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in comm unity

e ono

Federal Reserve Bank of Atlanta
Volume 9, Number 2

Certa in events in life a re si mply
unforgettable. Perhaps yo u ca n
reca ll exactl y what yo u were
doing w he n John F. Kenn edy or
Martin Lu ther Kin g, Jr. were
assassinated. Or you rem ember
the d ay e il Armstrong la nded o n
the moo n. Mo re recently, a n event
occurred in an inner city Atlanta
ne ig hbo rhood tha t will re ma in
etched in man y people's mind s
forever. Many heroes emerged
tha t da y, and we take this opportunity to report a compelling story
of bra ve ry combined wi th an even
bi gger pictu re of heroi sm . By
usin g o ne inner city neighborh ood
as a n exa mple, this issu e of
Partners refle cts o n the thousa nd s
of individua ls, mostly unsung
heroes, w ho d edi ca te their ca reers
to commun ity developmen t work.
lt was the afternoo n of April 12,
1999, w he n a tras h fire broke out
in th e Ca bbageto wn neighbo rhood a nd q uickly spread to th e
100-year-old timbe rs in the hi sto ric Fulton Bag a nd Cotto n Mill
und ergoing renova tion . Out of
contro l in a matte r of only a few
minutes a nd repor ted ly the largest
fi re in 15 yea rs, the blaze trapped
a crane operator 250 feet above
the grou nd. With flam es shoo ting

S11111111cr J 999
Federal Reserve Bank of St. Louis

hi g her a nd the heat becoming
unbeara ble, Ive rs Sims crawled
o ut of the cra ne's cab with hi s
two-way radio, onto the hori zo nta l a rm, a nd down to a concrete
counterwe ig ht. For a lmost 90 minutes, with his life in jeopardy, he
spoke with his supe rvisor on the
gro und below a nd waited for
Capta in Boyd C lines, a pil o t w ith
th e Geo rgia Department of
a tural Resources, a nd his naviga tor, Larry Rogers, ca refu lly
directed a Bell Long Ranger L-4
heli copter in a dramatic rescue
tha t was cap tured by television
a nd broad cast li ve throu g hout the
country. Few w ill forget the sig ht
of the courageous Atla nta firefi g hter, Ma tt Moseley, w ho hung
from a SO-foo t helicopter rope a nd
wa s slowly raised to the top of th e
crane. With w ind s swirling
arou nd them a nd intense heat a nd
updra fts compli ca ting the rescue,
these men ris ked their lives to
success full y rescue a trapped
worker whom they had ne ver
Heroes. o doubt about it. But
they were not a lone. Hundreds of
citi ze ns did amazing things that

day. From dozens of law enforcemen ts offi cers, to th e 110 fire fi g hters, to the neig hborhood resc uing
pets a nd belong ings fromS?ea rby
houses tha t ca ug ht fire, the best
of huma n character was on disp lay tha t day.
Behind the scenes a nd over a
lo ng period of time, even mo re
good people were at work . These
unsun g heroes includ e: the developers w ho a re de termined to
revitali ze this distressed a rea a nd

In This Issue
Great Promise ··-··..--....······-··..........- ...........3
Apersonal llllection on Cabbagetown and its people.

Living in High Cotton...............................,...- ................... 5
Key Players in redevelopment who make things happen.
Historic Tax Credits .............................................................7
Tax Credits made simple: what they are and how they work
Community Development Beyond Our Borders.......................9
Reserve Bank hosts visit from French conringent.
Taking Note of Annual Reports ....................... 10
Three organization that are active in community development
CEDRIC .............................................................. 11
New website for community development information.

Calendar of Events .................................................... 12

Federn l Reseruc Bn11k of Atln11tn

m c1 inta in its histor ic integ rity; the
bc1n kers w illing to fin a nce th e
ve ntures; th e no nprofit o rgc1 n izati o ns wo rk ing to red u ce displacem e nt a nd improve th e quc1 lity of
li fe; th e government c1ge ncies
w il ling to suppo rt a nd e nco urc1gc
these e ffort s w ith in centi ves, code
e n fo rcem ent, a nd crim e protecti o n; and th e fo und c1tio ns w illi ng
to s uppo rt th ese e ffor ts w ith
loa ns c1 nd g rc1n ts.
As w ith c1ny co mmun ity d evelopm e nt projec t, mc1n y peop le wo rk
tire lessly be hi nd th e sce nes to
m eet th e needs of d is tressed
c1reas, c1 nd low- c1 nd modc rc1 teinco m e p eople. Despite occc1sio nc1 l se tbac ks, this s pirit is ,1 Ji ve and
we ll todc1 y c1s re bui ldin g e ffo rts
hc1ve beg un . To th ese indiv idu c1ls,
be hind th e ir d es ks, behind th e
scenes, c1 nd on th e fro nt lin es, we
offer ou r s incere th c1 nks. ♦
- Editor

Renovation of the Fulton Bag and Cotton Mill into affordable housing was well underway before the April
1999 fire.

