Historic Solution

It can be very difficult and expensive to obtain a construction loan for a hotel these days. But there are ways to pull them off. One is by taking advantage of the Federal Historic Rehabilitation Tax Credit.The credit is an incentive from the National Park Service that commercial builders and developers can use in redeveloping structures that are at least 50 years old or are otherwise deemed historic. This route can reduce a developer’s required equity position to around 20 percent, according to John Campo, president of Campo Architects. It can also provide access to major urban markets, Campo said, listing as “target-rich environments” such cities as New York City, Chicago and Philadelphia. Many states will also match the federal credits. Campo pointed to a recent hotel deal in which historic tax credits paid for $26 million of the $55 million development cost.And the required development specifications are not as predetermined as many people think, he added. “There is misinformation out there that a building has to be restored to its original grandeur.” He is now working with Amarillo Hospitality L.L.C. to secure historic tax credits for the conversion of the Fisk Building, a 1920s office building in Downtown Amarillo, Texas, into a Courtyard by Marriott.For more on hard-to-finance deals, search this site for key words “Uncommon Paths,” which appeared in the May 2009 issue of CPN, as well as “Vetting the Lender” and “Condo Bet.”For more on hard-to-finance deals, visit  www.cpnonline.com/search and enter “Vetting the Lender” and “Condo Bet” in quotation marks.