Iconic Chicago Buildings Are Now the Hippest Hotels in Town

Credit: Chicago Athletic Association

In Chicago, everyone is invited to be part of the club.

The first half of 2015 has seen a rash of new boutique hotels open in iconic Chicago buildings that were purpose-built to be exclusive to members and account holders only. Today, you don’t have to be a member to book a room at the Chicago Athletic Club Hotel, the Hampton Inn in the Chicago Motor Club, or Virgin’s first hotel in the Old Dearborn Bank Building.

Accommodating the 21^st Century Traveler in 19^th and Early-20^th Century Buildings

These historic building conversions are part of an international trend towards boutique hotels. As the industry heats up with the economic growth experienced over the last few years, hoteliers are focusing on a new strategy to accommodate a new type of traveler. These consumers prefer authenticity to consistency. They want to Instagram photos of architectural detail and eat among locals in hip and trendy restaurants. And what better marketing tool for hotels than historic buildings that provide a sense of place to their guest?

Chicago hotels are also benefiting from growth in the manufacturing and high-tech sectors and the business travelers attached to them. According to the “World Business Chicago” 2014 Annual Report, the last year saw 21,700 new jobs bolstered by companies like ADM, Braintree, Wanda Group and Yelp, and included $6.8 million in investment.

Tourism is, of course, a major factor in the success of the accommodations sector. According to some estimates, 60 percent of hotel developments have taken place in the north Loop/Michigan Avenue, where millions of tourists visit this area each year drawn by its proximity to Chicago’s Gold Coast and Magnificent Mile shopping area.

Financial Incentives for Hotel Conversions

According to a March 2014 New York Times article, the National Park Service estimates that 4.5 percent of all federal historic tax credits (HTCS) are used for hotel conversions in historic buildings. In Chicago, this 20 percent tax credit can be coupled with the Class “L” Property Tax Incentive that reduces assessment levels for 12 years. (In many other states, the federal HTC can be paired with state HTC programs.)

These financial incentives also provide inherent benefits to the community at-large. In most cases, historic tax credits make these hotel projects feasible for the developer and encourage sensitive preservation of historic landmarks in cities across the country. Hotels, in particular, also provide a mix of economic benefits that include generating substantial sales, room and property taxes and creating direct and indirect jobs.

The Value of Historic Consulting

MacRostie Historic Advisors (MHA) provided historic consulting to many of the most talked-about Chicago hotel conversions in 2015. Among the services provided were:

• historic research that helped to provide the project teams with photos and documents that allowed for sensitive restorations of architectural detail,
• federal historic rehabilitation certifications for these hotels that allows for the projects to obtain the federal HTC,
• and Class “L” eligibility applications that allows for the reduction in property assessment values.

Our MHA Midwest team, based in Chicago, worked closely with our partners to ensure the success of these projects that relied heavily on historic tax credits. 

The Chicago Athletic Association Hotel

12 S. Michigan Ave.

Credit: Nick Fochtman / Curbed Chicago / Chicago Athletic Association Hotel

This Venetian-Gothic 1893 Henry Ives Cobb creation was home to a private athletic club for men (and in the late 20^th century, women) of the Chicago elite until 2007. AJ Capital Partners and Commune Hotels & Resorts took ownership in 2012 and transformed the intricately detailed structure into a 241-room hotel that opened in May. The rehabilitation restored bas-relief woodcarving elements, 19^th century stained glass, ornate marble staircases and the terra cotta façade.

Virgin Hotel (OldDearborn Bank Building)

203 N. Wabash Ave.

Credit: Nick Fochtman / Curbed Chicago / Virgin Hotel

Completed in 1928, architects Rapp and Rapp designed the neoclassical structure to be an office building for the Old Dearborn Bank. Despite the unfortunate timing of opening just before the Great Depression, the 27-story building has survived the greater part of a century and was acquired in 2011 Virgin Hotels (Virgin Group) as the company’s first hotel venture. This contemporary 250-room hotel retains the 1920s oak cigar bar, brass elevator doors in the lobby, and the original tiled ceiling. The crown jewel in the project is undoubtedly the reinstatement of the two-story lobby, the original banking hall that had been divided into two floors in the 1950s to accommodate more office space. Following rehabilitation guidelines that are intrinsic to the historic tax credit process, Virgin was able to creatively weave together modern touches with historic details to create a truly spectacular experience.

