Briarcliff Summit Apartments
The term preservation means different things to different people. To colleagues in our firm, it can mean historic buildings, tax credits or advocacy. To many of our clients, it relates to keeping affordable apartments affordable at the end of their original financing or subsidy period. Many of these housing subsidy programs, like Section 8, have been around for decades and are managed by HUD.
Not surprisingly, when the term of earlier subsidies end is aligned with the need for significant capital investment in the building. The owner often has to make a choice to preserve the existing affordable housing and reinvest, convert the property to market rate or owner occupied units, or to sell it to a third party. Fortunately, many current and new owners of these properties choose to preserve their affordability and they seek additional forms of financing. This often leads to incorporating state and federal historic tax credits (HTCs) as a component of their capital stack.
According to the Annual Report on the Economic Impact of the Federal Historic Tax Credit FY 2013, between 1978 and 2013 the historic tax credit program helped create over 135,000 units of affordable housing. HTC programs align well with housing preservation projects, as many of these units were created utilizing historic credits and the proposed work on the property will exceed the owner’s adjusted basis allowing for access to the historic credit again. In some cases, the buildings may have never had a historic designation when the units were developed as affordable, but are eligible for National Register listing today.
A good example of the positive impact the historic credits can have is a recent MHA project, the Briarcliff Summit Apartments in Atlanta, Georgia. Originally constructed in 1924 as a residential hotel by Asa G. Candler Jr., the building was converted to affordable housing in the 1980s. It had fallen into significant disrepair when our client Evergreen Partners, who specialize in affordable housing and are active members of the Institute for Responsible Housing Preservation (IRHP), purchased it. Evergreen utilized a variety of sources for the project, including state and federal historic and low income housing tax credits (LIHTCs) as well financing from HUD.
“The physical needs and renovation challenges a developer encounters on a standard preservation project are always amplified when dealing with a historic structure,” says Evergreen Development Associate Nick Bouquet. “Briarcliff Summit had substantial deferred physical needs and was one of the most transformational projects Evergreen Partners has had the opportunity to participate in. The level of renovation needed to both revitalize the property and renew the building’s distinct historic features would have not been feasible without the availability of the historic tax credit resource”
The capital stack for Briarcliff included state and federal LIHTCs. Combining these with HTCs provided additional funding sources and lead to many positive design aspects for the historic building. Project architects TAT (The Architectural Team) preserved the important decorative features originally designed by architect G. Lloyd Preacher including terracotta roof tiles, iron railings and floral glazed terracotta paneling. Perhaps most importantly for the preservation of the building, the incompatible 1970s era windows were replaced with new energy efficient units that match the windows shown in historic photographs.
Briarcliff Summit Apartments is an excellent example of how state and federal HTCs can be paired with a variety of housing subsidies to create a successful community preservation project. These projects preserve the physical fabric of the neighborhood by rehabilitating important historic resource, but also preserve the social fabric of community by providing high quality affordable housing for the residents who need it the most.
We recently outlined the increase in the Georgia state historic tax credit program in a previous blog. Learn more about these changes here.
Post by Richard Sidebottom | Senior Associate, MHA Southeast