Thursday, October 3, 2019

Breaking Down the 2018 Historic Preservation Economic Impact Report

by Derek King, Principal & Director of Operations at Preservation Studios

It’s that time of year again: Rutgers and the National Park Service have issued their Annual Report on the Economic Impact of the Federal Historic Credit for FY 2018. By clicking that link, you can get plenty of great summaries, as well as inspiring case studies, but some of the biggest things to take note of are:
  • Over 128,000 jobs created
  • $5.4 billion in income generated
  • $2 billion in taxes ($700 million of which were state and local) generated

This year, rather than digest the report page by page, we’re going to draw attention to some of our favorite tidbits from the report that may get glossed over otherwise.

Job Creation

While a majority of the jobs created were in construction (46K), manufacturing (28K), and “services” (21K), there are some interesting examples of how historic rehab construction has far-flung impacts on other industries as well:
  • 1,150 jobs were created in mining, most likely tied to aggregate used in most materials, but possibly also in stone used in replication and restoration of lost features.
  • 603 jobs were created in “Agriculture Services, Forestry, and Fish”, which we can assume is mostly lumber-related, but may also be tied to food consumption by job workforces.
  • 330 jobs were created in agriculture seems pretty simple: workers have to eat!
  • 5,211 jobs were created in Finance, insurance, and real estate, which underscores the complexity of any large real estate transaction, but especially a historic tax credit funded project.
  • 4,866 jobs were created in “Transport and public utilities” demonstrating not only the movement of goods, but workers as well, in addition to the work-site needs (electricity, water, etc).
Tax Credit Usage By State


New York still had a big year, but created 3,000 fewer jobs after total rehab costs dropped $200 million from 2017-2018. Even so, New York generated $665 million in income and $111.8 million in state and local taxes, and was still the leader in total rehabilitation costs.

Texas is probably one of the best case studies for how the introduction of a matching state historic tax credit can impact total credit usage. In 2015, the state created a 25% state income historic tax credit, and went from generating only $35 million in total rehabilitation costs to $180 million last year in 2017. That $180 million was a full 35% of their total five-year usage, a huge bump likely representing the first batch of projects to complete a full-rehab using state credits in addition to federal credits. In 2018, their total rehab costs skyrocketed to $622 million (a 345% increase), creating 10,054 jobs and generating $33.8 million in state and local taxes.

As a counterpoint (suggesting that State Credits are *not* end all, be all), Tennessee is one of just 15 states without any form of historic tax credit, and saw a 1000% increase in rehabilitation expenses, going from $38 million in 2017 to $346 million in 2018. Earlier this year, lawmakers and local leaders pushed for the state to adopt a state credit and their high-usage in 2018 suggests it could help continue a rising trend of investment in their historic building stock

Just like Tennessee, ascribing HTC usage to state credits can be tricky, as states with established HTC programs saw major swings, including Ohio (nearly doubling from $488 million in 2017 to $821 million in 2018), Illinois (shrinking from $420 million in 2017 to $266 million in 2018), Minnesota (going from $360 million in 2017 to $85 million in 2018) and Rhode Island (like Tennessee, increasing over $300 million between 2017 and 2018).

Notably, Illinois expanded their historic tax credit program this year to take it from a five-city program to statewide, so it will be interesting to see if their usage increases in years to come.

The states with the highest number of application approvals in 2018 (New York, Missouri, Virginia, and Ohio all had more than 70 Part 3 approvals, and more than 75 Part 2s) often have pretty similar total rehabilitation costs each year.

In states with dramatic changes, there were far fewer Part 2s and Part 3s approved in 2018 (Rhode Island: 17 and 8 respectively; Illinois: 27 and 20; Minnesota: 15 and 10) suggesting major swings in total rehabilitation costs are tied to fewer but larger projects.

Alaska (0.0), New Hampshire (0.0), Nevada (0.0), Idaho (0.4), and Wyoming (0.8) had the lowest usage of the historic tax credit last year, and Alaska has not had any certified rehabilitation costs in the last five years (though, to be fair, Nevada has only had $1.4 million and Wyoming $2.7 million in the last five years as well).


