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Credit Worthy News

Commercial Business District Office Towers Can Benefit From Historic Tax Credits

Posted by Bill MacRostie on Thursday, October 27, 2016

Since industrialization, urban centers across the country have been building up. Early multi-story masonry buildings gave way to glass and steel skyscrapers to create the skylines that have become iconic for many cities. In the 1920s and 1930s, technology and design collided to create the International Style of building that became the prevalent blueprint for modern construction for many decades.

But what is to be done about the millions of square feet that have been left vacant and obsolete when businesses abandon these towers for new facilities or more convenient locations?

One option is to rehabilitate them using historic tax credits. Because of the modern forms that many of these buildings take, it is easy to forget that they may in fact be eligible for these valuable tax incentives. In order to be eligible for the federal 20 percent historic rehabilitation tax credit for income-producing properties, the building must at least meet the following criteria:

  • Be 50 years or older;
  • Be eligible for the National Register of Historic Places either individually or as part of a district;
  • Meet the basis requirements for rehabilitation.

(For a full explinataion of eligibility requirements, click here.)

A quick translation of these requirements means that buildings built before 1967 that have historic significance either architecturally or culturally – which is often an easy case to make for these imposing buildings – and require a large scale make-over are ideal candidates for the federal program, and in many cases state programs as well.

With the recent move towards less traditional office spaces in industrial warehouses and even digital conference rooms, developers must be creative in vision for the reuse of commercial business district office towers. In many cases, these buildings are being converted into apartments, condominiums, and hotels as Millennials and Baby Boomers make the move back to urban areas. These uses are also in keeping with the standards that must be adhered to for rehabilitation and successful historic tax credit projects as often the layout of offices and corridors can be retained in order to create dwelling units.

MHA has provided historic consulting services on the rehabilitation of historic commercial business towers in many cities around the country:

Alto_211.jpg
Alto 211 | Dallas, TX
Mixed Use

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Ames Boston Hotel | Boston, MA
Hotel

MetLife_Tower_&_North_Building_from_W_24th_St_crop.jpg
The New York EDITIONS | New York, NY
Hotel

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Inland Steel Building | Chicago, IL
Office


Rehabilitation projects of this size require a tremendous amount of oversight in order to successfully qualify for rehabilitation credits, but they prove time and time again to be marketable and successful for developers who take the risk. It is only a bonus that they help to protect historic skylines, and in many cases improve them.

Contact us if you’d like to know more about our work with commercial business district office tower rehabilitations.

Topics: Office, Urban, Commercial, Mid-Century

Landmarks Illinois Celebrates Stony Island Arts Bank

Posted by Katherine Ferguson on Thursday, October 20, 2016

Over the weekend, Stony Island Arts Bank was honored at Landmarks Illinois’ 2016 Richard. H. Driehaus Foundation Preservation Awards. This program is designed to recognize “extraordinary stories of people saving special places throughout the state and show how historic restoration has a positive impact on communities, the environment and the people of Illinois.”

Stony Island Arts Bank is the recipient of this year’s Rehabilitation Award. In addition to its role in the community as a gathering and education space, Stony Island is an example of excellent rehabilitation effort and creativity to repurpose the building for a new use. The transformation of the badly water-damaged west offices into a two-story library housing the collections of the Johnson Publishing Company (publishers of Ebony and Jet Magazine) and the basement, submerged in water for several years, were notable to the panel of judges.

8_StonyIsland_AFTERBankingHall_creditMHA.jpg| Banking Hall

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| 2nd Floor Office

14_StonyIsland_AFTER2ndFlrWestOffice_creditMHA.jpg
| West Offices

4_StonyIsland_AFTERBasement_creditMHA.jpg
| Basement

In addition to the physical rehabilitation of the building, the award is an acknowledgement of the impact that artist Theaster Gates, developer of the project, and the Rebuild Foundation have had on Chicago’s South Side with their “pioneering approach to community revitalization.”

Congratulations yet again to this well-deserving rehabilitation and historic tax credit project that we are honored to be a part of.

Topics: MHA Midwest, Awards

Commission on Chicago Landmarks Honors Outstanding Preservation Projects

Posted by Katherine Ferguson on Thursday, October 13, 2016

In a reception held today at the Chicago Athletic Association, the Commission on Chicago Landmarks will honor four MHA Midwest projects among their 2016 Preservation Excellence Award winners. The Commission’s annual Preservation Excellence Awards recognize outstanding rehabilitation projects that involve notable improvements to Chicago local landmarks.

