Talking Heads
Larry Curtis, WinnDevelopment 4 02> +cis
from the time he was 10 years old. Walking through a
lerge shopping mall, Curtis told his parents that “one
day, |am going to own this place.”
twas a "preposterous" thing for a child to say,
said Curtis, but the ides of thinking big, exploring new
‘opportunities and succeeding, stayed with him. When he
was 18, Curtis bought his first house with money he had
eamed from odd jobs throughout high school.
He fixed it up, and sold it using the proceeds to sup-
port himself through college.
Forty years later, Curtis is President and Managing
Partner of Boston-based WinnDevelopment, one of the
oldest and largest developers in the country. Since joining
the company in 1987, WinnCompanies' portfolio has
grown from 3,000 units to more than 98,000 units under
management in 22 states and the District of Columbia.
Itis the largest menager of affordable housing in the:
United States.
Living and working in one of the oldest regions of the
country, Curtis has becorne an avid supporter of using
Historic Rehabilitation Tax Credits to turn dilapidated
mills, schools and other commercial structures into
affordable housing and retail space. Tax Credit Advisor
sat down with him to discuss lessons learned using HTC
as a funding source.
| = Curtis aspired to be a successful businessman
Tax Credit Advisor: Let's discuss your early life. Where
did you go to college? What was your major? How did
you end up as an affordable housing developer?
Larry Curtis: | grew up in Massapequa, New York, which
is famous for being the hometown of comedian and actor
JJerty Seinfeld, Jerry was a few years older than me, but
| knew his dad because he had a sign-painting business
‘two doors down from my father’s law practice. | majored
in Architecture at Cooper Union for the Advancement of
Science and Art in New York City. Up until a year ago it
was the only tuition-free, private college in America. You
wowhousingonline.com
could study architecture,
fine arts or engineering, Like
many things in life, my career
as.a developer started some-
what fortuitously. | found a
piece of land that | wanted
to develop for affordable
housing and | approached
the WinnCompanies. I then
began working for Winn-
Development and built my
career around the company.
Lamy Curis
TCA: What is your main motivation for utilizing Historic
Rehabilitation Tax Credits? Is it purely for their economic
value or do you have a preservationist streak?
Curtis: Some people view historic preservation as an
obstacle to development. | don't view it as an obstacle,
but as a catalyst for economic activity A significant portion
of the Back to the City movement has resulted from
historic preservation, There is clearly economic value in
preservation through the use of historic credits, but l look.
at it more for its social impact and community benefit of
rebuilding neighborhoods.
TCA: What percentage of your portfolio is historic?
Do you routinely combine LIHTC with Historic Tax
Credits? Are there cases where you only use HTC?
Curtis: The number of historic projects we do varies from
year to year. Its no coincidence that after more states
enacted Historic Tax Credit programs, ike Massachusetts
in 2003-2004, more properties in more communities
got rehabilitated. When only the federal credit existed,
development activity was focused in economically vibrant,
large-scele cities. The addition of State Historic Credits
sputted economic activity in smaller cities, ike Richmond,
Virginia and Lowell, Massachusetts. We often use Low-
Talking Heads, cominsec on page 1
Tax Credit Advisor | October 2016 9en
‘alking Heads contnued fom ge?
Income Housing Tax Credits because older properties are
located in areas where, if only Federal and State Historic
Credits are used, the effective net cost to rehab the
property cannot be supported by the economic rents. For
example, in Danville, Virginia, the average rent, even with
the cepital investment that comes with historic credits,
can’t support the resultant capital sructure. So the afford-
able credits are critical to making it happen, We have
done some developments that used only Federal Historic
Credits, but solely in communities where the economic
rent is sufficiently high enough so that the Federal and
State Historic Credits are sufficient to support the net
cost of the capital structure
TCA: What regions of the country do you look for
potential deals? Do you look only in places that have
the best state historic credits? What other factors
come into play when choosing a property?
Curtis: We operate in 22 states and the District of Columbia,
but not exclusively in areas with Historic Tax Credit
programs. We look for buildings which are important
in communities, or parts of communities, or that may
be architecturally significant, that could become, and
should become a “magnet” for subsidy. | am not talking
about background buildings, which may be historic, but
are located in strategically less important areas—what |
call “building on the side of the road.” It may be a good
building to do, but its not the most important building to
do ina given city. The ideal building creates an economic
spin-off effect that leads to subsequent development,
It’s @ building that the Mayor, the City Council President,
and the Planning Director — and the community ~ all are
desperate to see saved and rehebilitated.
