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DAA says historic status important for commercial properties

Wednesday, February 9, 2011 by Kimberly Reeves

More than two years ago, LBJ Asset Management Partners agreed that a major exterior waterproofing project was necessary to preserve the exterior masonry of downtown’s historic Norwood Tower, which was showing clear signs of water seepage. After manager Nancy Burns and her bosses spent $2 million upgrading the 1929 property, the problem was fixed, but only the keenest observer would recognize the outlay for the costly restoration, Burns said.

 

“I’m not sure anybody walking past the building today would recognize we’ve spent $2 million there,” Burns said. “The company we hired did a wonderful job, but the job was to make sure the building looked just the same from the outside as it always has. If you walked past it, the only difference might be the building looks a little bit cleaner.”

 

The Historic Landmark Commission’s Operations Committee is currently reviewing historic tax abatements, at Council’s request. Burns, who addressed the committee on behalf of the Downtown Austin Alliance last week, urged the commissioners to maintain commercial abatements. Those abatements have come under question in recent months, even from committee members, because some property owners are not as diligent as others when it comes to proper maintenance.

 

And when maintenance is done properly on a historic building, that expense is frequently not evident, Burns said. Burns also argued that historic properties often lose competitive ground because repairs are often up to 20 percent higher on historic properties; historic properties have difficulty competing with new downtown properties that have “hotter” new amenities, and the smaller floorplates and antiquated construction methods of older properties often make them hard to rent.

 

“It’s much more difficult to get a tenant in an older property,” Burns said. “New properties can do exercise rooms, restaurants, amenities. It’s difficult to have an older property when you’re in a downtown area with Class A buildings.”

 

The decision to pursue historic landmark designation is not always an easy one, and it’s one Burns’ bosses considered for some time. They purchased the building in 1997 but did not get landmark status for another eight years. Tax abatements had to be weighed in light of the cost, in time and effort, of city review standards.

 

“It’s a savings, but it’s not a huge savings, especially when you consider the smaller properties,” Burns said. “For small companies it’s probably even less of a savings, because they want to keep their tenants, and they know they can’t pass through the cost of preservation to their tenants.”

 

Downtown property, historic or not, presents its own unique list of challenges for a landlord, Sadowsky said. Access issues often hamper downtown properties. Parking, free or not, is rarely abundant. Suburban properties 15 miles from downtown will always be cheaper and more accommodating, Sadowsky said.

 

“On top of that, historic incentives for commercial property is about half what residential property runs downtown,” Sadowsky said. “So you have a property downtown with a significantly higher tax bill and not the same percentage tax exemption as you might see from a historical home.”

 

Sadowsky is sympathetic to the thought that many residential properties are better served being contributing structures in a residential historic district, while an individual landmark designation might be a better choice for commercial properties. Commercial properties often have a far more significant financial stake, and clearer history, when it comes to historic landmark designation.

 

“A lot of cities, a lot of towns, have focused their historic landmark designation programs exclusively on downtown,” Sadowksy said. “That doesn’t mean you ignore the big Queen Anne (house) in the neighborhood. You’re just focusing more of your effort on what’s going on downtown.”

 

In city neighborhoods, homeowners have tended to use the landmark code to guide, or avoid, tearing down older houses. Instead, what’s often been needed is the use of local historic districts, which provide stricter guidelines on how to rebuild on lots with proper design guidelines, Sadowsky said. 

 

Even after two revisions to the city’s historic landmark designation code in recent years, the city’s historic preservation officer admits that the code’s designation standards continue to be misused by various homeowners.

 

“We’ve had continuing problems with the designation criteria,” Sadowsky said. “I think we need to take a real serious look at the designation criteria part of our code … because too many things fit into our criteria.”

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