With future of historic building tax credits up in the air, what happens to projects on the drawing board downtown?
The developers of two significant historic redevelopment projects in the downtown area will continue moving forward with their plans, despite the legislature’s decision not to extend the state’s historic building tax credits program until 2026. The program will expire in 2021.
One of those projects is Mike Wampold’s renovation of the 52-year-old Chase South Towers office building, which Wampold acquired in early 2018 and plans to redevelop into a mixed-use tower of luxury apartments, offices and ground-floor retail.
The other is Solomon Carter’s overhaul of the historic Hotel Lincoln in downtown east, which Carter will redevelop into apartments and short-term rentals with a ground-floor restaurant.
Though construction hasn’t begun on either project, both developers are in the process of applying for the tax credits and are confident they will receive them.
Carter hopes the work will be completed by the time the program expires in 2021. Wampold assumes anyone who is certified to receive the credits will be grandfathered in to receive them.
“I don’t see the state cutting anybody off by the tail if, in fact, this program does go away,” says Wampold, who estimates his project will cost some $50 million. “They will have to phase it out gradually.”
Both developers are disappointed by the legislature’s failure to extend the program, which reimburses developers 20% of their construction costs in the form of transferable tax credits once a project is completed. The program is typically used in conjunction with a 20% federal tax credit and enables developers to justify the risk and high costs associated with historic renovations.
“This program has been lumped in with other tax credit programs that have gotten a black eye, such as movie credits, and that’s unfortunate,” Wampold says. “If you look at what historic building tax credits have done to revitalize Main Streets and downtowns in Louisiana it has been incredible, and a 20 percent credit is not exactly giving away the store.”
Wampold says the death of the program could impact a historic renovation he is planning for a still-undisclosed downtown New Orleans building, though he thinks the project will still go forward.
Advocates of the tax credit program hope the legislature will take up the issue again in a special session next year or during the next regular session in 2021, before the program expires.
Tom Adamek, principal of Stonehenge Capital, which brokers tax credits, says not knowing if or when that will happen is enough of a disincentive to stymie some projects.
“Developers need certainty that the credits will be there when they finish,” he says.