TCA: How does your background as an architect
impact the work you do? What building types do you
find most appealing? Which building types do you
find the most challenging and why?
Curtis: My architectural background is very important to
me, but that wasn't always the case. Earlier in my career, |
Govmplayed the fact that | was an architect. Most developers
have backgrounds in marketing or business. In the world
of finance, you were not perceived as a serious developer
wr housingonline.com
if you were a designer. That shifted when people began
to see the value of the “green” movement and energy
efficient design. When | promote a project today, | lead
with the architecture. People understand the importance
of design and planning. Finance is important, but it
needs to have the inherent design. As on architect, I love
all historic building types. They are unique places with
interesting details and fascinating stories. They are one
of a kind, People love historic buildings and even more
so when they are fully rehabilitated. We are best known
for developing old textile mills, but we have also worked,
‘on public schools and other commercial building types.
Unfortunately, many mills sit vacant because they are too
big for the marketplace they are in, In Maine and Massa:
chusetts, mill properties can encompass 700,000 scuare
fect in a town of 20,000, becouse at one time everybody
in town worked at the mill. Then the world changed, the
mill shut down, and has sat vacant for 40 years.
TCA: What important trends are you seeing in the
Historic Tax Credit market?
Curtis: The ongoing revitalization of downtown Lowell,
Massachusetts, where, to date, we have developed five
milion square feet of historic mill space, has attracted
the attention of other communities. In the past week,
I met with people in Maine, New Hampshire and
Connecticut and they sey, ‘hey, that city cid that, we
want to do the same.’ What they want is a structure which
has been sitting vacant, or is largely underutilized, turned
into something more vibrant. The trend is not unique to
‘Winn, but to many developers who specialize in historic
rehabilitation,
TCA: How has your participation on the Board of
Directors for the National Trust for Historic Preserva-
tion impacted your work? What federal policy changes
would you like to see enacted to improve the HTC?
Curtis: Other than my long-term involvement in NH&RA,
nothing has been more meaningful than my work with
the National Trust. Its a diverse Board of Directors both
geographically, as well as by background, comprising real
estate people, finance people, historians and politicians
Talking Heads, cominiecon page 19
Tax Credit Advisor | October 2016 11_
“aking Heads, continvad tom pege 11
who have varying perspectives on historic preservation.
My focus has been making sure the Historic Tax Credit
isn't looked at in 2 negative way, but as an essential tool
for community revitalization. Some in Congress think
that lowering tax rates solves everything, but we need
subsidies, like the Historic Tax Credit, if we are going to
continue rebuilding mills in Lawrence, Massachusetts,
or old high schools in Cincinnati. The Trust is working
diligently to make the credit more user-friendly for smaller
properties located in Main Street USA. | take pride in
these advocacy efforts, because if we don't have Historic
Tax Credits, much of the urban revitalization teking place
today will cease.
TCA: How do historic rehabs compare with new
construction from a cost standpoint? Has better
technology helped make historic rehabs more
‘economically feasible?
Curtis: This question raises two false perceptions, that
historic buildings cost more than new construction, and
they are less energy efficient. Both are generally wrong.
There is the occasional historic building that costs more,
but if you think about it, the building is already there,
and its built to last. The rehabilitation per square foot
is far lower, and acquisition costs are relatively nominal
Roughly half of the energy for new construction is spent
producing, acquiring and transporting materials whereas
the historic building is already there. It creates energy
officiency in itself. Window replacement is an issue, but
only one element of how to do these projects effectively.
‘Some developers don't want to bother dealing with the
National Park Service and State Historic Preservation
Offices, but often their guidance makes sense. There is
a reason for the rules being consistent and it results in a
better building and a better outcome, both economically
and physically.
TCA: What one piece of advice would you give to
2 developer who is considering his/her first historic
rehabilitation deal?
Curtis: Without credits or subsidies these buildings are
not assets, they are liabilities. You can hand out building
permits and the math won't work in most communities.
Don't buy the building and hope you'll get the credits
swwvhousingonline.com
Put it under agreement for a sufficient amount of time
and with sufficient economic risk. Make it something that
will serve the community, help the community, s0 that the
community will support you in your efforts to get funded.
