Building Rehabilitation Why is it important from a design perspective?

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1 North Carolina Downtown Development Association 0 HANDMADE IN AMERICA Clay County Chamber of Commerce Building Rehabilitation Why is it important from a design perspective? 1

2 A Bit About Me Born and Raised in rural West Virginia; Holloway Family Farm Washington and Lee Univ Psychology & Art History; Lexington, VA Virginia Tech 2005 Master of Landscape Architecture; Blacksburg, VA McKee Carson Landscape Architecture, Land Planning in Charlottesville, VA NC Main Street Center Small Town Main Street Program Western Region: Urban Designer; Asheville, NC City of Hendersonville Main Street Director; Hendersonville, NC Rehabilitation the process of returning a property to a state of utility, through repair or alteration, which makes possible an efficient contemporary use while preserving those portions and features of the property which are significant to its historic, architectural and cultural values. 2

3 Main Street Design within the Main Street context (a place based economic development context) is about getting your commercial district in top physical shape and creating a safe and inviting atmosphere. It takes advantage of the visual opportunities inherent in a commercial district by directing attention to all of them, public and private buildings, storefronts, signs, public spaces, displays, etc. In all these areas of opportunity the key word is QUALITY. Street Level 3

4 The Great Eight Places for people to walk with some leisure A physically comfortable space Definition Qualities that engage the eye Transparency Complimentarity Quality of construction and design Maintenance 4

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15 North Carolina Downtown Development Association 0 HANDMADE IN AMERICA Clay County Chamber of Commerce Building Codes and Existing Structures 1 Bethesda Eye Institute Missouri History Museum St. Louis Municipal Opera 15

16 Navigating the Codes Your options 2 North Carolina State Building Code 2012 Written for new construction Too stringent for existing building projects Costly Navigating the Codes Your options 3 NCSBC Chapter 34 Life Safety Evaluation Mandatory Safety Scores Pass/Fail 16

17 Navigating the Codes Your options North Carolina State Building Code Volume IX Existing Buildings Adopted June 14, Existing Building Code Vol. IX Chapters 1, 2, 3, 4, & 7 are still valid Chapters 5 & 6 were replaced by sections 3405 and 3409 of 2002 Chapter 34 of the NCSBC Ensures minimum health and safety standards Navigating the Codes Your options 5 North Carolina Rehabilitation Code Specifically for existing buildings Gradual implementation of code requirements Common Sense codified 17

18 Navigating the Codes Your options 6 Talk to AHJ You must be on the same page as the code official Preliminary meeting No surprises NCDDA NC Rehab Code 7 Rethought 100 years of code development All segments of stakeholders represented 18

19 NC Rehab Code Change in code philosophy Common Sense Codified Before Rice-White Building, Asheville, NC Live-work and residential units. 8 Model codes work great on new buildings But sometimes are counterproductive Owner says forget it. Rehab Code rethought role of hard core criteria in the code Less emphasis on dimensions, height & area, construction type, etc. Instead Advance building safety Encourage rather than discourage work on existing buildings Focus on the intent of the code NC Rehab Code What are your goals? 9 Maintain a vital urban climate Transportation Socialization Main Street programs 19

20 NC Rehab Code What are your goals? 10 Encourage adaptive reuse Preserving the architectural diversity of the existing building stock Establishing a strong community identity Preserving the architectural history of a community Become guardians of the identity of your community NC Rehab Code What are your goals? 11 Encourage business owners and homeowners to utilize the available building inventory through: Private funding Grants National, state, and local preservation incentives Permit fee credits Local tax incentives Generate revenue from abandoned big box stores and vacant shopping centers 20

21 NC Rehab Code What are your goals? 12 Sustainability Supports transit Mitigates urban sprawl Guiding Principles Why the Rehab Code Works 13 #1 Now is not the time Burdensome code requirements Belk Dormitory, Davidson College 21

