Spring 2009 Update: MacRostie Historic Advisors

Historic Tax Credits: An Important Source of Equity for Affordable Housing Projects

Portfolios of affordable housing projects in need of rehabilitation are prime candidates for historic rehabilitation tax credit equity infusion. Increasingly, the historic credits are providing the critical piece of financing for owners who are rehabilitating existing affordable housing as well as for new owners pursuing acquisition and rehabilitation.

In St. Louis, Missouri, our client Delphi Affordable Housing Group, Inc. of Austin, Texas acquired and rehabilitated 37 buildings having a total of 120 units of affordable housing in the Murphy-Blair and Tiffany neighborhoods. Important considerations included:

All buildings were located in previously designated National Register historic districts;
State and federal historic tax credits were utilized in conjunction with state and federal Low Income Housing Tax Credits;
1980s renovations had gutted interiors and replaced all windows, making historic tax credit certification relatively straightforward; and
The project yielded federal historic tax credits equaling 20% of rehabilitation costs and state historic tax credits equaling 25% of rehabilitation costs.

At the time this project was completed in 2006, the availability of state and federal historic credits made a marginal acquisition and rehabilitation project into a very profitable one. In today's unstable LIHTC equity environment, the historic tax credit equity can be the critical piece of financing that makes an affordable housing project feasible. We are currently advising several affordable housing clients on projects where historic credit equity is filling the financing gap; in some cases even creating National Register designations where they do not currently exist.

What We’re Working On:

From our Washington, DC office, we are servicing:

Rehabilitation of the Wilde Building, a 1957 masterpiece of modern architecture by Gordon Bunshaft of Skidmore, Owings, & Merrill (with interiors by Florence Knoll and sculpture and landscaping by Isamu Noguchi) in Bloomfield, Connecticut. Built as the headquarters of the Connecticut General Life Insurance Company and considered an early and influential example of a suburban office park, the 820,000 square foot building is being rehabilitated for continued office use by successor firm CIGNA. MHA also prepared an individual National Register nomination for the building; and
Conversion of the former National Furniture Company store in Washington, D.C.'s Chinatown neighborhood for mixed use.

Our Boston office is providing historic tax credit and National Register consulting services for:

Conversion of the Daniel Saunders School in Lawrence, Massachusetts for 16 two-bedroom units of supportive housing for homeless families;
Rehabilitation of five underutilized commercial buildings on Water Street in Gardiner, Maine for new mixed uses; and
Reuse of Sitkowski School in Webster, Massachusetts for 60 units of affordable senior housing.

In Chicago we are consulting on:

Reuse of Chicago's "original" Sears Tower as community offices and program space for the Homan Arthington Foundation. The 14-story brick tower was built in 1906 as part of the Sears, Roebuck and Company's Mail Order Plant (no longer extant) and served as a visual landmark for Sears' sprawling complex on the city's West Side;
Rehabilitation of the 1927 DeWitt Clinton Hotel in Albany, New York. Now vacant, the building will be reactived as an Embassy Suites hotel; and
Conversion of the Chicago factory of the Storkline Furniture Corporation, once the world's largest manufacturer of infant and juvenile furniture, fo a mixed-use project serving the city's Lawndale neighborhood.

Recent and Upcoming Speaking Engagements:

In February, Bill MacRostie was a featured speaker at a Housing Tax Credit "Graduate Course" seminar sponsored by Nixon Peabody LLC and Reznick Group, P.C. in Miami Beach, Florida;
In March, Bill participated in the National Housing and Rehabilitation Association's Affordable Housing Developers Conference and Annual Meeting in Key Largo, Florida;
In March, Allen Johnson participated in a panel discussion on "The Historic Rehabilitation Tax Credit and the Modern Cityscape" hosted by the John Marshall Law School in Chicago, Illinois;
In May, Bill will speak on the use of historic tax credits for affordable housing projects at a Community Development and Empowerment Workshop sponsored by Chicago Rehab Network;
In May, Emily Ramsey will speak on financial incentives for homeowners in National Register districts at a workshop sponsored by Neighborhood Housing Services of Chicago and the Historic Chicago Bungalow Association.