Interesting Projects

The photos in the report suggest some very interesting projects that we’d love to get our eyes on (not just their rehabilitation scope, but their National Register nomination):
  • Our very own Parkside Candy, a candy and ice cream parlor here in Buffalo NY with an Adamesque-interior, was shown on page 3.
  • Modernist architecture was front and center with the State Hotel in Dallas, Texas (also page 3) and the Jack Tar Motor Lodge in Durham, North Carolina (page 13).
  • The Miller Theatre in Augusta, Georgia (page 13) looks stunning, both on its Art Moderne facade and stunning lobby.
  • I did actually google the Kunia Camp in Hawaii since I was so intrigued-- take a look!

California's New State Historic Tax Credit

By Derek King, principal & Director of Operations at Preservation Studios

With the passing of SB-451, California is poised to become the thirty-sixth state to enact a State Historic Tax Credit program (edit: it was sent to the Governor’s desk on 9/19/19 and signed last week on 10/9/19). It combines many of the most successful features of other programs, as well as adds additional benefits and components that may become models for existing programs as well as future HTC programs to emulate. Though contentious (Curbed LA painted as “a deal to not only to preserve the state’s most expensive real estate, but to give the state’s wealthiest homeowners additional money to do so”), the passage of this credit should alleviate some concerns of the affordable housing and anti-gentrification community, as well as align with many of California’s environmental goals.

Historic Preservation Incentives

One of the biggest incentives available to historic rehabilitation projects is the Federal Historic Tax Credit, an income tax credit equal to 20% of qualified rehabilitation expenses (nearly all hard and soft costs associated with the rehab, minus acquisition and site work). The Federal credit has proved to be one of the most cost-effective stimulus programs; since 1978, $30.8 billion in (inflation adjusted) tax credits have created $162 billion in total investment, and generated $35.9 billion in Federal Tax receipts.

Many states have created additional incentives to redevelop historic properties, since in addition to those $35.9 billion in Federal Taxes, historic tax credit projects carry an additional $14.4 billion in state and local taxes created since 1978. These programs are all administered differently, with various levels of incentives and requirements, but the most successful programs allow developers to access as-of-right state credits that match the Federal historic tax credit. New York, for instance, has a 20% state income tax credit capped at $5 million per project, and while there can certainly be improvements, it also stimulated nearly three-times as much usage of the Federal credit as the next closest state.

Prior to this bill in California, the only major incentive to revitalize and maintain historic properties, outside the Federal historic tax credit, was the State’s “Mills Act.” This allowed “historic properties” (local, state, or National significance and designation) to receive a property tax freeze at the pre-rehabilitation rate for up to ten (10) years, and typically only available to properties with a value under $1-1.5 million (though some municipalities allow exceptions). While very lucrative in a state with high property taxes like California, the property tax freeze does not help developers, big and small, access other sources of capital often needed to make affordable housing or projects in riskier markets viable.


The New California Historic Tax Credit

The bill, which was proposed by State Senator Toni Atkins, meant to bring California in line with national trends in incentivizing the redevelopment and preservation of historic buildings. Even without a state HTC, California was 10th in the country in total usage of the Federal Historic Tax Credit from 2013-2017, but was 20th in usage in 2017, suggesting it is primarily used by fewer but larger projects generally than in other states.

The credit itself stacks up favorably to other states, as at its base, it will will:
  • create a 20% historic tax credit allocated on a first-come-first-serve basis to applicants,
  • allocate $50 million a year, with the balance rolling over to subsequent years,
  • create a 20% homeowner credit for projects with at least $5,000 in expenses and capped at $250,000 (which would result in a $50,000 credit).
  • require that Application note job creation totals (before and after rehab), expected increase in tax revenues (local, state, and federal), and what other incentives are being utilized.

From there, however the credit has several features which will not only help its success, but make it a model for other states:

While the program does not cap the per-project allocation (something most states use to prevent all the credits being used by one or two large projects), it does set aside $10 million for two subsets of projects:
  • $8 million will be set aside for commercial projects with QREs under $1 million (surplus rolled over to subsequent years)
  • $2 million for the historic homeowner credit program (surplus rolled over to subsequent years)

Commercial projects that include one of the following will be eligible for an addition 5%:
  • The project includes affordable housing for lower income households
  • The project is located in a designated census tract
  • The project is a transit-oriented development that promoted high-density, mixed use within one-half mile of a transit station
  • The project is on “Federal Surplus Property” or a part of a military base reuse
The law has the following goals:
  • Leverage the credits into $287 million in private investment
  • Create 1,300 construction jobs and an additional 2,140 ongoing jobs
  • Create $800 million in economic activity

Other Benefits of the State Historic Tax Credit

Though its goals do not directly state as much, the credit will have a huge impact on creating additional affordable housing as well as continuing California’s legacy as a leader in the environmental sustainability movement. Lastly, by incentivizing smaller projects in low-income census tracts, the program has the potential to drive employment to sectors often left-behind by the tech-boom.