The Chicago Motor Club Hampton Inn

68 E. Wacker Place

Credit: chicagoarchitecture.org

Before the days of AAA, the Chicago Motor Club was a haven for early motorists. This 1928 Art Deco gem was designed by Holabird & Root, and the 17-story building now houses 143 rooms. A great deal of attention was paid the historic aspects of the building, including details in the three-story lobby such as the original John Warner Norton 29 foot wide road map. A 1928 Model A was even installed on a mezzanine as a nod to the year the building opened. Rehabilitation included careful restoration and repair of exterior terra cotta, stone, and limestone. The architecture team at Hartshorne Plunkard created an exquisite LEED certified design throughout that preserved the historic features of the building.

It’s a decidedly good time to be a traveler in Chicago. It is more about the destination than the journey for once, and that is because developers see the value in historic structures, made even more valuable by the generous incentives of historic rehabilitation tax credits.

Four Outstanding Chicago Rehabs Receive Awards

We are pleased to announce that four of our projects from the MHA Midwest office were selected as recipients of prestigious Chicago preservation awards last week. All of these projects utilized the federal historic tax credit as well as city-offered programs to make their rehabilitations a reality.

Without further ado, the winners are...

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Hampton Inn at the Chicago Motor Club

Chicago Art Deco Society | 2015 Joseph Loundy Preservation Award

On Thursday, June 18, we, along with other members of the project team, including owners MB Real Estate, were awarded Chicago Art Deco Society's first-ever Joseph Loundy Preservation Award. Named for the former president of the Society, this award commends the restoration work undertaken to preserve one of the finest examples of Art Deco architecture in Chicago. 

The Chicago Motor Club was built in 1928 at 68 E. Wacker Place, and was an early automobile clubhouse for motorists in the Windy City who could find road maps and travel maps in this pre-AAA era. Standing 15 stories tall, notable exterior features of the building include it's slender footprint, limestone, terra-cotta bas relief panels, a steel frame awning with glass panels that allow you to see enjoy the fast moving lines of the automobile temple when standing at the base of the building, and the iconic Chicago Motor Club circular emblem of the letter "C" surrounding a red star. Inside, the lobby features an original 29 foot, two-story United States road map mural created by artist John Warner Norton, more bas relief detail, green and black terrazzo floors, and shimmering silver accents throughout.

The federal historic rehabilitation tax credit and the Chicago Class L Property Tax Reduction Incentive were used for this project.

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The Old Dearborn Bank Building / Virgin Hotel

Commission of Chicago Landmarks | 2015 Chicago Landmark Award for Preservation Excellence

The Chicago Landmark Award for Preservation Excellence is given to individual Chicago Landmarks or to buildings within Chicago Landmark Districts. The Old Dearborn Bank Building, now the first Virgin Hotel, is a distinguished recipient of this year's award class. 

The John Buck Company and Virgin Hotels North America led a spectacular rehabilitation and adaptive reuse effort to convert this 1920s bank and office building into a modern hotel. Modern as it may be, the historic touches that were restored are the real show-stoppers. Terra cotta exterior features were repaired while the lobby harkens back to the original banking hall splendor that includes restored entry frame ornamentation, marble walls, terrazzo flooring, an original cigar bar and a mail chute in the first floor lobby. For all public spaces, coffered ornate ceilings and ornamental elevator elements were restored. In addition, sensitive treatments for new sprinkler and mechanical systems and the installation of a "green" roof exemplified how modern techniques fit in with preservation projects.

The federal historic rehabilitation tax credit and the Chicago Class L Property Tax Reduction Incentive were used for this project.