22 Guiding Principles Why the Rehab Code Works 14 #2 Building Safety Leave the building no less safe Guiding Principles Why the Rehab Code Works 15 #3 Predictability Choosing the appropriate scope of work determines: Code requirements Costs No surprises at the end 22

23 Guiding Principles Why the Rehab Code Works 16 #4 Proportionality Requirements are proportional to the work planned Guiding Principles Why the Rehab Code Works 17 #5 Related Link Rehab Code with Fire Prevention Code Establish minimum level of life safety 23

24 How the Rehab Code Works Mechanics of the NC Rehab Code 18 Choose the correct scope of work Repair Renovation Alteration Reconstruction Owner s A&E must propose and justify the correct scope of work How the Rehab Code Works 19 24

25 Decision Diagram 20 Project Planning Dos and Don ts Caution #1 21 Owner s team shouldn t tiptoe around the intent of the category requirements. Look at the Basic and Supplemental requirements Determine the direction of the project Where do you want to end up? 25

26 Project Planning Dos and Don'ts Caution #2 22 Can t create a violation of existing conditions by doing a renovation Existing requirement is fire prevention code Can make no less safe than it would be under this code Significant discrepancies should be addressed Project Planning Dos and Don ts Caution #3 23 Existing code violations must be remediated Can be addressed in conjunction with new renovation Past applicable codes can be used 26

27 Project Planning Solving Problems 24 Know your building Know the building s code history You might have to do some research. Past building codes are available at Change of Use Five Hazard Indices 25 Means of egress Height and Area Exposure of exterior walls Fire suppression Structural load 27

28 Change of Use Five Hazard Indices 26 Evaluates the old occupancy use against the new occupancy use Is the new use more or less hazardous in terms of life safety? Historic Buildings 27 Criteria based on historic preservationist wish list. Casts a wider historical net: National Register Local Register Contributing Historic Alexander House 28

29 Case Study DanceSport Carolina 28 Two story office building with brick façade, party walls, interior wooden staircase, and wooden floors. Previously a business occupancy. Type 5B construction. Non-sprinklered. Original construction date is unknown. Case Study DanceSport Carolina 29 Description of proposed work Removal of interior, nonload bearing walls (alteration) Renovate the interior staircase (repair) Install new floating dance floors (renovation) New ADA compliant toilet rooms (alteration) Install new ADA compliant ramp at entry and interior of the building (alteration) New lighting fixtures (renovation) Repair HVAC system (repair) 29

30 Case Study DanceSport Carolina 30 Scope of work is alteration and change of use. Challenges: Non-sprinklered assembly occupancy above the level of exit discharge. Mixed occupancy use, B and A3 on both floors. Accessibility regarding changes of elevation in existing floors. Case Study DanceSport Carolina 31 Strategy of code compliance What is driving the occupancy use classification? What do the hazard indices require for the new occupancy use? What can the owner live with? 30

31 Case Study DanceSport Carolina 32 Strategy of code compliance Non-separated, mixed occupancy based on B and A3. The A3 occupancy prevails for the following: Relative Use Group Hazard: equal Means of Egress: higher Height and Area: higher Exposure to Exterior walls: equal Fire Suppression: higher Structural Load: higher Case Study DanceSport Carolina 33 Owner made the decision to go with A3 nonseparated mixed use. Factors were: A3 and B separated occupancies limited his use of the building. Building was adaptable for exiting based on the A3 requirements. Sprinkler system gave him more flexibility in his building and how he wanted to use it. 31

32 Case Study Davidson College Akers Hall 34 Two story dormitory building Type 5B construction Non-sprinklered Original construction date ca Case Study Davidson College Akers Hall 35 Description of proposed demolition Removal of two existing interior enclosed stairways Removing 2 large areas of floor/ceiling to open the first floor level to the second floor level Remove areas of floor slab to provide for new structural elements Remove existing toilet and shower rooms Remove some interior walls 32