In particular, the addition of an extra 5% for low-income housing projects is a huge incentive for developers debating whether to create affordable or market-rate projects. The ability for affordable housing projects to accumulate credits totaling 45% of their rehabilitation costs before any other incentive is counted can not only make otherwise unviable low-income projects manageable, but may even promote additional creation as well.

This extra 5% may seem small, but when taken in the context of how low income housing tax credits (LIHTCs) are allocated, it can make all the difference. California is allowed to issue only a certain number of LIHTCs by the Federal Government, so they are allocated to projects on a competitive basis, with project scoring based on a variety of factors, including the use of other sources that minimize the demand for LIHTCs.

In New York State, this has meant that projects that utilize historic tax credits (and thus require less LIHTCs) have become more and more common. This has the dual effect of 1) incentivizing the redevelopment of historic properties for low-income housing, but also 2) allowing more projects to utilize LIHTCs by lowering the requested amount per-project. Though many think of “historic preservation” as creating house museums and benefiting the wealthy, an adaptive reuse of an abandoned or underutilized historic warehouse, factory, or school building into affordable housing can add just as much density to a neighborhood as a high-rise, without many of the negatives (most notably displacement) associated with those new developments.

Another important benefit to remember when considering the impact of historic tax credits is the environmental component. Often environmental proponents advocate for new, LEED certified new construct, but this ignores that fact that not only can older buildings be updated to be more efficient, but there are other sustainability arguments to consider as well.

First we should consider the solid waste component, as it’s estimated that the average building demolition yields 155 pounds of waste per square foot. In addition to the solid waste is the embodied energy (the energy used to harvest materials, construct, and finish a product essentially) wasted when a building is demolished: the Advisory Council on Historic Preservation noted in 1979 that there are about 80 Billion BTUs of energy embodied in a typical 50,000 square-foot building, the equivalent of 640,000 gallons of gasoline. Lastly, older commercial buildings constructed before the widespread use of air conditioning, heating, and electricity were designed specifically to take advantage of natural daylight, ventilation, and solar orientation (key criteria when evaluating environmentally sustainable buildings today), and constructed with materials that often have much longer lifespans than modern materials.

The last important benefit we’ll consider when looking at the impact of the historic tax credit is job creation. In the latest report on the impact of the Federal Historic Tax Credit , it’s estimated that HTC-projects created over 129,000 jobs, with a majority of job creation in construction, manufacturing, and retail. The interesting thing to note, however, is that due to our interconnected economy, many jobs outside of directly related fields are impacted, with nearly 7,500 jobs created in the agricultural, forestry and fishing, mining, government, and transportation and public utility sectors. In California in 2018, even without a matching State Credit, 2,196 jobs were created as part of historic tax credit-funded projects, which we’d expect to increase dramatically (Texas, for instance, has seen the job creation from HTC projects skyrocket since the introduction of their credit in 2015, with 10,000 of the 17,000 jobs created since 2014 happening last year), with many of those jobs coming outside the tech-industry, and as far away from city-centers as rural farmland.

Despite some attempts to paint the passage of the California historic tax credit as a handout to the wealthy while other housing goals were not prioritized, there is a huge potential for the credit to catalyze further affordable housing creation, contribute to California’s status as a leader in environmentally sustainability, and create much-needed jobs in sectors left behind by the tech-boom (agriculture, retail, manufacturing) as well as thousands of entry-level and specialized trade construction opportunities. The credit is not only a great first step, but many of its features may soon be replicated in other states looking to create their own historic preservation incentive, or even looking to improve their historic tax credits.







