Saturday, March 22, 2014

National Park Service Issues Its Annual Historic Tax Credit Report Card


By Jason Yots

If you’re like me, then you’ve been anxiously awaiting the issuance of “Federal Tax Incentives for Rehabilitating Historic Buildings”, the National Park Service’s annual report about the performance of its historic tax credit (HTC) program.  Well, wait no longer because the 2013 version hit inboxes this month (Note #2), and this year’s issue was illuminating to watchers of the historic rehabilitation industry.

Preservation By Numbers

Like all good annual reports, the HTC report is packed with statistics.  On the macro level, the historic tax credit program generated over $6.7 billion in new investment in 2013, an increase of 21% from 2012.  At the micro level, the average cost of an HTC project was $5,820,000, while forty percent of all HTC projects cost less than $500,000 to build.  An interesting tidbit for small cities like Buffalo, NY: projects both large and small can work with HTCs.

Jobs, Jobs, Jobs

In historic preservation, we never tire of that broken record: “Preservation Means Jobs!”  Because it’s true.  Since 1978, the HTC program has created over 2.4 million new jobs.  In 2013 alone, the program created nearly 63,000 net new jobs, up from 58,000 in 2012.   And before you can ask, “Where, in China?”, we read that an average of 78 new LOCAL jobs are created with each HTC project.  Factor in the $40,000 average annual pay-days on HTC jobs, and suddenly it’s a no-brainer that small market cities like Buffalo should be encouraging HTC development.

Lofts, Lofts, . . . Affordable Housing?

The HTC program is a strong housing generator.  In 2013, the program rehabilitated 247,625 units and helped to spur the creation of another 236,886 new units.  Of those 484,511 total units, 131,438 – or a full 27% - were low-to-moderate housing.  So, while the perception at times may be that HTCs only result in fancy urban lofts, the reality is that the impact of HTCs on the housing industry is in fact diversified.

Most Importantly, How Did WE Perform?

In the end, it’s all about us, so let’s close with some statistics specific to our state.  2012 was an active HTC year for New York, and 2013 built on that momentum.  In overall “Part 2” approvals (the government’s OK to start work on your HTC project), New York placed 5th with 63, behind Virginia (128) Louisiana (119), Ohio (78) and Massachusetts (72).   To give that number some context, however, consider that New York led the nation in total HTC project costs with an eye-popping $1.165 billion in estimated HTC investment (that is, about 17% of all HTC investment in the nation in 2013).  Ohio placed a distant 2nd in that category with $612,610,000.  New York’s total investment undoubtedly skewed a bit higher due to New York City’s propensity for mega-projects, but it’s clear that New Yorkers in general are aware of what only a handful of other states have figured out: commitment to the HTC program means new investment, new jobs and new lives for old buildings.

Jason Yots is President and CEO of Preservation Studios LLC  www.preservationstudios.com.

Notes:

1.  For background on the federal and NY HTC programs, please see http://buffalorising.com/2012/10/survival-of-nys-historic-tax-credit-program-may-depend-on-bifurcation/