33 Case Study Davidson College Akers Hall 36 Description of proposed new alterations Add two new interior unenclosed stairways (alteration, new building element) Provide new accessible toilet and shower rooms (alteration) Provide 1 accessible sleeping room on first level (alteration) Provide area of assisted rescue exterior to the building (alteration) Provide NFPA 13 sprinkler system (alteration) Case Study Davidson College Akers Hall 37 Scope of work is alteration with new building elements New stairs must meet 2012 code for width vertical exit enclosures Newly created toilet/shower rooms must meet NCSBC chapter 11 and ANSI A

34 Case Study Davidson College Akers Hall 38 Strategy of code compliance Sprinkler system was included as part of the scope of work to allow the unenclosed stairs. 1.6j (Disproportionality) was met by adding Areas of assisted rescue Improved accessible route Accessible sleeping room NC Rehab Code The Intuitive Code 39 The code will tell you what to do Know the existing compliance challenges The code will help you decide The benefits of alteration The benefits & requirements of reconstruction 34

35 NC Rehab Code Additional case studies are on the web at 40 Sharon Towers Residential High Rise NC Rehab Code Rehab Code use in Mecklenburg County 41 Fiscal Year 2010 to Present Completed NCRC 563 reviews Business Use 233 Assembly Use 143 Total estimated $166.4 mil project costs Approximate % of 13.9% Rehab reviews to overall plan reviews 35

36 Code Availability 42 NC Rehab Code Common Sense Codified 43 Q & A 36

37 Preservation Tax Credits Incentives for Repair & Rehabilitation 3 preservation tax credits in NC INCOME-PRODUCING (commercial buildings) NON-INCOME-PRODUCING (owner-occupied residences) QUALIFIED INDUSTRIAL BUILDINGS & SITES (mill complexes, agricultural warehouses etc.) Asheville 37

38 Tax Credit dollar-for-dollar reduction in the amount of income tax owed, based on qualified rehabilitation expenditures Rutherfordton Who benefits? Owners & developers of properties listed in the National Register of Historic Places Lessees of properties listed in the National Register of Historic Places, depending on the lease terms Asheville 38

39 Who applies? property owner with assistance of consultant, architect, contractor, accountant, or tax advisor Asheville Who reviews & approves? State Historic Preservation Office National Park Service North Carolina Department of Revenue Internal Revenue Service Biltmore Village 39

40 What work qualifies? hard costs for repair & rehabilitation soft costs such as architects and consultant fees costs of acquisition, additions, site work,& personal property do not qualify Waynesville State income tax credit for owner-occupied residences private homes and residential condominiums reduces qualified rehabilitation expenditures by 30% Shelby 40

41 Federal income tax credit for commercial buildings commercial & industrial buildings, apartments, rental houses, inns, bed & breakfasts reduces qualified rehabilitation costs by 40% (20% federal + 20% state tax credits) North Wilkesboro State mill credit for industrial sites reduces qualified rehabilitation costs by 40% to 60% manufacturing facilities facilities ancillary to manufacturing at least 80% vacant for at least two years prior to rehab 20% federal tax credits % state tax credits minimum $3 million rehab expenditure 41

42 Qualified Rehabilitation work meets the Secretary of the Interior s Standards for Rehabilitation Morganton In Conclusion North Wilkesboro Consult with the State Historic Preservation Office and tax advisor before beginning repair or rehabilitation. 42

43 Jason Epley, AICP Private Investment Tax Credits Bargain Sales or Gift Sales Like Kind Exchange Loan Pools or Programs 43

44 Resources Cash Equity Donations of Property Price Negotiations Family / Friends Loans Ownership Interest Income Producing Non Income Producing Mill Tax Credits Housing Tax Credits 44

