February 2012 Featured Article
Historic Preservation –
One Way to Build the Foundation for Downtown Redevelopment
Maintaining a healthy downtown and central business district are important goals for any community. Meeting these goals involves not only investments in new stores and commercial opportunities, but in the aesthetic and often historic characteristics of the community itself. This effort includes the rehabilitation and preservation of a main street, as well as facilitating economic growth throughout all aspects of the economy. This cannot be done by improving the façades of a downtown or preserving historic buildings alone, but must be coupled with job creation, business development and business expansion as well. Ultimately, the redevelopment of a main street within a healthy regional economy can be an important catalyst for the revitalization of the surrounding neighborhood through increased homeownership rates and property values.
Historic preservation often provides a context and foundation for the revitalization of a downtown or a main street that has suffered a business exodus as a result of the big box boom of the 80’s and 90’s. Maintaining a classic main street façade with historic buildings that include both public and private uses is a vital way to maintain pedestrian activity in a downtown. For example, maintaining a historic city hall building provides a sense of pride for a community. Keeping a County Court House building along a main street is another way to keep a main street vibrant with pedestrian activity. These uses help to create a sense of place through quality architecture that the community can use as an anchor for their downtown and main street improvement strategy. Not only does it promote economic development, but it also helps our communities maintain their heritage. However, this type of main street and urban redevelopment does not come without its challenges. With the anticipated closure of nearly 50 post offices in New Jersey, many located in already underserved communities for goods and services, removing these offices may be another thorn in the side of communities who have relied on the post office as a source of activity in their downtowns. Coming up with creative reuses of the post office space will be an exercise that communities should already start considering.
Another challenge of historic preservation is the sheer cost of redevelopment. The redevelopment of a historic building maintains higher standards than a typical redevelopment. The rehabilitation of a building not under the auspice of historic preservation may cost a third less than historic standards. To abate these financial challenges there is a federally administered “Historic Preservation Tax Incentive Program”. This program, which is run through the National Park Service, is a 20% tax credit program that began in 1976 through a partnership with the IRS and the State Historic Preservation Offices. The program rewards private investments in rehabilitating income producing properties such as offices, retail stores or rental housing. Unfortunately this program does not apply to private homeowners who rehabilitate their historic homes. In order to be eligible for the tax credit program there are four factors that must be met: the building must be listed in the National Register for Historic Places, or have a significant contribution to a “registered historic district”; the building must be used for an income producing purpose for at least five years; the project must meet the “substantial rehabilitation” test, or the cost of rehab must exceed the pre-rehabilitation cost of the building; and the work must follow the standards of rehabilitation set by the Secretary of the Interiors Standards for rehabilitation. These include the 10 principles that ensure the historic preservation of a project. For more detailed information about this useful program that can be used by potential developers or businesses visit, www.nps.gov.
In addition, the New Jersey Historic trust has historically offered two grant programs: The Historic Site Management Grants, which range between $5,000 and $50,000; and the Capital Preservation Grants, which range between $150,000 and $750,000. However, in recent years these programs have not been funded as a result of budgeting.
The limited funding for these very important aspects of community revitalization bring to mind the importance of getting a return on investment for public funds in the way of job creation, downtown revitalization and economic development. As the federal historic tax credit incentive program reminds us that while the sheer revitalization of a building is beneficial in the sense that it preserves our heritage, ensuring that these commercial/historical ventures have financial viability is also essential. Redeveloping a theater or historic building into a museum is a very important venture. However, ensuring their financial viability is also essential for redevelopment efforts to be worthwhile. In order to do so it is important to complete a benefit cost and long term financial analysis to determine if there will be the necessary cash flow to sustain operations.
Another useful program is the Main Street New Jersey Program under the New Jersey Department of Community Affairs (DCA). This program takes a four point approach for downtown revitalization which includes: organization; economic Restructuring; design; and promotion. This program is currently on hold and is not accepting new applications as a result of budget shortfalls. However, communities interested in revitalizing their downtowns are encouraged to work with the Downtown Revitalization Institute, and for a small fee they can gain helpful resources for organizing a main street revitalization effort. For more information regarding the Downtown Revitalization Institute and their events visit http://msnjdrmi.eventbright.com. For more information regarding the Main Street New Jersey program contact the DCA.
The Downtown Business Improvement Loan Fund for 2012 was recently released. The purpose of this program is to assist municipalities and Improvement Districts with public physical improvements and improvements that benefit the public sphere directly or indirectly within designated Business Improvement Zones. The fund offers zero percent interest and does not require a dollar for dollar match of funds up to $100,000. However, matching funds increases the likelihood of funding loans between $100,000 and $500,000, which requires a dollar for dollar match. Allowable uses for funds are to purchase, lease, condemn or acquire land or an interest therein as necessary for right of way or other easement to or from the zone; relocate and move persons displaced by the acquisition of land; the rehabilitation and redevelopment of land; acquisition, construction, reconstruction, rehabilitation or installation of parking and other public facilities and improvements; and costs of appraisals or other professional services directly related to effectuating the improvement (NJDCA Sage, https://njdcasage.state.nj.us/RFPMailingRequest_List.asp). This program is on a first come first served basis, so if you have a project currently underway that has funding shortfalls, this is a potential opportunity. Contact your grant consultant today.
In closing, historic preservation and downtown revitalization are catalysts for economic development. Utilizing public dollars in effective ways and finding ways to leverage grant funding of any kind are important goals of municipal government, particularly in these difficult times. Understanding the long term financial viability of a project prior to partnering with a historic revitalization effort is essential in making the best decision for your constituents.
Published February 1, 2012.
Triad Associates is currently the League’s Grant Consulting Firm. Their firm, which is known for its expertise in community and economic development, including strategic planning, redevelopment, acquisition, relocation and funding, has brought diverse plans and projects to life by generating more than $580,000,000 for over 120 public, private and nonprofit clients throughout the Northeast region since 1978. Every member of the Triad team is personally committed and dedicated to the success of its clients and the projects that benefit communities.
Full version of February article for printing