Sunday, March 9, 2014

Scajacuada Creek and Expressway


Written by Derek King, Architectural Historian at Preservation Studios.
In August of 2012, an urban explorer who runs the blog "Concrete Aperture" explored the tunnels that comprise the capped stretch of Scajacuada Creek. The blogger and his friend traversed the three miles of capped creek from Forest Lawn to the edge of Buffalo, documenting the smells, sounds, and sights (or lack there of, in the pitch-black darkness), of one of the most curious urban planning decisions in Buffalo's history.
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Entrance to the capped section of the Scajacuada Creek, from Concrete Aperture's exploration of the tunnels.
In 1921, the City of Buffalo responded to the concerns of citizens in the quickly multiplying urban developments of the city's East Side. The Scajacuada Creek, a tributary that flowed westward from the surrounding towns out to the Niagara River, was being polluted by nearby factories, overflowing waste, and negligent homeowners. Rather than address the reasons why the creek was contaminated, and thus, smelled awfully, the City decided to construct a concrete cap over the three mile stretch from the city's Largest Cemetery all the way out to Cheektowaga. Constructed at the height of Buffalo's wealth, the capping of the Scajacuada was an engineering feat, but an irresponsible and wasteful one that defines the blunders of Buffalo's planning history.
Many of Buffalo's decisions over the last century followed similar simplistic logic. Like many cities, Buffalo pursued the easiest solutions to problems rather than the most correct ones. The city ran highways through parkland, and railways through neighborhoods. They let 500,000 square foot factories emerge right next to schools. They demolished entire blocks of buildings in order to combat blight, without any plan to address the poverty that leads to it in the first place. From 1920 until 1980, the actions of Buffalo's planners, whether pushed by modernist hubris or by an automobile-based planning ideology, irreparably harmed the landscape of the city.
If the capping of the Scajacuada Creek represents the modern ideal that there is a man-made solution to any natural "problem", the created of the Scajacuada Expressway represents the sacrifices made to appease car-dependent citizens in the years after the Second World War. Route-198 was finished in 1961, connecting the Niagara Thruway (which runs along the waterfront) with Route 33, an urban arterial that was finished around the time as the Scajacuada and runs downtown. The NY-198 corridor has been praised as one of the only east-west corridors through the city, but at what cost?
The route runs through the middle of Delaware Park, the heart of Olmsted's Parkway System here in Buffalo. Frederick Law Olmsted, designer of Central Park in New York City, chose Buffalo to highlight the true capabilities of urban parks. His parkway system  here connected the entire city to the large Delaware Park, running wide tree-lined boulevards and large-roundabouts through neighborhoods, all leading back to "The Park." 
Elm-ave-Bridge-Buffalo-NY-steel-1
Aerial Photograph of Elmwood Avenue and Delaware Park prior to the creation of the Scajacuada Expressway
Combined, the creation of the NY-198 and the NY-33 represent two of the most irresponsible blunders on the part of Buffalo planners in the past.  The NY-33, or “The Kensington Expressway,” created a rift through one of the city’s most affluent African American neighborhoods, creating a literal canyon down what had been Olmsted’s most glorious parkway in the city. The Scajacuada Expressway bisects Delaware Park with a four-lane highway in the middle of one of Buffalo’s best public spaces, and then runs along and over the western terminus of the Scajacuada Creek.
Together, the condition of Scajacuada Creek and the fate of route NY-198 are intricately tied, as citizen-groups advocate not only for the remediation of the waterway, but the downgrading of the highway, if not its outright removal. Though representative of much larger issues in Buffalo (aging and disruptive infrastructure, and neglected natural resources), these two campaigns signify the growing trend in Buffalo to not blindly accept the mistakes of previous generations.
Scajacuada Creek, with expressway in background.
Scajacuada Creek, with expressway in background.
Over the course of the next few months, I will explore the history of the Creek and Expressway, the current campaigns regarding their improvements, and lastly, what the broader implications are for similar problems throughout the city. The series will take a closer look exhibits at Buffalo’s History Museum and Burchfield Penny Art Museum that are highlighting the issues surrounding these two campaigns, as well as the community groups and organizations driving the effort to effect change on these hot-button issues.
Looking back at these mistakes, however, the intent is not to assign blame. Instead, with 100 years of urban planning blunders, this series, and these campaigns, are about learning from previous lessons, and creating a Buffalo that we not only want, but that we deserve.
Like the “UrbEx” bloggers who trucked through three-miles of sewage and stagnant water that currently defines the Scajacuada Creek, the goal is not to criticize and complain, but to understand and improve, so that maybe the future of the creek, and expressway, wont be as dark as the caverns that wind beneath Buffalo’s East Side. 
This piece also appeared on the Buffalo Exchange.

Tuesday, February 11, 2014

Embody This

By Jason Yots


Historic preservation advocacy is delivered in many forms – economic, environmental, aesthetic, political, moral, ethical.  Some concepts are more accessible than others, but they all share a goal: to promote historic preservation as a path toward more sustainable living.

Perhaps the most direct path to that goal is the historic preservation argument built on the notion of “embodied energy.”  Before you jump back to Reddit, hear me out.  This is actually pretty interesting stuff, especially if you like to geek-out on preservation stats.

Let’s start with some dictionary.  One way to define “embodied energy” is “the energy required to extract, process, manufacture, transport, and install building materials” (Note #1).  In other words, it’s the collective energy required to bring a new building into the world.  Compare this to “operating energy” – the energy expended in using the building – and you’ll see that we’re heading into some new theoretical territory.

Most “green building” efforts focus on the operating energy side of the equation, where the primary focus is on building the most energy-efficient structure possible (within your budget, of course).  The proliferation of the U.S. Green Building Council’s “LEED” energy ratings for new and existing buildings is an example of this emphasis.  However, particularly where a building will be demolished and replaced by a new building, a tight new building envelope and efficient new systems are only part of the analysis, argue some preservationists.  In that scenario, one must also factor in the embodied energy that is squandered when a building with a remaining useful life is demolished and landfilled.  When you do, “green” buildings become, well, less green.