Friday, October 5, 2018

Jamestown's Great Industry

Matthew Shoen
Associate Architectural Historian

Jamestown, New York is an unassuming little city in the heart of Chautauqua County. It is a city you likely never think about unless you're a local. However, if you peel back the layers of time, Jamestown's fascinating history becomes apparent. This small community of less than 50,000 once had one of the most vibrant economies in New York. Surrounded by hardwood forests and conveniently located near major markets in the Ohio River Valley and Pittsburgh, Jamestown developed into a center of furniture manufacturing. This industry sustained Jamestown for much of the 19th century and drew thousands of skilled Swedish woodworkers to the city. However, in  1873 textile manufacturing, specifically the production of worsted goods, took the city by storm, bringing with it a new group of immigrants and making several local residents extremely wealthy.

Textile manufacturing came to Jamestown largely under the influence of one man, William Broadhead. Broadhead was an English immigrant who came to Jamestown in 1843 and operated a locally successful manufacturing company with his father in-law. In 1873 Broadhead took a trip back to England to visit his hometown. In the thirty years since his departure from the Bradford area, the local economy had been transformed by the mechanization of textile production. Previously, textiles had been a cottage industry and garments had been produced by women as a means of providing extra money for their families. The invention and widespread use of mechanical looms changed this and textile companies were organized throughout the area to purchase raw wool and transform it into dressed cloth. These new companies provided employment to hundreds of people and turned out a far greater volume of cloth than the older hand weaving methods.

Broadhead saw this and recognized the economic opportunity of bringing English manufacturing methods to his adoptive hometown. So, while in England Broadhead started to purchase weaving machinery and hired experienced men to operate his proposed factory. Broadhead returned to Jamestown late in 1873 and soon after the Jamestown Worsted Mill opened and started to produce dressed goods. Within two years Broadhead had sold his claim in the Jamestown Worsted Mill and opened his own company, the Broadhead Worsted Mills. This new firm had 500 looms and by the 1880s it was consuming 400,000 pounds of raw wool annually, forcing the company to start sourcing wool from Argentina, New Zealand, and Australia. This wool came to Jamestown by way of the Erie Railroad whose tracks went past the Broadhead mill.

The Broadhead Worsted Mills industrial works























By 1892 William Broadhead's net worth had reached $1,000,000 making him Jamestown's first millionaire; additionally the Jamestown Worsted Mill and the Broadhead Worsted Mill employed close to 2,000 people, making textile manufacturing one of the two most important industries in Jamestown. Owing to the success of the mills Broadhead founded, other textile firms like the Empire Worsted Mills and the Falconer Towel Company organized in the 1880s and 1890s. Like the older mills these new concerns employed a significant population of English immigrants who made up one of the largest immigrant groups in Jamestown by 1900.

The influence of English laborers and factory managers is evident upon a quick perusal of old newspapers from Jamestown. English men organized cricket leagues as well as football associations. Each major worsted mill had its own association football team and there were cup competitions between the associations that culminated with the winning association receiving a silver cup and gold medals for their achievement. In addition to football clubs and cricket teams, the English organized fraternal organizations such as Lodge 107 of the Sons of St. George.

Worsted milling remained a key component of Jamestown's economy up until around 1950. By that time competition from non-unionized southern mills and a fall in the demand for worsted garments (which were typically high end suits and other items of formal wear) led to the shuttering of many of Jamestown's worsted mills. Equally tragic, many of these large industrial complexes were demolished. Only the Empire Worsted Mills' works remain intact, the last vestiges of Jamestown's once mighty textile manufacturing sector.

Painting of the Empire Worsted Mill

Facade of the Empire Worsted Mill






Before it was Record Theatre


Matthew Shoen
Associate Architectural Historian 

After Record Theatre closed in 2017 people started to speculate what would happen to the old building which had served as a gathering place for music lovers in Buffalo for close to fifty years. The building, sheathed in dull yellow metal siding, seemed like a questionable candidate for historic tax however a deep dive into the permit card vault in City Hall revealed an interesting truth beneath all that metal cladding.



This is the original facade of Record Theatre, a facade that had been buried under the metal cladding which was installed in the 1970s. Prior to that renovation, the building was known as the Monroe Building and was used by a variety of businessmen to sell automobiles.

The Monroe Building was built in 1920 for local automobile dealer Charles F. Monroe, a licensed agent for the Marmon and Velie Motor Companies. Monroe had been involved in Buffalo's auto trade since 1904 and was one of the city's many prosperous dealers. Due to Buffalo's high percentage of millionaires, the city had a thriving auto trade by the 1910s with many wealthy residents purchasing vehicles to flaunt their social status. Buffalo was also located close to major metropolises in northern Pennsylvania, eastern Ohio, and Ontario and car manufacturers licensed dealerships to sell their vehicles to consumers who traveled to Buffalo in order to purchase cars.

