Steel House Lofts after renovation. Photo courtesy of the San Antonio Conservation Society.

Combining local and federal tax credits for historic renovation can knock off 45% of tax costs for projects in San Antonio.

“If you can’t figure out how to make this deal work, then you’re not smart enough to be in the real estate business,” said Donovan Rypkema, a nationally known urbanist and principal behind Washington D.C.-based real estate and economic consulting firm PlaceEconomics.

His comment garnered a slight gasp and some chuckles from many attendees of Centro San Antonio‘s latest event in its Urban Renaissance Luncheon Series. As he told City Council members last month during a short presentation, public and private entities in San Antonio need to up their game and start increasing the use of local and federal tax credits – especially to renovate downtown historic structures into housing projects.

(Read more: Making Historic Preservation More Economical)

The Office of Historic Preservation (OHP) commissioned PlaceEconomics to carry out an in-depth, economic and demographic study of San Antonio’s historic districts. The results of the approximately $45,000 study were released Wednesday in a report, “Historic Preservation: Essential to the Economy and Quality of Life in San Antonio.”

Click here to download the full report – which is easily digestible with graphs, maps, and a clear outline of how to measure the contributions of historic preservation.

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The report dives into the economic impact of heritage tourism (which provides jobs for more than 112,000 San Antonians – not including the 1,862 jobs per year from historic construction projects), property tax fluctuations and volatility, household demographics, and more.

“(The report’s findings are) going to be discussed throughout the year. There’s a lot of information and a lot of it is applicable to a lot different situations,” said OHP Director Shanon Shea Miller “In some cases it will be other initiatives that the City is working on where questions will come up about historic districts and what they mean for the city and we’ll be able to use this.”

Initiatives like the Comprehensive Plan for 2040 and the Mayor’s Task Force for Dynamic and Diverse Neighborhoods, and SA2020.

“Historic districts really are a mirror of the city,” she said. “That economic integration that people are really seeking we’re already seeing in historic districts.”

Office of Historic Preservation Director Shanon Shea Miller speaks at the Centro San Antonio luncheon on Historic Preservation. Photo by Iris Dimmick.
Office of Historic Preservation Director Shanon Shea Miller speaks at the Centro San Antonio luncheon on Historic Preservation. Photo by Iris Dimmick.

Indeed, Rypkema said, historic districts in San Antonio have what the task force is looking for; diversity in residents’ income, housing options (density), and ethnicity. Historic districts also have the attributes that urbanites are looking for; high marks in walkability, bike-friendly streets, lower than average commute times, and closer proximity to schools.

“There’s a wide range of humans beings and pocket books that can afford to live in historic districts,” he said. “It’s not just rich neighborhoods. I think one of the key findings was the understanding of the misunderstanding of the character of historic districts in San Antonio.”

People assume that King William Historic District is where the rich people live. Sure, there is a sizable percentage people that have incomes of more than $150,000 per year. But a larger percentage makes less than $25,000 per year.

PlaceEconomics principal Donovan Rypkema speaks with attendees of the Centro San Antonio luncheon on historic preservation. Photo by Iris Dimmick.
PlaceEconomics principal Donovan Rypkema speaks with attendees of the Centro San Antonio luncheon on historic preservation. Photo by Iris Dimmick.

“I can’t identify a single sustained success story in downtown revitalization that didn’t use historic resources as part of that strategy,” he said. “This is no time to abandon the decade of downtown. This is just getting started.”

Rypkema’s address was followed by the owner of a prime case study for historic renovation, Dennis McDaniel of the Steel House Lofts, which recently reverted back to its original plan to put the 67 rental units up for sale as condos.

“It’s not for the faint of heart,” McDaniel said of his experience working with the City. When he purchased the Peden Iron & Steel Building in 2006 and began working on the project, there were no infill development workshopspolicy manuals, or incentives. “I may have been a little early in the game.”

Historic renovation is really not for folks looking to make a quick buck. The “buck,” or return on investment, is earned more slowly and in some ways that are harder to quantify – how does one quantify the charm of keeping an 1800s elevator motors and pulley wheels on display for residents and visitors? How much is that history or culture really “worth?”

“In general you have to realize that timing and delays are not the City’s main concern,” he said. Those are for developers. “If I knew then what I know now, I never would have done this. It was the most difficult project I ever did. And I’m so glad that I didn’t know then what I know now or I never would have done it. I’m really pleased and proud of the way it turned out.”

Steel House Lofts owner Dennis McDaniel speaks at the Centro San Antonio luncheon on historic preservation. Photo by Iris Dimmick.
Steel House Lofts owner Dennis McDaniel speaks at the Centro San Antonio luncheon on historic preservation. Photo by Iris Dimmick.

Someone has to go first in the development world, to test the waters.

“We’re more practiced now,” said Miller. “We weren’t seeing projects like that at the level that we are now. When Dennis first came to the City, the Center City Development Office maybe existed on paper but it wasn’t what it is today and we didn’t have the CCHIP and some of the codified incentives that we now have today. The process now is more defined.

“The tax credit is a game changer,” she said. “If you have the potential to get a 45% credit when you combine the two (local and federal tax credits), it’s much harder to walk away from.”

U.S. Rep. Lloyd Doggett made remarks about another game changer earlier in the program, the Mission Protection Overlay Districts that better preserve the environment, settings and views of the four Spanish colonial missions has strengthened San Antonio’s bid to win World Heritage Site recognition. He said he was confident from his talks with leaders in Washington D.C. that the designation in on the right track.

The United States has withheld payment of dues to UNESCO (United Nations Educational Scientific and Cultural Organization) for two years based on a law prohibiting funding of any United Nations branch admitting Palestine as a full member. Congressional efforts are underway to change this.

Office of Historic Preservation Director Shanon Shea Miller, Steel House Lofts owner Dennis McDaniel, The DeBerry Group President Trish DeBerry, PlaceEconomics principal Donovan Rypkema, and Centro San Antonio President and CEO Pat DiGiovanni pose for a photo after the luncheon. Photo by Iris Dimmick.
Office of Historic Preservation Director Shanon Shea Miller, Steel House Lofts owner Dennis McDaniel, The DeBerry Group President Trish DeBerry, PlaceEconomics principal Donovan Rypkema, and Centro San Antonio President and CEO Pat DiGiovanni pose for a photo after the luncheon. Photo by Iris Dimmick.

*Featured/top image: Steel House Lofts after renovation. Photo courtesy of the San Antonio Conservation Society.

Related Stories:

Teaching Realtors How to Sell History

Steel House Lofts Going Condo

Making Historic Preservation More Economical

City Offers Workshop on Texas Historic Preservation Tax Credit

Redefining Preservation in a City on the Rise

Artists and Developers Eye Historic Buildings, Imagine Possibilities

Iris Dimmick

Iris Dimmick

Senior Reporter Iris Dimmick covers public policy pertaining to social issues, ranging from affordable housing and economic disparity to policing reform and workforce development. Contact her at iris@sareport.org