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Steger Building

Commission of Chicago Landmarks | 2015 Chicago Landmark Award for Preservation Excellence

Another winner of a Chicago Landmark Award for Preservation Excellence is the Steger Building on East Jackson Boulevard, owned by CA Student Living. This 1909 Neoclassical Chicago skyscraper was originally built as the headquarters for Steger & Sons Piano Manufacturing Company and was part of the city's historic "Music Row." 

Under the new ownerships, the building was designated as a Chicago Landmark and has been adapted to house college students and also has retail space, but still retains many of its defining Classical features. The three-story base has intricate terra cotta details while the lobby is ornately embellished with decorative plaster and the walls feature terra cotta garlands, swags, medallions, rosettes, and foliated bands.

The federal historic rehabilitation tax credit and the Chicago permit fee waiver program were used for this project.

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The Inland Steel Building

Commission of Chicago Landmarks | 2015 Chicago Landmark Award for Preservation Excellence

The only mid-century building on our list of award winners, the Inland Steel Building was built in 1958 with an innovative column-free high-rise design. It was the first skyscraper built in the Chicago Loop after the Great Depression.

Capital Properties received this award for the outstanding rehabilitation they undertook, primarily on the interior spaces and most notably the historic lobby. Energy efficiency upgrades and a new vegetative "green" roof also contributed to the success of the rehabilitation that led to a Class A rating for the building, an increase in tenant capacity, and energy reductions of about 65% on a typical floor.

The federal historic rehabilitation tax credit and the Chicago Class L Property Tax Reduction Incentive were used for this project.

SpencerBANK Wins 2015 Silver Hammer Award For Rehab of Worcester Fire Alarm & Telegraph Building

SpencerBANK in Worchester, MA (Formerly the Worchester Fire Alarm and Telegraph Building, c. 1925)

MHA congratulates our client SpencerBANK as the winner of a 2015 Silver Hammer Award from the Worcester Chamber of Commerce for its rehabilitation of the former Worcester Fire Alarm and Telegraph Building on Park Avenue in Worcester, MA. The former Fire Alarm and Telegraph Building is listed on the National Register of Historic Places and had been listed on Preservation Worcester’s “Most Endangered Structures” list.

SpencerBANK renovated the historic structure to create its new Elm Park branch location, along with a community meeting room open to the public. MHA helped the bank navigate the state and federal historic tax credit processes, working closely with project architect Gregory J. O’Connor Associates  and contractor F. W. Madigan Company on this important project.

“I think this is a great example of how a small project can be impactful,” stated Albert Rex,  Partner and Director of MHA Northeast. “The combination of its use as a bank along with public meeting space will bring many people to this long vacant building."

The Fire Alarm and Telegraph Building was constructed in 1925 for the Worcester Fire Department. Local architect, Lucius W. Briggs, designed the picturesque English Tudor Revival Style building with a domestic appearance to fit within the surrounding Elm Park's 60 acres of parkland. Briggs was a prominent New England architect whose local works included Memorial Auditorium, Worcester Boys Trade School, South High School, and the Worcester Polytechnic Institute. The building was, according to Briggs' obituary, a special favorite of his and one of the best examples of his work in the city. It was said that he took "immense joy" from the project, designing and supervising every minute detail.

The original building design, completed for $126,000, included a garage, machine shop, coal room, and boiler room on the first floor, and an operating room, battery room, office, and dormitory on the second floor. The building was later converted to the Grounds, Equipment & Repairs Building for the Worcester School Department at an unknown date.

The Bank’s new Elm Park branch features a contemporary, cutting-edge banking environment that maintains the historic integrity of the building’s façade, including the retention of the main facade's historic steel windows. In addition, SpencerBANK constructed a state-of-the-art community meeting room and activity center. Overseen by Preservation Worcester, the room is available to organizations that promote the public use, preservation and stewardship of Elm Park.

Silver Hammer Awards, given by the Chamber at its Annual Awards Ceremony, acknowledge construction or rehabilitation projects that have an extraordinary visual and aesthetic impact on our physical landscape and that have brought new life to some of the region’s most historic assets.

