In 1980, the Longwood Historic Community Association received a grant from the National Trust for Historic Preservation to help finance restoration of nine abandoned houses in the Longwood Historic District of the South Bronx. This grant was part of a hard-won package of public and private funding intended to spur a renaissance in one of the most blighted parts of New York City, under the auspices of the New York City Housing Partnership.
The partnership planned a complete restoration of the buildings, including historic facades, at a cost of $75,000 per apartment. But the plan was vetoed by the State Historic Preservation Office, which insisted that the fire-gutted interiors of these private homes must also be restored to their original condition. These low-income apartments would have to include such amenities as fireplace mantels, hand-milled moldings, and specially fabricated reproductions of original doors. These improvements would have raised the renovation cost by some $20,000 per unit and been invisible to everyone except the residents of the houses.
The State Historic Preservation Office administers the Historic Rehabilitation Tax Credit, a federal program designed to encourage the preservation of historic buildings. This tax credit allows owners or investors to write off about 20 percent of the cost of rehabilitating an eligible property. Under federal guidelines, state agencies are given broad discretion to establish the architectural and aesthetic criteria used to qualify projects for the tax credit.
But if the state agency is too stringent in setting its requirements—as New York’s Preservation Office is in demanding that the interiors as well as exteriors of buildings be restored—the effect can be to discourage historic preservation, particularly in poor areas. The Longwood homes, for example, remain derelict eyesores in an otherwise solid residential enclave within the South Bronx. Local homeowners have kept the empty buildings sealed. After more than a decade, the city has committed the subsidies needed to renovate the buildings to the local Landmarks Preservation Commission’s standards, which do not require interior restoration of private residences. Renovation of the buildings will probably begin this year, but without the benefit of the tax credit.
The Historic Rehabilitation Tax Credit is the only source of public subsidy dedicated to covering historic restoration costs. But the tax credit by itself is insufficient to pay for the state’s high standards. That means an eligible property must also command a premium price in the marketplace in order for renovation to make economic sense. Thus, in New York the tax credit serves primarily as a subsidy for the wealthy.
The case of the Parc Vendôme, a former residential hotel in the Clinton Hill neighborhood of Brooklyn, illustrates the high cost of historic preservation—even preservation less extensive than that demanded by the State Historic Preservation Office. The building had been abandoned for twenty years and was slated for demolition to make way for a larger Housing Partnership construction project. But protests from preservationists prompted the city to withdraw the demolition order and commit extraordinary public subsidies to renovate the building for sale as affordable housing. The cost of saving the Vendôme—which involved virtually constructing a new building within the teetering historic façade—was $4.4 million, or $183,000 for each small two-bedroom apartment. Larger town houses on the site cost some 30 percent less to build. But despite the high cost, the renovation was not extensive enough to satisfy the state, which refused approval for the tax credit. The partnership is appealing to the U.S. Department of the Interior.
Onerous restoration requirements doom many historic buildings in New York’s less affluent neighborhoods to decay and demolition. In the South Williamsburg section of Brooklyn, the Housing Partnership has been struggling for five years to get regulatory approvals for construction of 24 new affordable homes on vacant land surrounding an abandoned public school building. The project was held up because the school had been identified as a candidate for the National Registry of Historic Properties.
The partnership recruited a preservation architect to prepare a plan for rehabilitating the school and converting it into an apartment house. But there was no way to satisfy the state within the limits of an affordable-housing budget. Preserving the interior structure would have required rooms as big as the original classrooms and halls the size they had been when they accommodated hundreds of students. These requirements severely limited the number of apartments that could be built on the site, rendering the project uneconomical.
The partnership eventually gave up its efforts to qualify the school renovation for the tax credit. Meanwhile, over the years, the elements have undermined the structure of the school to the point where only a partial facade is salvageable. What remains of the building will probably fall down.
Innumerable buildings and entire blocks are being lost for lack of a realistic set of specifications and financial incentives for restoration. These properties are concentrated in older neighborhoods where rehabilitation is most desperately needed. Many are owned by the city and could be made available to developers at a nominal price if rehabilitation were economically feasible.
Yet none of this is required by the federal law establishing the tax credit, which gives great discretion to state agencies. The State Historic Preservation Office could, on its own, relax its requirements, making it easier to rehabilitate buildings in low-income areas. Such a change in policy would bring substantial federal aid to the state.
The most significant obstacles to effective application of the Historic Rehabilitation Tax Credit for affordable housing are the requirements of interior restoration, replication of original craftsmanship and materials, and maintenance of the original layout. The latter often runs afoul of federally mandated standards for wheelchair accessibility, which make it legally impossible to meet the state’s requirements for preservation of historic doors and room sizes.
Preservation of a historic block or building is at least as important in poor areas of the city as in wealthy ones. The federal incentives for historic preservation that fuel redevelopment in Murray Hill, Greenwich Village, and Brooklyn Heights should be equally available to property owners and investors in Bedford-Stuyvesant, Harlem, and the South Bronx. But market values of fully rehabilitated property in these areas simply will not command the rents or prices necessary to pay for hand-hewn molding, plaster ceilings, and excessive amounts of lost space.
Congressman Charles Rangel has introduced legislation that would direct state regulators to be more flexible in granting federal tax credits for renovating low-income housing. Congress should pass it, so that poor communities as well as privileged ones can enjoy the benefits of historic preservation.