By the time Charles Monroe commissioned architect G. Morton Wolfe to design the Monroe Building, Main Street had developed a reputation as 'Automobile Row' due to the number of dealerships, garages, and specialty stores that catered to automobile owners. Every major automobile manufacturer had a presence on Automobile Row and consumers could travel up and down Main Street and peruse the newest vehicles from Pierce-Arrow, Packard, Ford, Marmon, and others.  To further promote automobile sales along, Buffalo's dealers organized yearly expositions in the city's various armories. These expos drew tens of thousands of people and were major showcases for America's car companies.

Expo in the Connecticut Street Armory

The prosperity of the 1910s and 1920s could not last forever and the Great Depression hit many of Buffalo's automobile dealers with a fatal blow. Because many companies had based their business model around selling luxury vehicles, they were unable to survive the economic downturn that ate into the finances of their clientele.

In 1931 Charles F. Monroe filed for bankruptcy and the Monroe Building was put up for auction where the Ford Motors Company ultimately purchased it. Ford immediately renovated the Monroe Building to reflect a new model of dealership the company wanted to create. Ford wanted to create a full service center with factory trained mechanics and parts for every model of Ford vehicle on the market. Ford's plan emphasized service and offering expert repairs, an important consideration for cash strapped Americans who needed their vehicles to last longer in the Depression years.

Interior of the Monroe Building in 1932





















Ford's ownership of the Monroe Building lasted for roughly five years and after the company sold the Monroe Building to a local dealership called Birk & Bailey Incorporated, the property passed through the hands of several other automobile dealers before Leonard Silver purchased it and transformed the building into Record Theatre.

So there you have it, a building that outwardly looks like an unimpressive box store actually possesses a long and fascinating history that highlights Buffalo's early automobile history. Hopefully in the coming years something can be done to restore this beautiful piece of Buffalo's architectural and automotive legacy to its original form. Or at least maybe someone could peel off that metal siding!



Monday, September 17, 2018

PresStudios Opens Long Island Office; Hires New Associate Director


PRESERVATION STUDIOS LLC OPENS LONG ISLAND OFFICE,
HIRES ASSOCIATE DIRECTOR OF ARCHITECTURAL HISTORY

September 17, 2018—Buffalo, NY—Preservation Studios announced Wednesday that they have finalized terms with Karen Kennedy, M.S., co-founder and principal at TKS Historic Resources Inc, to become the company’s Associate Director of Architectural History and run a new office for the company out of Long Island.

This announcement formalizes nearly a decade of collaboration between the two firms, which includes the creation of five historic districts and two cultural resource surveys throughout Western New York. Ms. Kennedy founded TKS Historic Resources with architectural historian Sarah Apmann in 2002, with projects including the National Register listing of the John Coltrane House in Long Island, and a 11,000 property survey of the City of Yonkers.

“We’re excited to bring on Karen and strengthen our ability to provide preservation services across New York State, including historic districts, surveys, and historic tax credit projects,” said President Jason Yots.

Ms. Kennedy will run the company’s new Long Island office, as well as assist Director of Architectural History Caitlin Moriarty, Ph.D in preparing National Register nominations for historic districts and historic tax credit projects across New York State. Dr. Moriarty, based in Preservation Studios’ Buffalo office, has led the company’s Architectural History department since 2016. Ms. Kennedy will also support company founder and current Director of Municipals Services Tom Yots in providing preservation planning and cultural resource surveys to nonprofits and communities across the state

The new Long Island office for Preservation Studios will be located at 169 Sequams Lane Center, West Islip, New York 11795. Inquiries related to preservation activities on Long Island and across the state can be directed to the company’s main office, or to the new Long Island office at 631-807-3889.

Founded in 2002, Preservation Studios offers a variety of preservation-related services, including preparation of individual and historic district National Register nomination, tax credit financing and development services, local preservation planning and programming, and technical services designed to help architects and developers navigate the Secretary of Interior Standards for Rehabilitation. The company has grown to a staff of ten, and is working on over 150 active tax credit projects across New York State in addition to other preservation projects.