Still a little fuzzy?  Maybe some math might help.   The May T. Watts Appreciation Society created an intriguing online program called “The Embodied Energy Calculator” (Note #2).  Using only your building’s type and its gross square footage, the EEC estimates your embodied energy investment in a building.  The EEC also calculates the “demolition energy” that would be generated by demolishing a building by factoring its construction type and its gross square footage.

Let’s say that Developer plans to demolish a 25,000 sf masonry building to construct a similarly sized “green” building on the same site.

41,000,000 – mBTUs (Note #3) expended to build the tear-down
     387,500 – mBTUs expended to demolish the tear-down
41,000,000 – mBTUs expended to construct the new-build
82,387,500 – total mBTUs to construct the new-build

How much energy is 82,387,500 mBTUs?  One measure would be the equivalent of 716,413 gallons of gasoline, or enough to propel my Honda CR-V over 14 million miles.  Yeah, that’s a lot of energy for one medium-sized building, however green it may be.

Based on this methodology, then, a building’s overall efficiency would seem to depend heavily on the decision to include in the equation the embodied energy from the construction and demolition of the building it replaced.  Whether that's a fair measurement of a building's energy efficiency may be debatable but the adage “the greenest building is the one already built” certainly merits serious consideration.
  
Notes:

1 – Wayne Curtis, “A Cautionary Tale.”  Preservation (Jan./Feb. 2008).


3 – One mBTU = 1000 British Thermal Units.

Wednesday, February 5, 2014

Preservation Bytes


Written by Jason Yots, President and CEO of Preservation Studios

The former Duffy Silk Factory at 1210 Broadway,
located near the Belt Line
The New York Times recently featured Chattanooga, Tennessee in its Business Day section, describing it as possible model for the resurgence of former industrial centers (Note #1).  More specifically, the article discusses the connection between Chattanooga’s investment in ultra-high-speed fiber-optic infrastructure and a recent surge in capital and professional talent flowing into the city.  Known as “The Gig” locally, the taxpayer-owned fiber-optic system is considered by some to be the fastest system in the United States.  How fast?  How about one gigabyte per second (or about 33 seconds to download a two-hour high-definition movie)?  That’s 50 times faster than average the “high speed” internet available to American homes.  For less than $70 per month.

But folks aren’t moving to Chattanooga because they can download movies faster; they’re moving there for the jobs that have emerged from the businesses that have started or expanded there to access The Gig.  Here’s a bit of the article:

“Since the fiber-optic network switched on four years ago, the signs of growth in Chattanooga are unmistakable.  Former factory buildings on Main Street and Warehouse Row on Market Street have been converted to loft apartments, open-space offices, restaurants and shops.  The city has welcomed the new population of computer programmers, entrepreneurs and investors.  Lengthy sideburns and scruffy hipster beards – not the norm in eastern Tennessee – are de rigueur for the under-30 set.”

Former factory buildings?  Scruffy hipster beards?  We have a few of those in Western New York, don’t we?  If Chattanooga launched The Gig only four years ago, we aren’t that far behind.  In fact, this reminds me of a local effort from the late-1990s encouragingly called the “Buffalo Byte Belt” that focused on attracting technology companies to the trunk of Main Street downtown (Note #2).  I don’t know if the Buffalo Byte Belt took off downtown but it might be something that Buffalonians should reconsider, perhaps along the re-emerging Belt Line (no relation).

-----------------
Note #1 - “A City Wired For Growth”, Edward Wyatt, February 4, 2014

Note #2 - See, for example, this 2001 Business First article - http://www.bizjournals.com/buffalo/stories/2001/06/18/story3.html?page=all.

Wednesday, January 22, 2014

The History of Hamlin Park Finale: The Legacy of Model Cities and Hamlin Park in the Present

This information comes directly from the National Register nomination that Preservation Studios completed. Check back for additional installations in the series in the coming weeks. Stay up to date with all things Hamlin Park by liking the Hamlin Park Historic District on Facebook.

