Prestige Digs in Tuscaloosa
This Tuscaloosa tower caught the eye of a Memphis developer long before the Legislature passed a tax incentive for historic redevelopments.
Older buildings have classic design features that would be expensive to replicate today, according to real estate developer William Yandell.
Real estate developer William Yandell was having lunch with his son in downtown Tuscaloosa in 2009 when he spotted one of the city’s iconic landmarks, the 11-story,
classic revival skyscraper at the northwest corner of University Boulevard and Greensboro Avenue. Birmingham architect David O. Whilldin designed the structure, which was built for First National Bank in 1925.
Yandell, a principle at the Memphis-based Heritage Land & Development Co. LLC, a company known for redeveloping historic buildings, talked with business partner John Glassell about buying the Tuscaloosa office tower. In 2012, they announced the purchase of the building, which was by then home to PNC Bank.
“We like to work with old buildings,” says Yandell. “That’s just something my partner and I like to do is take old buildings and renovate them. This one has a lot of history about it, because it was the First National Bank building. It’s been here forever and helped produce commerce for the city. So it’s great to be able to take a building like this and revitalize it for the whole community.”
Today Yandell and Glassell have converted the old office tower into The Tower Apartments, which are set to open in January 2015. Yandell says the $14 million project to create 69 one-, two- and three-bedroom luxury apartments got an extra boost when, for the first time, the state Legislature passed the Historic Rehabilitation Tax Credit program in 2013, to aid those seeking to rehabilitate historic commercial and residential buildings in Alabama.
Alabama’s historic tax credit is 25 percent of eligible expenditures for certified historic commercial or residential buildings. Qualified buildings are those listed on the National Register of Historic Places or pre-1936 commercial buildings. In addition, project expenditures must be greater than 50 percent of the purchase price or $25,000, whichever is higher.
Conversely, the federal Historic Rehabilitation Tax Credit is 20 percent of qualified expenses and is limited to buildings used for businesses or “income-producing purposes” and certified by the National Park Service.
Alabama’s new tax credits could help provide a greater stimulus to the state’s economy and boost its tax coffers, says Beau Byrd, an attorney with Bradley Arant Boult Cummings LLP, whose firm worked with economic development groups, like the Downtown Mobile Alliance and REV Birmingham, to lobby for the state historic tax credits.
“The Legislature wanted to do something that was pro-business and pro-growth as far as helping development,” says Byrd. “You’re encouraging development rather than just bulldozing these great buildings that we have here, and giving developers the incentive to rehabilitate them and do something with them.”
But Yandell and Glassell set their sites on the PNC building long before passage of Alabama’s tax credits, and they turned to Harbert Realty Services to help them acquire it.
“We put the building under contract and had a due diligence period of several months to get in and survey the building and figure out how it could be renovated, because this would be a mixed use of offices and apartments,” says Dean Nix, a senior vice president at Harbert Realty.
“A lot of the upper floors were vacant, and no renovation had taken place on those upper floors,” he says.
To help navigate Alabama’s newly minted historic tax credit rules, Yandell and Glassell sought advice from New Orleans attorney Trey Parker, at Butler Snow LLP, who specializes in tax incentives and public finance. Parker says state historic tax credits have already helped transform older neighborhoods and cities in both Louisiana and Mississippi. In fact, 35 states now have historic tax credits.
“It’s a community service benefit when developers come to locations that have a number of old and rundown historic buildings that are often centrally located in a downtown area,” Parker says. “They can really depress the whole downtown area just by their existence. The rehabilitation of the buildings can serve to bring not only the individual project back to life but will also stimulate development, in not only the immediate area but throughout the town.”
Parker says that developers often consult with expert architects who have experience working with historic buildings. The experts can research old photographs and drawings to help developers come up with a plan for preserving a historic building’s original character or architectural features. The plans are usually submitted to a state historical preservation agency for approval.
But David Schneider, of Schneider Historic Preservation LLC, in Anniston, says he worries that Alabama’s historical tax credits could run out before a lot of developers will be able to apply for them. That is because the Legislature capped the historic tax credits at $20 million a year. Due to the large number of applicants, the Alabama Historical Commission held a lottery to determine which projects would get priority for the tax credits this year. The former First National Bank of Tuscaloosa building was one of the 10 projects selected. The others included the Jefferson Davis Hotel in Montgomery, the Edwards Brothers Furniture Company Building in Mobile and the Redmont Hotel and the former Federal Reserve Bank building in Birmingham.
Another concern, says Schneider, is that the legislation includes a sunset rule that ends the tax credits in 2015, unless the Legislature extends the program.
“It’s very complicated to put deals together and get them financed and get them in construction,” says Schneider. “It can take up to a year to 18 months to even plan a project and get it ready for someone to finance it.”
But Byrd says the Legislature included the limits to test the new program. “They wanted to see the impact of the program and see if there was any negative impact on the revenues for the state,” he says.
Inside The Tower, the new apartments will feature high ceilings, with exposed ductwork, stainless steel appliances, designer cabinetry and quartz countertops in the bathrooms and kitchens. From the building’s top floors, one can see the Black Warrior River in the distance.
Yandell says the tax credits will allow him to spend more to restore many of the building’s original features, such as the mosaic tile, pine wood and concrete flooring and the marble walls on the building’s lower floors.
“We kept all of the old floors, and that’s very expensive to do,” says Yandell. “But one thing that having the tax credits is going to help us to do is keep things like that, instead of putting down plank floors. It enables you to spend the extra money to keep some of those things intact.”
Gwen Peters, director of marketing and training for Arlington Properties, says prospective buyers have come for hard hat tours to see the apartments, which will rent from $895 to around $1,800 a month.
PNC Bank has remained on the first floor of the apartment building. A law office also has remained in the building.
“We’ve received an overwhelming response from people who are interested in calling The Tower home,” says Peters. “We’re receiving calls from local professionals and students as well, but mainly professionals.”
Yandell says he is proud that The Tower Apartments are among other new developments coming to downtown Tuscaloosa, including the new $31 million Embassy Suites Hotel nearby at 2410 University Blvd.
“I hope that this will be a big catalyst for the downtown area,” he says, “and I hope that we’ve provided a good place for the area.”
Gail Allyn Short is a freelance writer based in Birmingham. Art Meripol is a freelance photographer based in Hoover.