The following is part I of an article written by Warren Kirshenbaum published in Area Development Online. To read the entire article now, click here.
Those wishing to rehab an historic building can take advantage of various historic tax credits, while also building good will in the community.
Given that the Greater Boston area specifically is well developed, there is no longer an abundance of available, developable land. In urban centers there are structures that are well located for current business purposes, but which require substantial rehabilitation to be brought back to current use.
When businesses are considering expansion or relocation venues, some of their considerations may include properties that have historical significance to the area or neighborhood and are listed on the National Register of Historic Places. This may provide an opportunity to restore an historical property and garner certain tax advantages or income to offset rehabilitation costs along the way.
Examples of companies and organizations that have discovered historical property and chosen to renovate it are not uncommon. The Fort Point Channel area in South Boston is a good example of an area comprised of several buildings built and designed by the Boston Wharf Company that were used as warehouse space for shipping and receiving functions and other port- and trade-related uses in the early 20th century. The buildings, which are historically significant to the city of Boston, are now being adapted for re-use as residential apartments, storefronts, restaurants, and office space. Any entity undertaking the rehabilitation of an historic property will encounter some challenges, but there are considerable advantages as well.
Meeting the Challenges
One of the biggest challenges to historic property preservation is cost. Fundamentally, the expenses associated with historically rehabilitating a building are much higher than renovating a building that is not subject to rules and regulations that maintain its historical character. As one can imagine, with these types of parameters, there’s a risk that the residual value of the building may not fully reflect the cost of the rehabilitation.
Along similar lines, putting together a team that has the knowledge to successfully — and compliantly — preserve an historical building can be a challenge. The professionals involved, including the architect, historical consultant, tax credit syndicator or investor, attorney, and others, will need to be well-versed in the universe of historical remediation.
Reaping the Benefits
Given this, why would anyone even consider rehabbing an historic building?
The decision to move forward with the renovation of an historical structure can have special appeal as well as some significant financial benefits. For starters, an organization may look to the selection of an historical structure as a way to demonstrate its commitment to a specific city. Investing funds into saving or restoring a significant structure of some kind and preserving the history, culture, and values of the area could build a great deal of good will for a company, as well as strengthen their overall brand image.
Additionally, circumstance could dictate such a choice. Finding the perfect location or the perfectly sized building, that just happens to be historical, may be your motivation or the result of your search. The previous use of the building, especially if unusual in nature, may also make a difference if the planned future use of the building is similar.
And then there is a matter of financing. Certainly if there was one lesson learned by virtue of this recent recession, it has been that financing is not an easy proposition. Although banks are starting to loosen their lending requirements, securing the needed amount of financing to build a new structure, or to buy an already-constructed building, might prove a challenge.
Historic rehabilitation tax credits help to neutralize this challenge, and may even offer a more favorable financing situation.
The Historic Rehabilitation Tax Credit is specific to geographic locations, so you are best served by a company that has expertise in the New England region, encompassing the MA, ME, NH, RI, CT areas. Cherrytree Group provides that expertise.