As a whole, the Model Cities program is remembered fondly by participants, not only for vestiges like the Build Academy, which survived the end of the program, but for achieving some of the less quantifiable goals of the program regarding power and agency, noted this in the documentary Model City:

Buffalo is a great example of the level of agency created for citizens by the Model Cities program. Aside from larger projects run by the Model Cities Agency, dozens of other programs were enacted through the Model Cities funding, often collaborating with other groups in the city. Two programs were run in junction with the Buffalo Library; the Readily Accessible Materials Van (RAM Van) brought magazines, books, and films to areas without access to a library, and the Bars Beautyshops and Barbershops (The Three Bs) program provided encyclopedias to areas where residents typically congregated. In August 1972 a Model Cities Expo was held to highlight all of the different projects made possible by the program, around 36 in all.

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Tangible results of the program are more difficult to evaluate, though the effects of the funding on Hamlin Park seem apparent. Though much of the area east of Main Street suffers from poverty, Hamlin Park fared better than most. The seven census tracts that encompass all of Buffalo’s Model Cities area have dropped by over 50 percent in population and are now largely impoverished African American neighborhoods. Indeed, beginning with the topmost portion of Hamlin Park, the census tracts increase in poverty the deeper you get into the Model Cities program areas. Tracts 52.02 and 33.01 (the boundary of the Hamlin Park historic district) have poverty rates of 26.27 and 25.5 percent, whereas the tracts immediately to the south (within the remainder of the Model Cities area) have rates of 30.2, 37.3, 29.9, 37.05, and 44.7.

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In many ways, the goals of Model Cities were far too lofty: broad, sweeping programs that combated blight, poverty, health, recreation, and education. Based on its own criteria, the program utilized in Hamlin Park was actually highly successful, largely because it was unburdened by the full program’s expectations. Indeed the city’s only expectation for rehabilitation programs was to prevent conditions from getting worse:

While code enforcement projects represent the least costly of the available urban renewal activities, they are also capable of the least amount of change. Consequently the areas which have been selected for code enforcement action have been drawn primarily from residential areas which are presently stable with the object of maintaining this stability. - Model Cities Pamphlet

HP-0738

A variety of factors contributed to Hamlin Park’s maintaining building integrity, population density, and low poverty rates compared to the remainder of Buffalo’s East Side. The establishment of the Hamlin Park Taxpayer’s Association in 1965 enabled a largely middle class neighborhood to mobilize against the issues of poverty spreading throughout Buffalo’s East Side. Working with city officials, they helped qualify the area for a project that would eventually be folded into the Model Cities program, enabling families the tools to help improve their neighborhood and fight off blight. Hamlin Park was chosen initially because of the neighborhood’s proximity to impoverished areas, a buffer community against blight and poverty, and the Taxpayer’s Association was pivotal in maintaining that integrity after Model Cities ended, not only by assisting homeowners with subsequent state and federal assistance programs, but helping to establish the local historic district in the 1990s. 

HP-1282

While Hamlin Park demonstrates neither the unqualified success nor failure of the entire program, it does demonstrate that with successful targeting and implementation, rehabilitation programs can succeed in stemming or counteracting the effects of blight. Unlike the lofty goals for much of the city, the code enforcement program, run simultaneous with and then through the Model Cities program, was highly successful at preventing the effects of poverty that spread through Buffalo’s East Side, particularly in comparison to the surrounding neighborhoods today.

1913 4-24 Buffalo Express

While Urban Renewal funding enabled the rehabilitations that maintained the neighborhood’s integrity, Hamlin Park’s success in the Model Cities program is tied to the Taxpayer’s Association that formed to facilitate the dispersal of those funds. The involvement of the group in the district did not end with Model Cities but continued in the following decades, whether implementing “Watch Dog Programs” to battle building deterioration, or assisting residents in applying for subsequent HUD program funding. In this way, Model Cities was successful in Hamlin Park by providing important funds for the community, but more importantly, by prompting the development of an organization shaped the neighborhood long after the program finished in 1975.

Northland Avenue

In the course of 153 years, the area known as Hamlin Park has been influenced by a variety of individuals, ideas, and movements, and the effects of those influences can be seen in the physical features of the district itself. The earliest stage of its history is traced in the curving streets of the northeast corner. Designed by August Hager, but inspired by Frederick Law Olmsted, it captured the dilemma of the nineteenth-century urbanite attempting to create the flowing, open spaces of the rural environment within the bustling crowded cities they occupied. The second period of development, at the turn of the twentieth-century, epitomized much of Buffalo’s streetcar neighborhoods: small, narrow lots with rows of identical houses, offering thousands of families the ability to relocate “home” to quiet, secluded neighborhoods only a transfer or two from their workplaces in the industrial and manufacturing parts of the city. Finally, the neighborhood epitomizes Buffalo’s, and the nation’s, attempt to combat the poverty and blight creeping into areas that seemed so idyllic only a generation before.