Keep in mind that many State Historic Tax Credits are
competitive and not automatic, lke the Federal Historic
Credit. Most states have a cap and @ mechanism for
allocation. As with anything in the affordable housing
business, its all about time, effort and hard work. My
business partner, Arthur Winn, has a saying} 'you know
that closing is going to occur, when every last bit of fun
has been wrung out of the deal,’ There is an element of
that in any development, but especially with historic
projects, which can get enormously complex.
TCA: What makes a city or town attractive to you?
Do you look for some level of local support? What
form does that typically come in?
Curtis: | ike al cities and towns. | am agnostic to where
‘we go. But | want to find a building that becomes a
magnet for the types of funding programs we utilize and
‘a community that is realistic in its plan. For example, @
moderate to low income community that wants luxury
housing in a historic mil. They envision themselves
trensforring overnight, when in ality it can take years or
decades for a community to turn around
“There also needs to be some level of local support:
model municipal tax relief, HOME funds, or local officials
saying this is an important project for the city. We begin
with community input as community support is essential.
If there is true resistance or the community asks for a
program that is not financially feasible then we do not
pursue the project.
TCA: You have said that money is made in the buying
of a building, as much as the development. You must
buy right. What does that mean?
Curtis: This not only applies to historic development, it
applies to business in general. For example, a historic
developer buys a building at the asking price, has done
poor due diligence and concludes, ‘this building is in
worse shape than | thought. Its going to cost more.’ He
“aking Heads, continued on page
Tox Credit Advisor | October 2016 13ee
INHBRA News, continued fom page 46
National Park Service Responds to NH&RA
‘Comments on Historic Tax Credits
Ina letter dated September 23, Stephanie Toothman,
Associate Director, Cultural Resources, Partnership and
Science at the National Park Service responded to joint
comments submitted in May of 2016 by NH&RA, the
Historic Tax Credit Coalition, the National Trust for
Historic Preservation and the National Trust Community
Investment Corporation. The letter responded to a
series of concems relating to the Historic Rehabilitation
Tax Credit and the NPSS interpretation of the Secretary
of the Interior's Standards for the Treatment of Historic
Properties. The letter advises NH&RA members that
NPS will begin converting the Interpreting the Standards
Bulletins (TS), which explains rehabilitation project
decisions, to a web-based format, which will facilitate
the NPS's abilty to easily add new and update existing
gui
stil fundamental differences of opinion on the interpre-
ince. The letter also demonstrates that there are
tation of the National Park Service Advisory Board's
recommendations in 2006 relating to increased flexibility
in the administration and interpretation of the Secretery’s
Standards. NH&RA’ Historic Preservation Development
Council (HPDC) and our partners will continue to
advocate on behalf of these issues.
NH&RA Executive Director Speaks at Tennessee
Governor's Housing Conference
(On October 12 NH&RAS Executive Director Thom
‘Amdur will speak on a panel at the 2016 Tennessee
Governor's Housing Conference entitled, “Double Down
con UTC? The Latest Changes from Washington.”
Mr. Amdur will explore prospects for critical housing
legislation in the “Lame Duck Congress”, Senator
Ron Wyden (D-Ore) recently proposed Middle-Income
Housing Tax Credit 105 AB and the Bipartisan Fight for
Expansion, state QAP trends in response to the Supreme
Courts disparate impact rule and the Rental Assistance
Demonstration
\wawhousingonline.com
Talking Heads, conteved rom page 13
hires architects who have never worked with historic
buildings. He hires contractors who may have done one or
two historic projects, but generally build new construction
He adds up the costs and says, “look at all these costs,
‘then goes to the state and says we need all this subsidy,
please provide it’ The state comes back and says, ‘We
notice that other qualified developers deliver the same
product at 2 lower cost, what are they doing that you are
rot doing?’ It's not ust about buying the right building,
it's buying the right architectural services or the right
construction company. its buying all the right services
along the way at lower effective costs. | call it the
assembly line process. It means doing things as efficiently
‘as possible, from construction, timing, and process. We
have largely eliminated the risk of the trensaction by
‘assembling a knowledgeable team which has done this
dozens of times. That doesn't mean we won't make 2
mistake along the way, but we try to insure that we have
the best possible project. HA
t Your Project
in Experienced Haidss
mo
jon and Construction
Deere
310-450-5661 x 101
Tax Crecit Advisor | October 2016 55