities and found that the owner was completely frustrated with trying to sell the property, for 5 years!  Seems that no one wanted to undertake a rehabilitation which would be expensive and ultimately cost more than the property would be worth.  Now long-abandoned and home to squatters the owner has grown concerned and wants to be rid of the costly headache.  One can be sympathetic, we know from great experience that often the cost to rejuvenate a property may exceed its investment.  However, we offered to explore how to become the white knight.  With experience in real estate development, finance, historic renovation technical assistance and a familiarity of market trends we determined to see what we could do.

Informing the owner that financial resources exist to mitigate the rehabilitation cost and our contribution of in-kind development and architectural services could make the project feasible for a moderate-income homeowner. Hartford needs community-based models of smaller properties to help spark more neighborhood revitalization step-by-step.  We proceeded to draw plans, assemble a development budget and make inquiries into resources to successfully model a preservation project of note.  ( I failed to mention that the boarded up property greets motorists who take the exit from I-84 to reach the Capitol and/or the State Armory.  Welcome to Hartford!)  A perfect teaching model of how to utilize the unique Homeowner Tax Credit Program offered by the State Historic Preservation Office would be presented to the public as we bring a house back to life.

315-capitol-drawings

So, the puzzle?  Although we have made good progress to assemble the project the property owner has gone silent.  Attempts to discuss how a purchase might be organized have met with a vague response.  Two of which have us scratching our heads: 1. We are anxious to have the project move forward more rapidly (remember the property has been owned for 5 years and in serious decline during that period) and 2. What happens, after renovation, regardless of it being owner-occupied, and roughly $400, 000 is spent on the project, that it falls into ruin once again?  Sadly without further information we are coming to the belief that the owner of the property simply wants to demolish the building.  As I often say “don’t confuse me with the facts, my mind is made up”.

At a time when the City of Hartford sorely needs community economic development and to have properties on the tax rolls.  The historic fabric of the City needs to encourage cost-effective models of rehabilitation and the State of Connecticut offers very robust financial incentives to accomplish the work.  We are both disappointed and honestly feeling as if the owner has not engaged with us in a good faith conversation.  Historic preservation matters in Hartford, economic development matter more so we only wish that or time and talent has not gone to waste.

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What’s HPA All About? A Reflection from the Intern

chelsey-crabbeOne of our favorite “jobs” here at HPA is working with interns and student volunteers. Chelsey Crabbe (Trinity College ’17) joined us this semester and leaves us this week with this article. 

Historic preservation is a cause that I feel passionately about and I never thought that I would find an internship while at school that would fulfill these interests of mine. As a History major at Trinity College, I felt like the opportunity to work at the Hartford Preservation Alliance (HPA) would allow me to both satisfy my interests as a “historio-phile” as well as integrate the city of Hartford, a city that has been my home for four years. I, humbly, accepted the internship position at HPA and, thus, began my semester-long experience at the organization.

How fitting that HPA’s office is in the re-purposed (and listed on the National Register of Historic Places) Underwood Computing Machine Factory Building. During my first weeks at the office, I started to become hyperaware of all the quirks of this historic building, an environment that acted as the perfect backdrop for a budding historic preservationist. For instance, one of the most vivid memories I will have of my time at HPA involves continually rolling backward in my chair due to the office’s original flooring that had become slanted over the decades. While a majority of the time, I found this to be quite annoying, a small part of me understood that this tiny intricacy gave the old factory at 56 Arbor Street a certain element of character. Characteristics like this are often lost because of demolition or abandonment and replaced with homogeneous architecture reminiscent of a time that occurred only seconds in the past rather than centuries. And to get back to my point, my awareness of these small details can now be attributed to my time working at HPA.

187-189 Sigourney an endangered property that Chelsey title searched.

187-189 Sigourney an endangered property that Chelsey title searched.

Although I never met the many supporters of the alliance or many of the board members, I had the pleasure of working alongside HPA Assistant Director, Mary Falvey, and Executive Director, Frank Hagaman. If anything, my experience in the preservation field was only enhanced by the support, expertise, humor, and knowledge of these two not-so-silent soldiers. Gaining recognition of and finding funding for historic preservation is trying work and requires a certain amount of engagement and commitment that is difficult to recruit. Both Mary and Frank, through their tenacious work ethic, taught me to speak up within a professional environment and go about obstacles and realities with a sense of humor. My experience at HPA was not only rewarding because of the work that I was doing, but because these individuals were so accommodating and personable.