Driving Park
Back in the days of the Driving Park

Hamlin Park emerged from the 1970s as one of the city’s only Urban Renewal success stories and, coupled with Allentown-Lakeview, could be used as an example for future revitalization programs. When Buffalo applied for Model Cities funding in the 1960s and began outlining its plan for Hamlin Park, it saw that neighborhood as a vanguard against the poverty spreading through its East Side neighborhoods. Though the concentrated code enforcement program, and the Community and Taxpayer’s Association that emerged because of it, were successful at mitigating the effects of poverty in Hamlin Park, the remainder of Buffalo’s Urban Renewal programs were largely failures. Today, Hamlin Park is one of Buffalo’s last intact historic East Side neighborhoods.

Tuesday, January 21, 2014

The History of Hamlin Park Part IX: Concentrated Code Enforcement and Model Cities Bring Positive Change

Now that Hamlin Park has been listed on the National Register of Historic Places I've decided to do a short series of the history of the neighborhood. This information comes directly from the National Register nomination that Preservation Studios completed. Check back for additional installations in the series in the coming weeks. Stay up to date with all things Hamlin Park by liking the Hamlin Park Historic District on Facebook.

HP-1469

In a 1967 article by Ralph Taylor and George A. Williams called “Housing in Model Cities,” the authors summarized the goals of the program as meeting the housing needs of residents by improving existing homes and providing housing for citizens of all income levels. This was meant to alleviate concerns that such a program would be used to gentrify a neighborhood while failing to provide low and moderate-income housing.  

If only low-income housing were provided, cities posed the problem of perpetuating conditions of poverty without solving the problems that lead to those conditions in the first place. As such, part of the program stipulated that locating housing projects in areas of high racial segregation would be “prima facie unacceptable,” lest the federal assistance be “used to solidify ghetto housing patterns.”  The Model Cities Program’s solution to this problem was to emphasize rehabilitation; not only was this a less expensive option, but it ensured that federal money could be implemented from within the community and not by forced gentrification measures or ghetto entrenchment.  The program was directly influenced by principles of the Baltimore plan the decade before, and HUD promoted Model Cities as well as several other programs beginning in 1966.

SF-2-20
The incredible dome at St. Francis De Sales Church

Hamlin Park, nestled between Main, Jefferson and Humboldt Parkway, managed to avoid many of the problems that plagued Buffalo’s East Side neighborhoods but not all of them. The southern and eastern edges in particular  faced many issues resulting from poverty, including the spread of blight. In the mid-1960s, city officials began a sweeping reform of urban renewal initiatives, implementing many of the new HUD programs, including Model Cities.

In 1966 the Buffalo Division of Rehabilitation and Conservation began a seven-year, citywide, housing inspection program. For Hamlin Park and several other neighborhoods, the division’s goal was to qualify them for a program known as “concentrated code enforcement,” which would trigger federal funds and loans.  Areas were chosen for this HUD program because they did not suffer as strongly from the physical and social problems ailing other parts of the city: as described in the grant handbook, this program was “not a vehicle for correcting the diversified problems of so-called “rock bottom” slums.”  


HP-1265

In order to qualify, city officials surveyed an area and noted any houses that were either out of code or in disrepair.  In addition to receiving funds for home improvements, the area would also be able to take advantage of money for new parks and infrastructure, such as streetlights.  Homeowners who qualified for the program, which was the vast majority of residents, were able to take advantage of federal grants up to $3,000, with the goal being, “to maintain and stabilize the predominantly residential Hamlin Park neighborhood and prevent it from slipping into decay and blight.”   The Allentown-Lakeview code enforcement project was the first to occur, followed by Hamlin Park, and then the Broadway-Fillmore neighborhood. 

HP-1302

The Hamlin Park Community and Taxpayers Association formed 1966 to assist the city in these efforts. The association was the culmination of efforts from several other organizations in the area, including the Humboldt-Delevan Interest League, the Humboldt Family Association, the Community Action Organization, and several local block clubs. The taxpayer’s association was integral in helping the city perform surveys, in ensuring community involvement and in coordinating the proper dispersal of funds. 

