Back to top
March 21, 2018
Historic

Part 1 of 3 - Strategies to help you through your historic renovation project

"New construction is simple. Renovations are exciting."

That is what the superintendent told me when I walked onto the site of my first historic renovation project at 116 South Michigan – at the Art Institute of Chicago. He taught me a lot of what I know today about historic work.

Since then, my career has taken me behind exhibits in the Lincoln Park Zoo, Shedd Aquarium and the Art Institute of Chicago, up into the original Sears tower on the west side, inside The Three Arts Club in the Gold Coast neighborhood and to an unparalleled view of the city skyline from The Robey before it was open to the public. These types of renovations expose history and offer a rare glimpse of stories untold or long forgotten. It's gratifying to take something that lost its use – was on the brink of falling down – and breathe new life and purpose back into it.

Shaw Learning Center tranformation
The Charles H. Shaw Technology and Learning Center before and after the renovation

When it's a landmarked building, you don't have the option of tearing it down and building new. You have no choice but to renovate. So, what can you do with a building that can't be torn down? Understanding the potential constraints and how to find creative solutions can help you direct the project to a successful completion. This is the first of three articles to help you get started with your historic renovation project and anticipate what to expect once you proceed.

Upfront documentation requirements

The National Register of Historic Places documents the interior and exterior items that are designated as part of the landmark. Before starting the design, it's important that your entire team learn about the history of the building so everyone understands what's negotiable and what's not. A landmark consultant will help with this research.

When designated a national landmark, city of Chicago landmark or within a historic district, projects require specific documentation to qualify for a tax credit. According to the US Department of the Interior Technical Preservation Services, the type of treatment varies based on importance in history, physical condition, proposed use and mandated code requirements. There are three phases of documentation that must be submitted to the National Park Service to receive tax benefits and certification.

  • Phase 1 documentation evaluates the significance of the project and applies for permits. It explains the vision for the renovation.
  • Phase 2 provides a description of the rehabilitation and outlines the plan to restore the building.
  • Phase 3 is the Request for Certification of Completed Work.

A copy of each must be submitted to both the State Historic Preservation Office (SHPO) and the National Park Service. You can submit the first two phases at the same time, but we typically recommend submitting the first phase ahead of the second because of the time involved.

Each project is unique and must be evaluated on its own merit. Once you have a handle on the documentation that is required, then you can start to evaluate costs.

The cost of neglect

Even when occupied, if maintenance has been deferred or inexpensive fixes have covered issues, there is a significant difference in the scope and cost of work. Buildings that sit vacant require a higher level of investigation before design begins.

Karcher Artspace Lofts transformation
The building that houses the Karcher Artspace Lofts sat vacant for more than 20 years.

When no one is in the building, it's not been climatized. Often roof drains are faulty. Weather and water have been running through the building and causing damage for years. Temperature and humidity deteriorate materials more rapidly. And some materials are no longer available or only through limited resources, making them costly to repair. Unknowns and structural repairs are challenging to anticipate. Because of this, it's important to include a contingency for what we don't know.

Opportunities for cost savings

We believe historic preservations make a good investment for building owners and for our communities. That's where historic tax credits come into play. They have allowed organizations to proceed with otherwise cost-prohibitive rehabilitations. While the cost of preparing a landmarked building for occupancy can exceed that of new construction, the tax benefits can equate to as much as 40 percent in gross equity to a real estate project.

Many have speculated how the changes in the federal historic preservation tax credit will impact historic renovation projects. According to Allen Johnson, partner with MacRostie Historic Advisors, the outlook remains very favorable.

"While we feared the worst during the run up to tax reform, we wound up with a historic credit in the tax code that we believe will be as strong and effective as it has been for the last 30 years.  This credit will continue to provide a vital subsidy for quality historic renovation projects in cities and towns across the country."

– Allen Johnson, MacRostie Historic Advisors

In addition to the tax credit, during the planning process your contractor can help find ways to save costs in the overall project budget. The premium for replicating the original materials, craftsmanship and installation often can be offset by alternative solutions for delivering the design intent within budget.

Creative negotiation

From my experience, the landmark agencies are open to reasonable negotiation if the overall intent is to replicate the original building. Your historic consultant and historic tax attorney are important players during the negotiation process with the National Park Service. They will help interpret the features that can be altered and to what extent, which ones must be restored and so on. Once you have that foundation of understanding, your contractor and architect can work together to find alternative solutions for achieving the historic requirements.

For example, the National Park Service may require wood frame windows be restored. Alternatively, to save costs, your team may propose installing wood frame windows on the first floor and energy-efficient aluminum frame windows that maintain the original profile on the second floor.

Historic window restoration
Before and after a window restoration

We have also found cost-effective options to match materials that are no longer made. Examples we have been able to get approved include: GFRC instead of terra cotta, aluminum windows in leu of wood and restoration of original murals and paint. The historic agencies will also consider alternative ideas for floorplans and are willing to review alternates for one area so a more substantial investment can be made in another space.

Success is in the details

Unlike new construction, there is no average square-foot cost with historic renovations. Each project is different, and the costs range considerably based on several variables. The more detailed you can be in your upfront analysis and planning, the better the results.

In Parts 2 and 3, I'll share some of the unique considerations of these projects that can impact the budget and schedule and how to navigate the process to a successful completion. If you are considering a historic renovation project and aren't sure where to begin, contact us. We can help.

About the Author

Mike Stensland

Mike StenslandSenior Vice President, Illinois

As senior vice president Mike leads our teams on hospitality, cultural, civic and retail projects. He is responsible for the overall profitability and growth of the markets he supports, as well as supporting and developing the teams in his group. Over his lengthy career at Pepper, Mike has been instrumental in expanding our geographic reach, developing new clients, and taking existing relationships to a new level. Through his leadership, Mike and his team have significantly grown our institutional and higher education markets. Mike earned his construction engineering degree from Iowa State University and his MBA from the Illinois Institute of Technology.