Borch-Stevens Bakery part of the Windsor Street Factory Building Survey that Chelsey created.

Borch-Stevens Bakery part of the Windsor Street Factory Building Survey that Chelsey created.

Speaking of the work…I found myself switching between projects as circumstances changed allowing me to practice the skill of adapting within a working environment, a skill that will probably be of use to me in the coming years. Each project was different in its content and context, but required a similar set of skills which I found the most enriching. From conducting archival research to brainstorming for a social media campaign, I utilized several important skills sets that are relevant in any workplace. Specifically, I spent a majority of my time working with blighted properties in the Hartford area ranging from old homes to abandoned mill factories. Disturbing fact: the fate of these properties will most likely involve barrels of concrete and, eventually, a new parking lot. However, with organizations like HPA, some of these buildings can be revitalized in a way that would enrich the historic character of Hartford and provide a service to the city’s inhabitants. There is a solution to revamping the city, an answer that involves economic development, and a key to that is keeping the aesthetic of the city unapologetically rooted in Hartford’s heritage. The answer is historic preservation. My time working at HPA highlighted this important fact to me. So, to conclude, did I enjoy my time at the Hartford Preservation Alliance? Of course. Now, there is more work to be done and I truly believe that this organization can make a real difference especially because of Hartford’s rich history. I am sad to leave, but I will continue to support the organization and encourage any student in the area, especially those interested in history, urban studies, and architecture, to apply for a position at HPA.

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Singing Praises

Left to right: HPA Intern Jake Fusco, Valerio Giadone, HPA Board President Jack Kemper

Left to right: HPA Intern Jake Fusco, Valerio Giadone, HPA Board President Jack Kemper

On occasions the stars seem to align to bring great chance to a good idea. We at the Preservation Alliance have been fortunate to have engaged a master of design, common sense and skill to provide technical assistance to those historic property owners in Hartford.  He is Valerio Giadone an architect and guide for our strategy to work on behalf of community economic development here.

In our strategic plan which was ratified late in 2014 the Preservation Alliance determined to be an historic preservation force: Focusing Priority

To be Hartford’s historic preservation resource and technical assistance hub and develop the organizational structure, partnerships and resources to support it for historic property owners and the City of Hartford so that HPA is relevant, is recognized and acheives mission impact and sustainability.

These are all very goals lofty for a small organization with little capacity to deliver on the promise.  With the very generous support of a Capacity Building grant from the Hartford Foundation for Public Giving the Preservation Alliance set out to build a team to achieve its desire.  We wanted to be the go-to resource for the 5,300 historic properties in Hartford.  In hiring Valerio nearly all our dreams come true.  He is a skilled architect with a deep background in working with historic buildings.  He has a passion to learn about design and materials which can repair, restore or replicate the features which we associate with appropriate preservation.  Yet all the while he is working to keep the budget within workable boundaries.

We in Connecticut are very fortunate to have State Historic Preservation Tax Credits which are financial incentives for property owners and developers to go the extra distance in preserving their properties.  Valerio has become expert in navigating the process to apply for and be granted an allocation of credits.  This is particularly true with homeowners who can be fearful of working with a state agency.  He has become a trusted intermediary for the Hartford Historic Preservation Commission often interpreting how best to achieve a preservation goal.  There are many examples of Valerio’s success however the City is most appreciative of his consultation to bring historic tax credit resources to Hartford’s desire to rejuvenate the former Northwest School on Albany Avenue to create the John E. Rogers African American Cultural Center.  By engaging the Preservation Alliance and Valerio the City has realized $ 630,000 in additional financial resources otherwise unknown to the project.  The testimony from homeowners of the benefit that his guidance has brought to their restoration projects grows daily.  Often his steady advice has made the process of petitioning the City for permission to do work on properties far easier and less complicated.  He has also saved them money!

So much praise and thanks for making our team demonstrate that “Preservation Matters”.  He is the force which makes our work so meaningful in Hartford.  Next time you get a chance please thanks him for his work and dedication.

 

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