During the Model Cities era, the association was directly involved in helping to preserve the character and integrity of the neighborhood and community. Indeed, prior to the organization’s formation, “Hamlin Park” had very loose interpretations, sometimes referring to small portions of the area (such as the Driving Park development after 1912), or blending into the adjacent Humboldt Park or Cold Springs neighborhoods. The taxpayer’s association clearly defined Hamlin Park as the area “bordered by Humboldt Parkway on the east, Jefferson Avenue on the west, East Utica on the South, Main-Kensington on the North.”   This solidified the identity of the neighborhood that has now been known as Hamlin Park for nearly fifty years.

HP-1320

During the concentrated code enforcement surveys, the Division of Rehabilitation and Conservation utilized a rating system to determine building quality that covered fifteen categories, eight for the interior and seven for the exterior, and covering most building features, including foundation, porches, stairs, windows, roof, ceilings, walls, plumbing and heating. “Building Specialists” performed building by building surveys, noting key structural and aesthetic issues as well as rating each of the categories listed.   The use of the word “aesthetics” suggested that the program’s goals were intended to extend beyond simply code enforcement and improve things that might suggest blight and neighborhood deterioration.  Structures judged deficient in this category might have missing or mismatched roofing materials, missing or broken window panes, and missing or rotted porch supports, treads, risers or railings.  

HP-0724

After buildings were surveyed, owners were able to apply for federal funding to complete any modifications or repairs. Homeowners were qualified for up to a $3,000 grant to complete repairs on their home, as well as eligible for rehabilitation loans at reduced interest rates.  Members of the Division of Rehabilitation and Conservation department called “Rehabilitation Specialists” helped residents complete applications for the funding.  Though the $3,000 “Section 115 grant” was limited to households that made under $3,000 a year ($20,683 inflation-adjusted to 2013), there were caveats that allowed homeowners above that limit to still get funding. Additionally, the “Section 312 Loan” was available to all building owners, regardless of income, for up to $10,000 for residences and $50,000 for commercial spaces.  Once code violations and estimates for so-called “beautification expenses” had been made and loans and grant money had been secured, financial officers from the department would contact and secure bids from contractors.

The improvement project for Hamlin Park advanced significantly in August 1967, when the Buffalo Planning Board approved $1.2 million for the project. News coverage of the announcement explained the “the total cost of the Hamlin Park project is estimated at $1,223,737, of which $815,824 would be the federal government’s two-thirds share and the $407,913 the city’s share.”  In addition to the home improvements, the entire area would see sewer improvements, tree trimming, new parks, and new playgrounds. The final cost of the project was later estimated at $2.3 million, devoted to the effort to “preserve the value and character of this fine neighborhood.”

HP-0729

After several delays due to resistant residents and absentee landlords, homeowners began making improvements in the final months of 1969, by which point the code enforcement program had been folded into the Federal Model Cities program, becoming synonymous with the larger program in Buffalo as well.  Though the evaluation process, outside of the code violations, was largely subjective and based on the evaluator’s opinion of a building’s appearance, many of the improvements cited in local newspapers included general exterior and interior remodeling, the addition of aluminum siding, and “modernization.”  More specifically, the majority of these projects included partly or fully enclosing open porches (usually to create more living space) and the replacement of deteriorated wood porch elements with wrought iron or steel. 

It seems that modernity was associated with contemporary materials, cleanliness, and the elimination of detail that might be difficult to maintain.  A number of stained-glass windows were also removed, not because they were undesirable but because they were too damaged to repair. In the years between 1969 and 1975, many houses in the district filed building permits for “general repairs,” of the interior and exterior, “window replacement,” “remodeling,” and replace “existing front porch, [with] new posts and railings.” Sometimes these repairs would be accompanied by “as per the Hamlin Park Project,” though the sheer volume of repairs documented in Buffalo’s Permit Office during that time period suggest more projects than the ones noted were prompted by the code enforcement funding.  Approximately 19 percent of the residences in the district (or 292) have enclosed porches today, while 284 (or 18 percent) have replacement porch elements.  Fifteen percent have aluminum siding. 

A publication issued in 1971 by the Buffalo Planning Board served as a guide to understanding why Hamlin Park was chosen. The brochure explained, “what generally became known as Hamlin Park was the first large-scale residential development or subdivision in this part of the country…the great majority of its fine older homes have been well maintained and preserved by their owners. The community, the City, and the Federal Government are cooperating in a massive effort to upgrade the remainder.”  