Congratulations to four of our MHA Midwest clients among the esteemed honorees this year:

NICHOLS TOWER
Client: Foundation for Homan Square

11_NicholsTower_AFTER14thFloor_creditDarrisLeeHarris.jpg| Credit: Darris Lee Harris Located in Chicago’s West Side community of North Lawndale, the 14-story Nichols Tower at Homan Square was originally known as the Sears, Roebuck & Co. Merchandise Building Tower, the tallest structure within the Sears Company’s former administrative headquarters and mail-order complex. Part of the Foundation for Homan Square’s initiative to re-envision the abandoned complex and revitalize the surrounding community, the seven-year $17 million rehabilitation of the Tower was completed in the fall of 2015. Retaining many of its original features and finishes, the 14-story building now houses multiple non-profit organizations and a 14th floor observation room for community use. MHA Midwest served as historic tax credit consultant on the project and prepared the building’s local landmark designation.

 

ARC at OLD COLONY
Client: CA Ventures LLC and MCJ Development

ARC_OldColony.jpg Originally constructed as a downtown office building in 1893, Chicago’s Old Colony Building continued to house office tenants into the 2010s but lost its historic appeal due to many outdated renovations. CA Ventures LLC acquired the building in 2014 and completed a $61 million rehabilitation including restoration of the building’s masonry facades and the uncovering of the long-hidden main entrance archway and columns. Inside, CA Ventures LLC transformed the 17-story Old Colony Building into ARC at Old Colony, a 204-unit student housing complex with restored entry lobbies at the ground floor, and historic 1890s office features incorporated into upper floor residential units. The sensitive rehabilitation of the Old Colony Building has ensured the future of one of Chicago’s earliest skyscrapers for decades to come. MHA Midwest served as historic tax credit consultant on the project.

 

CHICAGO ATHLETIC ASSOCIATION
Client: AJ Capital Partners

Chicago_Athletic_Association_Hotel.jpg Located along historic Michigan Avenue in downtown Chicago, the Venetian Gothic style Chicago Athletic Association (CAA) was completed in 1893 as a private athletic club for men (and in the late 20th century, women) of the Chicago elite until 2007. AJ Capital Partners and Commune Hotels & Resorts took ownership of the vacant CAA in 2012 and transformed the intricately detailed structure into a 241-room hotel that opened in May 2016. The rehabilitation restored the terra cotta and brick façade, and rehabilitated interior features bas-relief woodcarving, 19th century stained glass, and ornate marble staircases. Historic club rooms and athletic facilities have been transformed into new hotel lobbies, bars, restaurants, event spaces and fitness areas, and a new sensitive rooftop addition houses a new bar with spectacular views of Chicago’s Millennium Park and Lake Michigan. MHA Midwest served as historic tax credit consultant on the project.

 

CHICAGO MOTOR CLUB
Client: MB Real Estate

11.4.15_Timmys_MotorClub.jpg As American automobile ownership expanded in the early twentieth century, the Chicago Motor Club was a downtown haven for early cross-country motorists. This 1928 Art Deco gem housed club offices along with a grand three-story high lobby lined with help counters and a large 29 foot-wide road map painted by artist John Warner Norton. After standing vacant for over a decade and threatened with demolition, MB Real Estate purchased the building in 2014 and undertook a $38 million rehabilitation that converted the 17-story Chicago Motor Club to a 143-key hotel. In addition to extensive exterior rehabilitation, the three-story ground floor lobby, including the large Norton mural, was restored. A 1928 Model A was installed on a lobby mezzanine as a nod to the year the Chicago Motor Club opened its doors. Rehab architects Hartshorne Plunkard created an exquisite LEED-certified design that provided modern hotel accommodations while preserving the building’s original Art Deco features. MHA Midwest served as historic tax credit consultant on the project.

 

Topics: MHA Midwest, Awards

MHA Receives 2016 Wintrust Housing Partners in Innovation Award

Posted by Katherine Ferguson on Tuesday, October 11, 2016

9.28.16_MercyHousingAward.jpgJohn Cramer, MHA Midwest Senior Associate, accepts the 2016 Wintrust Partners in Innovation Award from Theresa Handley, Board Member of Mercy Housing Lakefront and a Vice President for Wintrust Financial Corporation, during the Mercy Housing Lakefront Moving Forward Together program | Photo credit: Eileen Molony

MHA Midwest was part of a project team honored on September 28th, 2016 at Mercy Housing Lakefront’s Moving Forward Together dinner for our work on The Lofts on Arthington in Chicago. MHA Midwest along with our fellow project partners accepted the 2016 Wintrust Partners in Innovation Award, given by Wintrust Ventures to community leaders and organizations that are catalysts for change.

