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What landmarks and tax credits mean to KeyArena and OVG’s plan

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The role of historical preservation in the potential arena renovation

MOHAI Seattle

Landmark designation and historic preservation play a vital role in the ongoing Seattle arena saga. Expected status for the KeyArena roof and exterior dictated the two responses to the city's request for proposal for a prospective renovation project. It could also help fund the renovation.

So, what is the landmark process, in what ways could KeyArena qualify, and just how can history help pay for a new arena on the site?

Remember the past

Like national and state environmental protection acts that ask governments and developers to consider the environment in their decision-making on construction projects, historic preservation asks them to consider the cultural significance of existing locations intended to be redeveloped.

Seattle's preservation is managed by the city's Department of Neighborhoods. In the case of KeyArena, specifically by the Landmarks Preservation Board, an 11-member board appointed by the mayor and confirmed by the city council. The board consists of at least two architects, two historians, an urban planning specialist, a structural engineer, someone in real estate management, someone in finance, and three others from any kind of background. Each member serves for 3 years.

Designation process

To be designated a historic landmark, a building, object, or site goes through a four-step process: nomination, designation determination, controls and incentives, and a designating ordinance.

Nomination and designation

The property must be at least 25 years old to be nominated. As part of state environmental law, landmark consideration of a location over 50 years old is highly recommended for a redevelopment project to determine if, and to what degree, environmental review is needed. KeyArena and the six other nominated buildings at Seattle Center fall under this older timeframe.

A location can be nominated by any person or group by submitting an application to the Historic Preservation Office. If the application checks out, the board holds a public meeting to consider and approve the nomination in part or whole.

The Landmarks Preservation Board is scheduled to meet on Wednesday, June 21st at 3:30pm to discuss and potentially approve the KeyArena nomination.

If a nomination is approved, another public meeting is scheduled within 30 to 60 days to consider designation. The nominated property must "possess integrity or the ability to convey its significance" and meet at least one of the following standards to be designated:

a) It is the location of, or is associated in a significant way with, a historic event with a significant effect upon the community, City, state, or nation; or

b) It is associated in a significant way with the life of a person important in the history of the City, state, or nation; or

c) It is associated in a significant way with a significant aspect of the cultural, political, or economic heritage of the community, City, state or nation; or

d) It embodies the distinctive visible characteristics of an architectural style, or period, or a method of construction; or

e) It is an outstanding work of a designer or builder; or

f) Because of its prominence of spatial location, contrasts of siting, age, or scale, it is an easily identifiable visual feature of its neighborhood or the city and contributes to the distinctive quality or identity of such neighborhood or the City.

Despite some audible scoffing from many who perhaps don’t think of the building or its distinctive roof as iconic amongst the Seattle landscape, the former Washington State Pavilion, Washington State Coliseum, and Seattle Center Coliseum actually qualifies under all of those standards per a 2013 landmark study.

Controls & Incentives and designating ordinance

When designation is approved, the board submits a report to the property owner and negotiates a controls and incentives agreement. This determines what can or cannot be changed about the property and the incentives to preserve it.

Contrary to popular misconception, a historic landmark can be altered. Landmark status helps to manage any changes not prevent them.

The sides have up to 75 days from the report to come to an agreement. Within 30 days after that, the board reviews the agreement to approve it. Then, it's off the see the council for the legislation process and designation ordinance enacted into law.

Any changes to a property nominated and/or designated for landmark status require a Certificate of Approval, which has its own process. Appeals can happen at nearly every step along the way of the landmark process. It's also possible for a nominated building, object, or site to be denied nomination or designation, which automatically imposes a 5-year moratorium until the property can be nominated again.

History gets you money

In the financial structure of bid winner Oak View Group’s renovation proposal, they plan to use a federal historic rehabilitation tax credit to aid in financing their project.

OVG is said to have applied for $70 million in tax incentives, though their proposal financial paperwork speaks to a use of $50 million in tax credit toward the renovation.

The credit is jointly offered by the U.S. Department of the Interior through the National Park Service, and the U.S. Department of the Treasury, naturally through the Internal Revenue Service. To qualify, a building, object, or site must be placed on the National Register of Historic Places or certified by the Secretary of the Interior as part of a designated historic district.

MSG

The tactic was previously employed by one of OVG’s investors, the Madison Square Garden Company. It received the tax incentive on its 2012-14 renovation of The Forum in Inglewood, CA into a premier music-centric venue.