HP-1347

The code enforcement program utilized in Hamlin Park was consolidated with several other HUD-funded programs (including sewer and health services) under the Model Cities umbrella in 1968. In Buffalo, though the initial code enforcement funding, while separate from Model Cities, came through the same HUD channels, the city made a clear distinction between Hamlin Park and the rest of the city’s urban renewal programs:

The early scheduling of this predominantly nonwhite area was dictated not only because of its position on the blight index, but also because of its strategic location in relation to the overall pattern of blight. Early completion of Hamlin is essential if it is to be maintained a stable area. 

In many ways Hamlin Park was not like the neighborhoods south of it. The middle class nature of the community not only prevented the area from slipping further into disrepair, but also meant it was not in as dire condition as the remainder of the model cities areas. Over 30 percent of the families living in the “Model City” area designated by Buffalo earned less than $3,000 annually, and 7 percent earned under $1,000. In an area of 61,000 people, there was 14 percent unemployment, and 37 percent of the housing stock was substandard.

HP-1396

Jesse Nash became the first Model Cities Association director in 1967. The association was the governing institution of the city’s many Model Cities funded programs, or City Demonstration Agencies (CDAs). Nash’s prerogative was to assist the neighborhoods experiencing the most problems: the Ellicott District, the Fruitbelt, and parts of the Masten neighborhood that bordered Hamlin Park. By engaging communities in smaller neighborhood sections, he hoped to get greater citizen participation. The first boards were made up of about 30 residents and 10 mayor-appointed members, and while Nash butted heads with the common council over self-determination, he was eventually able to secure a great deal of control over Buffalo’s Model City association. 

Among the CDAs sponsored under the Model Cities program that targeted the social ills of these communities were the ECCO Co-operative Food Mart at 300 William Street, which offered lower prices for food, and the Langston Hughes Art center, which helped local artists highlight cultural aspects of the community. Additionally, David Collins, director of the Employment Information Center, enforced a strict policy concerning employee education in the Model Cities program. Individuals who had not obtained a high school diploma were enrolled in an equivalency program, and those who had not attended or completed college were entered into a program through the University at Buffalo to obtain college credit for their work with Model Cities. The 1490 Jefferson Community Service Center opened in October 1971, providing a base of operations for Model Cities programs in the city and supplemented the health and wellness programs already offered at the Clinton Street “Build Academy.”

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In all of its forms, Buffalo’s Model Cities program was active between 1966 and 1975. On June 30, 1975, the Buffalo Courier Express reported that as federal funds for the program ran out, programs in the city would continue to shut down. By that point, only four programs remained of the 47 Buffalo boasted at the height of the Model Cities program, which had contributed $18.5 million to inner city revitalization. Though it was ending, the Buffalo Model City Agency was renamed the Division for Demonstration Projects, which was used to oversee programs that had not become self-sustaining over the course of the previous half-decade. One program that was temporarily saved was a bus program that provided free service for the elderly and the handicapped.

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Other programs in the city were not so lucky. The Employment Information Center, responsible for securing hundreds of jobs for inner city residents, ended the day the article was released. The article noted a great deal of optimism surrounding the program, as through community meetings in poor neighborhoods had direct input on the distribution of $11.7 million of U.S. Community Development funds. David Echols, acting head of the Division for Demonstration Projects, noted that the program’s real success lay in helping those on public assistance into good jobs, as well as fostering a sense of commitment to maintaining the community. Though many of the programs related to drug prevention, recreation and art, and health and wellness had been phased out over the previous years, Echols estimated that 400 of 800 employees whose positions were funded by the Model City Agency found work in other public agencies or private industries.

Wednesday, January 1, 2014

Historic Rehab Industry Sails Into Tax Credit Safe Harbor




Written by Jason Yots: President, Preservation Studios LLC


In 2012, the federal version of the historic tax credit – an incentive offered for substantially rehabilitating historic commercial structures – generated over $5.3 billion in investment and created nearly 58,000 jobs.  For communities, like Buffalo, NY, that don’t see enough of either of those commodities, the historic tax credit (HTC) can be a welcome economic development engine, not just an historic preservation resource. 


So industries varying from preservation to construction to financial services were understandably dismayed when, in the August 2012 Historic Boardwalk Hall case, a federal appeals court invalidated long-settled HTC investment structures, while also failing to offer any advice for structuring future HTC syndications (Note #1).  In essence, Historic Boardwalk Hall scolded the HTC industry for doing things all wrong, but it didn’t tell us how to do them right. 

