Historic tax credit may become an even more important tool for developers
As Atlanta undergoes continued transformation through new developments, a move by the Georgia legislature and governor’s office has provided potential investors and other stakeholders with another investment tool.
This time, though, the focus is on buildings in peril.
The often underutilized properties that have seen better days still provide opportunities for creative and savvy developers. More prevalent than one might think, properties deemed historic are tracked by several community improvement districts, agencies and non-profits.
The Georgia Trust for Historic Preservation, for example, tracks endangered houses and buildings and serves as an advocate for these properties, as well as preservation funding and its various governing laws and policy initiatives.
Taking note of successes with other state tax credits such as the well-known entertainment and film credit, the state government has responded. While not new, the state historic tax credit (HTC) has been expanded.
Effective January 1, 2016, House Bill 308 will increase the state cap from $300,000 to $5 million. Bottom line, the state HTC goes from something that would not typically draw serious interest to something that can become a significant aspect of a developer’s capital stack.
The $5 million per project cap can be exceeded if a project can show 200 or more permanent jobs created, or $5 million in payroll. There is also a statewide cap of $25 million per year from the state, earmarked for buildings going into service in 2017 and after.
As new buildings from residential to office and others, along with the ever-evolving Peachtree Street corridor, for example, continue to evolve and emerge, it will be interesting to see how the increased state HTC will aid developers, and, thus, Atlanta, going forward.
Keep in mind, this is just the state HTC and other Federal historic credits could also factor in. Projects like Ponce City Market and the Flatiron Building have clearly benefited from the HTC.
No question that both are models that are, and will, breathe new life into their respective communities. What will become of other vacant structures or those along the Beltline, the continued burgeoning of West Midtown and other investment areas of the Metro Atlanta area and beyond?
All are indicative of Atlanta’s ability and creativity to revamp significant landmarks for positive redevelopment and community revitalization.
As the HTC gives incentives to help preserve and utilize existing structures that can still have a positive effect in their respective communities, it also will attract developers from outside the state that specialize in historic deals. This also ties into current market and demographic trends, in part due to the Millennials, to work and live in cool buildings, often in urban areas that help promote walkability to nearby dining, shopping and entertainment amenities.
Given the area’s current growth in the tech sector, numerous structures like old schools, textile mills and other places in peril suddenly come into play. New and old structures alike both contribute to places of interest, something tech firms and other creative industries have an interest in. Old structures can bring character that compliment traditionally developed new buildings. At a time when Atlanta is attracting a diverse work force of all ages, backgrounds and industries, it can only help to have product that matches a wide range of demands while preserving past character.