Porch Swing Properties | Ohio HTC Program Expands in 10th Round of Awards
Community-focused property management and development in Cincinnati, Ohio.
Cincinnati, Porch Swing Properties, Developer, Contractor, Renovation, Restoration, Historic, Green, LEED
105
post-template-default,single,single-post,postid-105,single-format-standard,ajax_updown_fade,page_not_loaded,smooth_scroll,

Blog

24 Jul / Ohio HTC Program Expands in 10th Round of Awards

Ohio HTC Program Expands in 10th Round of Awards

By Mark O’Meara, Staff Writer, Novogradac & Company LLP

 

The Ohio Historic Preservation Tax Credit (OHPTC) has grown since its inception in 2006. The demand for credits increased and the program has reached Ohio’s smallest rural communities, funding both large and small projects. The Ohio Development Services Agency (ODSA) announced the 10th round of tax credits in June, awarding $33.9 million in tax credits to 22 owners rehabilitating historic buildings in 10 communities. These awards are expected to leverage more than $200 million in private investment.

“We want to reach out to all communities across the state, not just the big cities,” said Stephanie Gostomski, public information officer at ODSA, which administers the credits. “Our goal is to make sure that everyone, including local governments and small cities, knows about the program and has the tools to utilize the credits.”

The OHPTC program provides a 25 percent tax credit for the rehabilitation of historic buildings. To be eligible for state credits a building must be individually listed on the National Register of Historic Places; contribute to a National Register Historic District, National Park Service Certified Historic District or Certified Local Government historic district; or be listed as a local landmark by a Certified Local Government. The credit has an annual cap of $60 million and is allocated equally through two funding rounds. Round 10 awards exceeded the $30 million per round cap because the state also allocated $3.9 million of previously awarded, but unused credits. Individual projects are capped at $5 million.

Round 10 Brings New Growth 
In Round 10, as in several previous rounds, ODSA prioritized the funding of small developments in small markets. ODSA has provided allocations to developments in 40 cities throughout the life of the program. And in Round 10, it provided allocations to developments in six new cities where tax credits haven’t been used before. ODSA set aside $1.5 million for small projects in Round 10 and 10 of the 22 developments that received funding are small projects with qualified rehabilitation expenditures of less than $1 million. “This is the fourth round where we have [prioritized small developments],” said Gostomski. “We see a number of smaller cities getting involved in the program as a result.”

“It is really exciting that there were a lot of small-scale projects this round,” said Joyce Barrett, executive director at Heritage Ohio, which helps foster economic development through historic preservation. “You want to balance the larger projects with smaller projects. The larger the project, the greater the economic impact. However, when you do smaller projects, you get a broader base of support for the program.”

While supporters of the state tax credit are pleased with the direction of the program, they say they would like to see a few changes, including raising or eliminating the annual and project caps. “The state historic tax credit program pays the state back in new tax revenue in a very reasonable amount of time. It is an investment on behalf of the state that’s generating excellent economic returns, so why limit it?” said Peter Ketter, Sandvick Architects Inc.’s director of historic preservation.

How Small Developments use State HTCs
A couple developments that have used the state credits from the small projects pool include the Brill House and Merriman Block. The Brill House, built in 1846, is a mixed-use development in Cincinnati that will create seven one-bedroom apartments on the top three floors and retail space on the first floor. The credits will help to preserve the metal cornice on the front of the building and to refurbish the balconies, the woodwork on the internal stairwell, the fireplaces and molding. The $256,000 development received $62,500 in OHPTCs. “The tax credits are critical,” said Oliver Kroner, president of developer Porch Swing Properties. He added that the federal and state OHPTCs account for 45 percent of the renovation’s total budget. “To do everything historically accurate, there is a substantial cost associated with that. We would be stuck without the credits.”

The rehabilitated Merriman Block is providing space for the expansion of Twirl, a bridal, formalwear and tuxedo shop. Located in the city of Kenton’s Courthouse Square Historic District, the Merriman Block is a two-story, 14,000-square-foot building erected in 1863. Developer Brad Wingfield will restore the original hardwood floor on the second floor and original light fixtures in addition to preserving the exterior facade. The $225,000 development received $43,750 in OHPTCs. “The tax credits definitely made the project happen,” Wingfield said. “We were able to triple the scope of the project because of the tax credits.”

Small Project Pool Poses Challenges
However, even with the recent efforts to expand the program, small developers are experiencing challenges. “Our goal is to try to make [the tax credits] more accessible on a smaller scale,” said Barrett. “But there is a big learning curve with the tax credits.”

Because the small projects pool is still relatively new, small developers are having a hard time utilizing the credits. The Merriman Block development, for instance, is the first development in the city of Kenton to use OHPTCs; therefore, there was little infrastructure set up to guide Wingfield through the tax credit application process. “There are no local resources that you can turn to,” Wingfield said. “It took a lot of reading, a lot of trial and some error to get the project done.”

Despite these challenges, Wingfield is eager to develop additional buildings. “With this project, I just dipped my toes in the water. I’d like to see it in a larger scale,” Wingfield said. Wingfield said that the challenges he faced with the Merriman Block development will help him move forward. “For my second one, I think I can do it in half the time,” he said.

Kroner said that although the OHPTCs were an essential part of Brill House’s financing that they slowed down the development process. “There were several rounds of back and forth. Everything needed to be approved by the Cincinnati Historic Conservation Board,” he said. “The process slowed things down. Now that the tax credits are in place, it was definitely worth the wait.”

The Future of the Program
While an increasing number of smaller projects are receiving OHPTCs, the majority of the funding still goes to larger developments, especially those in larger cities, said Gostomski. In Round 10, nine developments in Cincinnati received $9.7 million in tax credits, two Developments in Akron received $8.1 million and four developments in Cleveland received $7.6 million.

“Small projects require less funding,” Gostomski said. “The small projects pool allows us to fund those projects, but it doesn’t impact allocation amounts for the larger projects.”

In order to strengthen the program and help foster future growth, ODSA implemented the Pipeline Pilot Initiative in December 2012 to develop a pipeline of properties that are eligible for redevelopment assistance. “Some communities are not well positioned to take advantage of the state and federal tax credits,” Gostomski said. “We do what we can to ensure that there are no obstacles in the way of obtaining the credits.” The initiative will provide grants and technical assistance in nominating buildings, districts and areas to the National Register of Historic Places.

Post a comment