The ensuing uncertainty deeply chilled the HTC investment market, forcing some long-time institutional players to the sidelines while HTC advocates lobbied for clearer IRS guidance.  In New York, those troubles were compounded by programmatic restrictions that devalued our state’s fledgling HTC by bundling it with the federal credit.  In a word (or two), it’s been rough sailing for HTC projects and their proponents since the summer of 2012.

Thankfully, clearer skies await HTC industry members, home and abroad.  In New York, lawmakers hopefully have loosened one logjam by allowing for the “refundability” of the state’s HTC, beginning in 2015 (Note #2).   On the federal level, the IRS issued long-awaited HTC guidance, on December 30, 2013, in the form of Revenue Procedure 2014-12 (Note #3).

For the HTC industry, “Rev. Proc. 2014-12” is considerably more exciting than its name.  At 17-pages, it offers a thorough discussion of the issues raised by the Historic Boardwalk Hall case and, most importantly, it affords a “safe harbor” under which future (and past) compliant HTC projects may not be challenged by the IRS.  Key provisions of Rev. Proc. 2014-12 include:

  •   Partners Must Act Like “Partners”:  A major IRS criticism in Historic Boardwalk Hall focused on the HTC investor’s lack of meaningful investment risk or reward potential.  The IRS found such a “fixed” arrangement to be antithetical to the nature of a true partnership and, in Rev. Proc. 2014-12, it states fairly clearly that an investor’s economic risk and reward must be commensurate with its ownership interest and must remain unfixed.  This is a significant departure from the structures of many past HTC deals.
  •  Guaranties Are Nipped and Tucked: Along the same risk/reward continuum, the IRS previously attacked HTC project guaranties that were so expansive and/or financially-backed that they dissolved nearly all investor risk.  Rev. Proc. 2014-12 spells out the guaranties that will – and will not – be permitted in HTC deals.   Again, the industry is in for some changes.
  • Here’s Your Hat, What’s Your Hurry?  One of the many tricky aspects of HTC projects is the investor’s exit strategy.  Most investors would prefer to leave a partnership as soon as they claim the HTCs, but HTC program guidelines prohibit changing the ownership of an HTC project for the first 5 years after it’s placed in service.  In the past, HTC industry members attempted to preserve the sanctity of the partnership while affording some back-end certainty by allowing for a “put/call” process at the end of the 5-year regulatory period.  This process paid lip-service to the notion that the project sponsor and investor were partners, while giving both parties comfort that they, in a sense, could afford to divorce in the future.  In the Historic Boardwalk Hall case, the IRS argued that such prenuptial relationships don’t go far enough to preserve the partnership structure and, not surprisingly, Rev. Proc. 2014-12 flat-out prohibits the traditional put/call arrangements with which the HTC industry had grown so comfortable.  While prohibiting pre-determined, non-fair-market-value investor buy-outs, the IRS appears to have compromised a bit by allowing a partner-interest “flip” after the 5-year HTC recapture period expires  (for example, reducing the HTC investor’s interest from say 99% to 5%, and thereby devaluing it to a feasible fair-market buy-out level).
  • Threshold Ownership Levels Established:  The IRS provides precise minimum “partnership percentages” for the HTC project sponsor and investor of 1% and 5%, respectively.  Industry approaches to this have varied over the years.
  • Threshold Equity Investment Levels Established: To date, the level and timing of an investor’s HTC investment largely were established through arm’s-length negotiations between the HTC project sponsor and the HTC investor.  What resulted in some instances were HTC equity pay-in schedules that removed nearly all meaningful financial risk for the HTC investor (in some cases, investors could claim all of the HTCs before investing any funds whatsoever).  Rev. Proc. 2014-12 shifts that balance by requiring a minimum HTC investment of 20% prior to the date the project is “placed in service” (i.e., completed).  Furthermore, at least 75% of the HTC investor’s expected capital contributions must be fixed by that same date.  These provisions will help add some certainty to HTC project sponsors’ budgets.


While Rev. Proc. 2014-12 does not answer all of the industry’s questions, it certainly answers quite a few.  And while its implementation remains a major open question, it appears for now that HTC industry members will enjoy smoother sailing in HTC investment pools in years to come.

Notes:

1.      See Historic Boardwalk Hall, LLC. v. Commissioner, 694 F.3d 425 (3d Cir. 2012), cert. denied, U.S., No. 12-901, May 28, 2013).

Photo credit: Jason A. Yots, 2013