NFL: Inglewood Views Kirby Lee-USA TODAY Sports

The former home of the Los Angeles Lakers and Kings was purchased by MSG in 2012 from a church that used it for Sunday services from 2000 to 2009 while continuing to host music concerts. It was listed on the National Register on September 24, 2014. The Forum renovation is seen as a model of sports & entertainment arena preservation.

Historic Resources Group, the consultant that aided that effort, is working with OVG on the push for KeyArena preservation.

The concept of tax credits for an arena came MSG’s way when plans were discussed in the mid-2000s about moving New York City’s Madison Square Garden a block west to free up Penn Station and Penn Plaza for other development. Efforts to displace the Garden have swirled for nearly two decades, specifically in relation to a transit hub development called Moynihan Station. The building the Garden was eyed to moved to, the James A. Farley Building, offered the credits as incentive for the relocation. Though, there were concerns at the time the renovation wouldn’t qualify with NPS.

Interestingly, it was the Garden that kicked off the wide-scale historic preservation movement.

The modern Madison Square Garden was built in the late 1960s by razing the above-ground portions of the original Pennsylvania Station, the historic railway station opened in 1910. The below-ground areas were renovated into what we now know as Penn Station.

Preservationists were outraged at the sheer disregard for history and the iconic architecture in favor of an extensive office, hotel, and entertainment plaza redevelopment. This kicked off new NYC landmarks preservation policies that would eventually inspire and influence the country in the passage of the National Historic Preservation Act of 1966.

National Register process

In its KeyArena proposal, OVG included a letter to Michael Houser, Washington state’s official architectural historian, inquiring about the possibility of adding the facility to the National Register. Houser spoke with the NPS and determined that the site is, indeed, eligible for consideration.

“Despite changes to the building that occurred after the Fair, we have determined that the building is still eligible under criteria “A” for its direct connection to 1961 [sic] Century 21 World’s Fair. This building, along with the Space Needle, was an iconic structure of the fair and retains enough character defining features to convey its history as a fair structure.”

Criterion A evaluates the building by an "event.” “The property must make a contribution to the major pattern of American history.” In this case, the Century 21 Exposition, more commonly referred to as the 1962 World’s Fair.

Similar to the city’s landmark process, a nomination application for the National Register must be filed with the State Historic Preservation Office. After an application review, this is sent to the state’s historic review commission, which can recommend the property to the State Historic Preservation Officer. It’s this officer who officially nominates a property with the Keeper of the National Register. The National Park Service then approves or denies a nomination.

Tax credit

The tax credit OVG is seeking, which would technically be awarded to the city as the property owner if approved, is a 20% historic rehabilitation tax credit that’s been available since 1986. Twenty percent of the cost of the rehabilitation can be credited towards any federal taxes collected for a given year.

Once a property is on the National Register or certified as a historic structure, the rehabilitation must also be certified. A description of the rehabilitation must be filed with the SHPO, reviewed, and then forwarded to NPS to certify per the “Secretary of the Interior’s Standards for Rehabilitation.”

Once the arena renovation is done, OVG and the city would then have to submit a Request for Certification of Completed Work to the SHPO. Reviewed and forwarded, the NPS and the IRS can then certify the project for the tax credit.

While the local landmark process can take months for the better part of a year, the National Register and tax credit process can take 2 to 5 years. The rehabilitated project must be put back into service to be granted the credit, so they would file the last part of certification when the arena opens.

Use it while you got it

Pushing for the tax credit is a fascinating approach to helping fund and/or recoup expenses on developing the new arena. One wonders if there will be rash of arena projects around the country gunning for the same thing, but the very process of the arena game would seem to negate that. Most projects are looking to replace an aging sports palace with an all new spectacle of a building, so these tax credits wouldn’t be available to them.

It’s a smart approach to tap a resource that is unique to your project site, as well as built-in media bait for the preservation story. What’s more is that OVG would likely have been the only one of the two competing bids to take advantage of the tax credit. Concerns over the roof design with Seattle Partners’ proposal might have disqualified them from local landmark status in addition to the National Register and any incentives.

Whatever the City of Seattle chooses to do with KeyArena, they have the potential of the tax credit at their disposal. OVG was wise to jump on this and jump on it early. Even if they don’t ultimately get certified for their credit, MSG has offered to backstop the $50M factored in the project financials. A savvy move either way.

Now, just imagine if we’d actually gotten CylonDome at Seattle Center for the football and baseball stadium?

1966 Seattle Center Stadium Proposal (“Pilot Dome”)