45 Salisbury Empire Hotel Appraised at $2M $1M charitable donation $1M purchase through a loan pool with 7 banks in Salisbury Rehab is expected to be $14M Mixed use Development Expected Tools: Public/Private Investment Façade Grants Historic Tax Credits New Markets Tax Credits Grants Lexington Vestal/Belk Building, Main Street $500,000 Like Kind Exchange (1031 exchange avoid capital gains) Prior to donation to flip property from corporation to individual donation Donation of Property to ULI Endangered Properties Preservation Services Fund Environmental Assessment Donation of Appraisal Sold with Preservation Covenants to retain facade Façade Grants (2) 1 to remove façade, 1 to restore facade CDBG Economic Development Grant Much of the construction done by owner 45

46 Local Banks Special Loan Pools or Programs Lower down payments Lower interest rates Longer term amortization (20+ years) Brownfields Monies Donations of Surplus Properties Municipal General Fund Municipal Service Districts Façade Grants Project Development Financing Synthetic TIFs Local Incentives CDBG Rural Center Main Street Solutions Fund 46

47 The Brownfields Property Reuse Act of 1997 allows the Department of Environment and Natural Resources (DENR) to work with prospective developers to put brownfield sites back into reuse. A prospective developer is any person who desires to buy or sell a brownfield property for the purpose of redeveloping it and who did not cause or contribute to the contamination at the property. Provisions of the Act limit the liability of the prospective developer, while ensuring the site is cleaned to the satisfaction of the DENR. Five Year Tax Property Tax Exclusion on New Value after Improvements Year 1: 90% Year 2: 75% Year 3: 50% Year 4: 30% Year 5: 10% 47

48 MSD G.S. 160A 535 through 544 A specifically defined geographical boundary that levies additional tax upon properties that benefit from certain improvements G.S. defines downtown revitalization among other allowable purposes Public/Private funds Typically $1,000 - $10,000 grants 1:1 match minimum Effective tool used throughout NC 48

49 Offers incentive directly to the developer. Established as a development grant from the local government(s), it a value typically less than the difference of anticipated property taxes based on redevelopment minus the original property taxes. Typically established for 3 5 year period. Example Downtown Smithfield Empty 1/2 acre of land - $50,000 tax value $0.78 = $390 Annual County Tax $0.57 = $285 Annual Town of Smithfield Tax $0.19 = $95 Annual DSDC MSD Tax $770 Total Annual Tax (Before Development) Proposed development - Construction/Development - $750,000 tax value $0.78 = $5,850 Annual County Tax $0.57 = $4,275 Annual Town of Smithfield Tax $0.19 = $1,425 Annual DSDC MSD Tax $11,550 Total Annual Tax (After Development) Downtown Smithfield Development Corporation Example 49

50 Under example from previous slide, owner Pays $11,550 annually in both County and Town Taxes Owner is then granted back annually $10,780 $11,550 New Tax - $770 Previous Tax $10,780 Annual Tax Grant 5 years = $53,900 Total Grant Downtown Smithfield Development Corporation Example Free or reduced tap fees Free or reduced service fees Designation of Local Historic Landmarks Owners eligible for 50% property tax deferral Maintain historical features Recapture penalties for violation Other 50

51 Community Development Block Grants NC Main Street Solutions Fund (Main Street only) NC Rural Center Building Reuse & Restoration Program Tier One and Tier Two Counties Must generate 1 new job per $8,000 in grant funds Up to $12,000 per job in certain NAICS Business Categories $480,000 max award w/3% local match Tier Three Counties Up to $8,000 per job created $240,000 max Award Must meet job creation commitments within 24 months of grant award Jobs retained for 6 months Buildings must be completely vacant for 3 month Liz Parham, CMSM, NC Commerce, Urban Development Jason Epley, AICP, Benchmark Robert Murphrey, NC Commerce, Urban Development Randy Hemann, Downtown Salisbury Diane Young, Downtown Concord Myrick Howard, PNC (photos) Main Street Program (photos) 51