“SpencerBANK is honored to accept this Silver Hammer Award. It symbolizes a unique community effort to restore this historic structure and provide a forum for the preservation and enjoyment of Elm Park. Our new Elm Park branch is up and running and we’re very excited to share it with the community,” said SpencerBANK President & CEO K. Michael Robbins.

post by Megan Lydon

New Georgia Law Expands State Historic Tax Credit Program

The Briarcliff Summit Apartments in Atlanta, which opened in late 2014, used Historic Rehabilitation Tax Credits to convert this former hotel into affordable housing.  

Gov. Nathan Deal signed Georgia House Bill 308 into law on May 12, which makes significant changes to the Georgia historic tax credit (HTC) program. The new law will have a positive impact on developers of certified historic properties and includes changes to the definition of a certified historic structure, the distribution of claimed but unused credits, and a substantial increase in the maximum credit allowed for certified non-residential structures. In addition, a unique provision is made for large developments that doubles the total tax credit if a substantial number of jobs are created. 

Here is a review of what these changes mean for historic building development in Georgia starting January 1, 2016.

‘Certified structure’ definition now includes reference to the National Register of Historic Places.

Previously, the code read that a ‘certified structure’ was defined only as a historic building or structure individually listed in the Georgia Register of Historic Places or certified by the Department of Natural Resources as contributing to the historic significance of a Georgia Register Historic District. This changes little in the program since any building listed in the National Register of Historic Places is automatically placed in the Georgia Register but the added language streamlines closings since it allows federal certifications to document eligibility for the state program.

The maximum credit for non-residential certified structures has increased from $300,000 annually to $5 million.

This significant increase in the project cap means that projects up to $20 million in qualified rehabilitations expenditures (QREs) will now be able to take full advantage of the HTC. Currently, any project over $1.2 million in QREs sees only a partial incentive, which is reduced as the size of the project grows. The change brings Georgia to a competitive level with other southeastern states and should entice more investment on larger scale historic projects.

The law does include a $25 million annual cap for the program, where projects receiving more than $300,000 in credit count toward the program cap.

Where a project creates 200 or more full-time, permanent jobs or $5 million in annual payroll, the project is eligible for credits up to $10 million for any individual certified structure.

This change aims to incentivize the preservation of large-scale historic properties that function as employment centers. This seemingly favors large retail, hospitality or new corporate office uses but only time will tell if this change is truly effective in incentivizing historic rehabilitations and job creation throughout the state.

Previously claimed but unused HTCs may be transferred or sold in whole or in part to another Georgia taxpayer.

This is great news for developers who want to add equity to their projects. Since the law makes it easier to transfer the tax credits generated from the rehabilitation, those credits should be more valuable to tax credit investors and provide more capital for the developer. 

The program is capped at $25 million per year for larger-scale projects.

While this means that just a few large rehabilitation projects could exhaust the cap in each calendar year, any project not funded because of the annual cap will receive priority in the following year. So, plan to submit as early as possible to get high in the pecking order. While we would prefer to have an uncapped program, the improvements in the law provide far greater benefit for historic building development than we have seen over the past 12 years of the existing program.   

The definition of ‘target area’ remains the same, meaning a qualified census tract under Section 42 of the IRS Code of 1986.

Under section 42(d)(5)(c) of the Code, a Qualified Census Tract is a census tract (or equivalent geographic area defined by the Bureau of the Census) in which at least 50% of households have an income less than 60% of the adjusted median gross income (AMGI). The intent of the program is to spur redevelopment in the areas that most need investment.

It’s a whole new ballgame for developers of historic properties in Georgia come January 1. These incentives could be good news for the future numerous large-scale historic properties in Atlanta like the Medical Arts Building on Peachtree Street built in 1927 and abandoned in 1995 after a four-alarm fire, or the mid-century modern Atlanta Constitution building built in 1947 at the corner of Alabama Street and Forsyth Street, currently up for sale. The revisions, however, are designed for economic growth that will certainly have an impact on a number of communities throughout the state and stimulate interest in historic buildings.