By Oriana R. Montani, originally published on 4/21/17.
A Buffalo without Historic Tax Credits
A lmost 100 days into the new administration, the fate of the Federal Historic Preservation Tax Incentive Program remains uncertain. The Program offers developers and investors tax credits worth up to 20 percent of qualified rehabilitation expenditures in the redevelopment of historic buildings. As in many states around the country, projects in New York have an opportunity to obtain another 20 percent in State tax credits from the State’s complimentary Historic Property Tax Credit Program.
Citing the much higher price of redeveloping historic buildings rather than constructing new, developers have credited the availability of historic tax credits as the determining factor in whether to pursue the redevelopment of an historic building. Some have heralded these historic tax credit programs as the driving force behind the renaissances occurring in small, once blighted, cities around the country. In 2016, an estimated $750 million was invested toward qualified rehabilitation expenditures in New York State, which amounts to an estimated $300 million of funding in the form of state and federal refundable tax credits. Developers and preservationists speculate that without the program, many, if not most, historic properties would inevitably be torn down (resulting in a loss of tax income for the municipalities as well as cultural enrichment for the surrounding communities). The recent uncertainty of the federal program asks us to consider the idea of a Buffalo without historic tax credits. With this, we take a look at some of the redevelopment projects in Buffalo representing buildings that may have been demolished without the availability of these coveted tax credits:
Hotel Lafayette, 391 Washington Street, Buffalo: Originally designed by Louise Blanchard Bethune, the country’s first professional female architect, the Hotel Lafayette was rehabilitated in 2012. It has since been the host to many prominent figures and events. The $42 million rehabilitation project was financed in part by historic tax credits.
Hotel Henry, 444 Forest Avenue, Buffalo: The Richardson Complex built in 1870, and originally designed by Henry Hobson Richardson, sits on 93 acres of landscape designed by Frederick Law Olmsted in the heart of Buffalo. After a long and arduous effort by State and local lawmakers, preservationists, developers, and investors, the Complex will reopen as the new Hotel Henry at the end of this month. The project received approximately $16 million in historic tax credits.
500 Seneca, 500 Seneca Street, Buffalo: The redevelopment of the former F.N. Burt Company Factory into what is now known as 500 Seneca was completed in 2015. The building, which once housed the world’s largest manufacturer of paper boxes, offers a multi-use space that symbolizes a gateway from downtown to the popular “Larkinville.”
The total project cost of $31.7 million made the availability of historic tax credits a valuable asset to the building’s redevelopment.
Larkin at Exchange Building, 726 Exchange Street, Buffalo: The Larkin Terminal Warehouse was constructed in 1912 to house the Larkin Soap Company, a revolutionary Buffalobased business and the first employer of Darwin D. Martin at age 13. Representative of Larkinville’s growth and vitality, the Larkin at Exchange Building was redeveloped into mixeduse commercial office space in 2002. This $40 million redevelopment project was funded in part by historic tax credits.
Guaranty Building, 140 Pearl Street, Buffalo: Designed by Louis H. Sullivan, one of the country’s most influential architects and known as the “father of skyscrapers,” the Guaranty Building is a staple in the Buffalo landscape. The building was rehabilitated in 2008 with a project cost of $15.6 million funded in part by historic tax credits.
From Larkinville to the Cobblestone District, to the Buffalo Niagara Medical Campus, historic tax credits have been a significant force in revitalizing Buffalo. For a rare, yet refreshing moment in our current political climate, we see a nonpartisan effort among elected officials, developers, investors, and preservationists to lobby for the continuation of the federal program, guaranteeing the State program through 2019 and cementing the continuation of Buffalo’s revitalization.
Oriana R. Montani is an attorney at Phillips Lytle LLP who focuses her practice in Real Estate Law, particularly on commercial real estate sales, acquisitions, development and leasing. She can be reached at email@example.com.