Incorporating Green Features in Historic Projects Growing in Popularity

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Tax Credit Advisor, February 2009: Incorporating green and sustainable building features and practices in historic preservation projects is becoming more popular. And there are a variety of steps and approaches that can be taken and still qualify a project for federal tax incentives, such as the historic rehabilitation tax credit, according to industry sources recently interviewed by the Tax Credit Advisor.

Moreover, some steps are underway to try to make it easier to include green building features in historic projects within the parameters and interpretations of the Secretary of the Interior’s Standards for Rehabilitation – required to obtain the historic tax credit.

John Leith-Tetrault, president of the National Trust Community Investment Corporation (NTCIC), an affiliate of the Washington, DC-based National Trust for Historic Preservation that syndicates federal and new markets tax credit (NMTC) projects, says he’s seen a general increase in the use of green building features in historic tax credit projects.

One example he points to is the current rehabilitation of an historic former mansion in Langley Park, MD – in suburban Washington, DC – by Casa de Maryland, a nonprofit Latino advocacy organization, into its new multicultural center and headquarters. The renovation of the McCormick-Goodhart Mansion will incorporate various green features, including a geothermal heating system. The project is receiving federal historic and new markets tax credits and state historic credits, with the tax credits syndicated by NTCIC, Enterprise Community Investment, and Bank of America, according to Casa de Maryland.

Specific Goal

NTCIC is also a community development entity (CDE) under the NMTC program, and received a new allocation of NMTCs in the program’s latest funding round. With its new allocation, Leith-Tetrault said, “we’ve committed best efforts to do 25% of our transactions that have at least a [LEED] Silver certification.” He noted most projects that NTCIC syndicates receive both federal historic and new markets credits. LEED, short for Leadership in Energy and Environmental Design, is the green building rating system administered by the U.S. Green Building Council.

Leith-Tetrault suggested that much of the impetus behind the growing “greening” of historic projects is that many corporate investors in historic and new markets tax credits also are interested in investing in federal energy tax credits (e.g., solar), which can often be received as well for the same project and boost the investor’s yield even further. In addition, he indicated many investors also want to “do their part” to address the global warming issue and promote energy efficiency. He anticipated the global warming issue will draw more attention under the new Obama Administration, and that the large energy bill expected to be written by Congress in 2009 may well have elements relating to energy improvements in historic buildings.

Washington, DC attorney Andrew Potts, a partner in the law firm of Nixon Peabody LLP, indicated that existing historic buildings already have a leg up in the current national debate favoring green building, energy efficiency, and sustainability. He noted someone who rehabilitates an existing historic building is engaged in a green and sustainable act because they are recycling the energy already embodied in the existing building and making use of the surrounding existing infrastructure, as opposed to the tremendous amount of energy expended in constructing a new building from scratch.

Potts also said there’s tremendous interest now in improving the operational efficiencies of existing and historic buildings. He noted President-elect Obama’s climate change agenda called for significant improvements in the operational efficiencies of existing buildings. “How to achieve those efficiencies, while also respecting the historic building, is very much on the minds of the historic rehab community,” said Potts.

Benefits from Green

Potts said the benefits to a developer/owner of incorporating green and sustainable building features and practices in an historic tax credit project include savings in long-term operating costs, and the availability of green building credits in some states, such as in New York. He also pointed out that there is an enhanced federal tax deduction available for energy-efficient commercial buildings, including historic properties.

Potts indicated that the challenge is to design historic tax credit projects in a way that the proposed green and sustainable building features will conform to the Secretary’s Standards and to the National Park Service’s interpretation of them. This is essential for a rehabilitation plan to win approval by the Park Service and the state historic preservation office (SHPO) to qualify for the historic tax credit. “It’s certainly possible to harmonize new sustainable technologies with the Secretary’s Standards,” said Potts, who pointed out some historic projects have even achieved LEED Platinum certification – the highest level possible. “But it needs to be easier.”

Potts noted some green strategies are readily compatible with many historic buildings, such as the installation of radiant heating.

Possible Approaches

Among green building features most likely to pass muster with historic reviewers are those to the internal mechanical systems of a building, which generally aren’t visible and won’t compromise the historic character and appearance of a building.

Washington, DC architect Carl Elefante, a principal and Director of Sustainable Design for Quinn Evans Architects, indicated that one opportunity is to make improvements to the energy-consuming systems in a building (e.g., lighting, mechanical, appliances). Another is to introduce renewable energy on-site to reduce the load on the grid. A third is to improve the performance of the building envelope (e.g., roof, walls, windows, doors), such as by super-insulating a building. He acknowledged, though, that the replacement of existing windows in an historic building with more energy-efficient windows can be touchy with the Park Service. The particular facts of a situation are critical to a sensible plan regarding windows, he suggested. For example, Elefante said his firm performed an energy modeling for the historic rehabilitation of the popular Eastern Market building on Capitol Hill in Washington, DC, and determined that the existing buildings – many in number – only accounted for about 3% of the total energy performance of the building, making it hard to argue in favor of window replacement on the grounds of greater energy efficiency. On the other hand, he continued, his firm did a study of the American Institute of Architects’ headquarters building, a modern-era building with ribbon windows in Washington, DC, and determined that the windows accounted for more than 50% of the building’s energy performance.

Elefante offered a thought to sponsors thinking of incorporating green features as they develop the design for an historic tax credit project and approach the Park Service and SHPO. “If you come in there with bad preservation, and try to justify it with good green, it’s still bad preservation. On the other hand, if you come in there with good preservation that is supported by green, not only will they approve it, they will welcome it.”

Elefante indicated that incorporating green and sustainable building features in an historic tax credit project can mean developing a design to achieve LEED certification, but doesn’t have to. Rather, a design can still have green features but which in totality are less extensive than LEED.

Work Toward Greater Coordination

In the meantime, new developments are occurring illustrating the heightened attention being paid in the historic preservation community to sustainable and green building features and practices and how to promote this further in historic buildings.

Emily Wadhams, Vice President for Public Policy at the National Trust for Historic Preservation (NTHP), reported that NTHP and the National Center for Preservation coordinated a retreat in November at which attendees from the preservation and environmental fields gathered to discuss the interaction between preservation and sustainability and to talk about current policies governing and affecting this. She said the consensus view was a need to “re-think” the existing policies, and noted that a task force was established to make recommendations for future actions and steps to accomplish this.

Separately, the Trust is involved in an ongoing initiative advocating changes to the LEED standards to make them more sensitive and friendly to historic rehabilitation projects.