Since 2011, MHA Midwest served as historic tax credit consultant for Mercy Housing Lakefront on The Lofts on Arthington, a $60 million conversion of the former Sears, Roebuck and Company Merchandise Development and Laboratory (MDL) Building to affordable rental housing.

The MDL Building is one of four original main buildings of the Sears, Roebuck and Company Mail Order Plant, a sprawling administrative and distribution complex located in Chicago’s Homan Square community and listed in the National Register of Historic Places in 1978. Completed in 1916, the MDL Building originally served as the printing center for all of Sears’ catalogs and publications and later housed the company’s merchandise development operations and product testing laboratories. After Sears left the site in 1973, the MDL Building was only marginally used and fell into disrepair after over twenty years of vacancy.

Scheduled for completion in 2017, The Lofts on Arthington will house onsite educational services and 181 one- to four-bedroom affordable housing units for 600 residents, including 350 children.

The Lofts on Arthington is MHA Midwest’s third major rehabilitation project at the former Sears complex – the Sears Power House was completed in 2009 and Nichols Tower in 2015 – and will help continue the exciting revitalization of Chicago’s Homan Square community.

The recipients of the 2016 Wintrust Partners in Innovation Award for The Lofts on Arthington included:

  • Applegate & Thorne-Thompson PC
  • Chicago Department of Planning and Development
  • Chicago Housing Authority
  • Chicago Realty Company
  • Citi Community Capital
  • DENCO Construction LLC
  • Environmental Solutions, Inc.
  • Federal Home Loan Bank
  • First Eagle Bank
  • James McHugh Construction Company
  • MacRostie Historic Advisors LLC
  • Nationwide Insurance
  • RBC Capital Markets
  • Alderman Michael Scott Jr.
  • Solomon Cordwell Buenz

9.28.16_MercyHousingAwardgroup.jpg | Photo credit: Eileen Molony

MHA is proud of our role in this important historic rehabilitation. Congratulations to all of our project partners on the 2016 Wintrust Partners in Innovation Award and to Mercy Housing Lakefront on this outstanding affordable housing development.

 

Topics: MHA Midwest, Awards

What Trump's Tax Return Could Mean For Historic Tax Credits

Posted by Bill MacRostie on Thursday, October 6, 2016

For those of us watching the Presidential race in the context of its likely effect on tax reform, we may look back on Saturday, October 1, 2016 and say that was the day the political forces for sweeping tax code changes took a turn. As the world now knows, Saturday was when the New York Times published its story detailing how Donald Trump took a $916 million loss on his 1995 taxes and may not have paid any federal income taxes for 18 years. Trump says—and this really gets to the heart of this as a political issue beyond the election—that taking such a loss is perfectly legal. Business people use real estate depreciation, net operating losses, and any manner of other deductions and credits in the tax code as a matter of course. However, to the legions of Trump voters (and Bernie Sanders supporters for that matter) who are hurting economically but who nevertheless pay taxes, the idea of a billionaire paying NO TAXES for years can’t help but feed populist anger and have a political impact beyond the election…regardless of who wins.

Before this weekend, the political tea leaves seemed to indicate that Trump, who proposes to lower the corporate tax rate to 15%, would need to eliminate all tax preference items (including the historic credit) from the code. If former House Ways and Means Chairman Dave Camp’s 2014 discussion draft for tax reform—which pegged the corporate rate at 25%--eliminated nearly all “community investment” credits from the code, then it’s hard to imagine a rate of 15% not doing that and more.

Hillary Clinton—while not taking a formal position on the historic credit but supporting the Low Income Housing and New Markets credits—has a history of supporting urban focused programs and policies consistent with Democratic Party orthodoxy. Many have assumed that while generally supporting incremental tax reform, a Clinton administration would be inclined to keep economic development incentives in the code.

After the New York Times bombshell, however, all bets about a selective, incremental approach to tax reform may be off the table. A sizeable chunk of people in the country are hurting and angry, and sweeping tax code changes that more fairly balance the burden by eliminating “loopholes” may be the perfect way for a Trump or Clinton administration to address that anger.