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Variety of Rehabilitations Capture Annual Journal of Tax Credits HTC Awards

Published by Brad Stanhope on Tuesday, July 11, 2023

Journal Cover July 2023   Download PDF

A former school, tobacco factory, county jail and trolley car rail yard were all transformed into vibrant 21st-century properties thanks to equity from historic tax credits (HTCs), earning the developments recognition as the 2023 Novogradac Journal of Tax Credits Historic Rehabilitation Award winners.

Developers of the properties–located in Maine, North Carolina, Minnesota and Ohio–will be honored at the Novogradac 2023 Historic Tax Credit Conference, Oct. 12-13 in Charlotte, North Carolina.

“Historic rehabilitation is so crucial to the character and the economy of cities across America and this year’s winners show the breadth of the types of properties that can use the historic tax credit,” said Thomas Boccia, CPA, a Novogradac partner and chair of the conference. “That the winners come from such a diverse list of geographic regions and the properties that have been redeveloped are being used for such a variety of purposes is further evidence of how well the HTC incentive works.”

The winners:

HTC Residential Development that Best Exemplifies Major Community Impact: Dracut Centre School

A historic school building in Dracut, Massachusetts, is experiencing new life as veteran-preference workforce housing while meeting the goals of the city. The Dracut Centre School was built in 1898 and closed in the 1980s, due to declining enrollment and budget issues. The building was used as a town hall annex until 2017, when a new town hall was built and Dracut Centre School was declared surplus property.

2023 HTC Awards - Residential Development that Best Exemplifies Major Community Impact

 

Developer Coalition for a Better Acre combined a variety of funding sources, including $660,000 in state HTC equity from Dorfman Capital, to finance the renovation. The result is nine units of veteran-preference workforce housing for those who may be housing insecure but earn more than the federal low-income housing tax credit limit of 80% of the area median income. The property includes a bike rack, drought-tolerant landscaping, high-efficiency water heaters, Energy Star-labeled appliances and recycled materials throughout construction.

The reconstruction retained much of its original fabric, allowing the new Dracut Centre School property to meet the goals of the town and developer–to the extent that Dracut uses this development as an example of successful preservation and adaptive reuse. The development also drew broad attention, including being featured on the “This Old House” program on PBS.

HTC Nonresidential Development that Best Exemplifies Major Community Impact: Mill House

The final phase of the massive Revolution Mill development in Greensboro, North Carolina, is a mixed-use transformation of portions of the former textile mill into office space and housing. Developer Self-Help Ventures Fund (SHVF) redeveloped Mill House to provide affordable office space for nonprofits and small businesses, particularly those that are women- and minority-owned, as well as a variety of affordable and workforce homes. The property includes nearly 60,000 square feet of commercial space and nearly 45,000 square feet of rental residential area, including 33 apartments.

2023 HTC Awards - Non-Residential Development that Best Exemplifies Major Community Impact

 

The 45-acre Revolution Mill has been transformed into a mixed-use campus since being acquired out of foreclosure in 2012 by SHVF. It includes more than 400,000 square feet of office, residential, restaurant and public spaces.

The first floor of Mill House is a combination of commercial and retail space, including a café and a locally owned restaurant. That floor also includes a coworking space with flexible lease terms. The upper floors will include nearly 50,000 square feet of creative office space and a 33-unit residential component, of which 20% of the units will be income restricted. HTC investor Foss & Company provided $5.8 million in federal HTC equity. The property is expected to create 315 construction jobs and 323 new permanent jobs.

HTC Residential Development that Overcame Significant Obstacles: Leijona

A long-vacant county jail was transformed into 33 mixed-income apartments in Duluth, Minnesota, thanks in part to HTC equity. The former St. Louis County Jail–built in 1924, decommissioned in the 1980s and abandoned in 2008–had 99 steel detention cells that acted as the interior structure, meaning the first-time development partnership of Meghan Elliott (Jillpine), Jon Commers (Donjek) and Grant Carlson (Blue Limit) had to restructure the interior, oversee substantial abatement of lead-based paint and collaborate with multiple stakeholders.

2023 HTC Awards - Residential Development that Overcame Significant Obstacles

 

The result is Leijona, a development that stalled out before being reinvigorated in 2020 and completed just days before the expiration of the Minnesota’s since-reinstated state HTC allocation at the end of 2022. Located in Duluth’s Daniel Burnham-designed Civic Center Historic District, Leijona overlooks Lake Superior. The 33 apartments will help address a severe housing shortage in Duluth and the property is within walking distance of major employers, public transportation, entertainment and retail. The financing included $3.2 million in state and federal HTC equity from MinnWest Bank, as well as a broad mix of other public and private financing.

Due to the historic character of a former jail–the structures are single-purpose, harsh, intentionally isolated and isolating–the developers faced some specific design challenges. For instance, the vertical steel plate walls and bars that created double-occupancy six-by-eight-foot detention cells also served as the load-bearing structure. But Leijona is evidence that the transformation is possible.

HTC Nonresidential Development that Overcame Significant Obstacles: East Market Trolley Barn

As if a pandemic, delays in sourcing materials and price increases weren’t enough, the East Market Trolly Barn in Columbus, Ohio, also had a fire in the roof of one of its buildings and had a wall collapse due to heavy rain that coincided with workers being unable to be on-site due to a government-mandated shutdown. Still, the rehabilitation and adaptive reuse of the Columbus Street Rail east trolley barn buildings by Connect Realty LLC was completed, although the issues during development led to a need of an additional $5.5 million in equity.

Journal Graphic: July 2023, HTC Award Winners - East Market Trolley Barn

 

The five buildings in the Trolley Barn were built between 1880 and 1920 in the Franklin Park neighborhood in Columbus, with the original building intended to be a horse stable. The building operated during the city’s streetcar era and then transitioned to serve the city’s bus transit system. In its latest iteration, it is a multitenant mixed-use property with a public food market and event space, restaurants, headquarters for a national business, opportunity zones coworking office and 65,160 square feet of rentable space.

Bank of America provided $2.8 million in federal HTC equity and Foss Ohio Fund provided $1.8 million in state HTC equity.

Honorable Mentions

HTC Development that Best Exemplifies Major Community Impact: Carlton Terrace Preservation Project in Chicago (Developer: Mercy Housing Lakefront).

HTC Nonresidential Development that Best Exemplifies Major Community Impact: Loving School Facility in New Orleans. (Developer: State of Louisiana Department of Education, Recovery School District).

HTC Nonresidential Development that Overcame Significant Obstacles: Hinchcliffe Stadium in Paterson, New Jersey (Developer: RPM Development Group and BAW Development LLC).

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