The Cabbage/own community lies ,n the shadows of the old cotton mill.

Pnrtners in Co1111111111ity nnd Eco110111ic Ocz,efop111c11t
Federal Reserve Bank of St. Louis

As il teenager in the ·1970s, I
remembe r vis iting il fami ly
member w ho hild mo ved into
th e C1bbilge town nei g hborhood ,
il low-inco me community on the
eastern edge o f A tl ilnta's central
bu sin ess di str ict. The ne ighborhood was ob\'iously distressed ,
\,·ith ..,ubstilndilrd housing surroundin g il series of nine industri a l buildings. The people I met
\\'h o li\'ed th ere - iln eclectic collection of long- term residents,
arti..,t,,, mu s iciilns, il nd hippiL'S m ostl y fas cin a ted m e.
I sup pose I kn e\\' it \\'aS a poor
neighborhood , but a t that ilge, it
did not bot her me becil use I wa~
not old enough to fully gr,bp
th e implications of pove rty. All I
could think of at th e time 1,·,1s
how fu n and funky a place this
was. For example, I reca ll a popular house in th e neig hbo rhood
dubbed "The Patch," whic h was
eilsil y recogni zed by th e hu ge
ha nd made flil g d es ig natin g th e
nil me il I1li cre,1 ting il sense of
identity for th e people w ho
li \'ed there.


Federal Reserve Bank of St. Louis

As time has pilssed, I recogni/ed
thilt many of the sociil l il nd economic issues of the I970s were
concentrated in the C 1bbi1gdmvn
neig hborhood. I remember ,1 man
know n by his nickn,1 me "Snuffy
Smith," but it was YL'MS lilter
before I rm li,ed he was i1 conscientious objector of the Vietnil m
wil r. And I recall the story of a
neig hbor's home th,1 t \\'as r,1ided
by und ercover police officer..,
(weilring bell bottom jm ns and
fringe lea ther 1·ests) for selling
marijuilna . That sa me evening,
after the police had left, neighbors
brought food over to th e home
bec.1 use they knew "~o methin g
bad h,1d hi1 ppened ."
Cabbilgetown, like most distressed communities, had ,1 d ,1 rk
side. I rec,1ll the nL'wspilpcr ,1nd
television stories tha t ca ptured
\'cl riow, iss ues, including cri me,
prostitution, edu cation, heal th
Cilre, ,md housing. My perceptions, hmve\·er, often went f,1r
beyond the coverage itself. I
cou ldn' t help but thi nk i1bout th e
people ilnd the sense of community thilt for med the foundation of
the neighborhood . And I remember th e t-.. !ill that serwd as the
foca l point for the neig hborhood.

At one time, the Fulton Bag and
Cotton Mill was a thri ving busines..,. The nine-bui lding comple:-.
w,1s built 0\'Cr i1 40-yca r period
beginning in 188 1, ,1nd the Mi ll
oper,1 ted continuously until 1977.
Employing ,1s m,1ny as 2,600
workers, the Mill primari ly p rodu ced cotton bags u..,ed to pi1ckilge agricultural products.
ThL' Mill owners pnl\'idcd a nd basic hea lth ca re to its
employees. Attracted by this and
by mi ll wages, workers and thei r
families were dr,1wn to th e city
from Appi1lachi,1 ,1nd from sma ller
southern rur,1 1communities. The
commun ity of mi ll -houses became
known as C1 bb,1gctown reported ly beca use the prominent smell of
c.ibbilgc cooking on ..,tO\'L'-lops
cre,1ted il n unu!>L1<1l identitv. The
si:-. sq uare block MCil adjacent to
the Mill is char,1ctcri/ed by narro\\' streets, <,had e trees, simple
one il nd two story "shotg uns,"
,md cottilge;. \\'ith \'ictori,111 styling
in their porch, door, ,1nd wi nd ow
d esigns.
M,1 ny of todil y's C1 bbi1getown
residen ts il re d escendilnts of the
mill1,·orker..,, and the neighborhood is currentl y contending \,·ith

fcdcrn l l~cscn•c Ronk of J\tlrm/11

gentrification issues as middle
income resid ents begin to move into
the area.

tion on low-income families who
want to remain in the neig hborhood.

The Mill and Village have been
add ed to the National Register of
Historic Places, and the strong sense
of communi ty continues to serve as
the fo undation of the neighborhood.
But changes are apparent, with
artists, musicians, and long-term
residents now joined by young professionals and entrepreneurs.

Fina ncing the $19.2 million first
p hase of the project (206 units) has
req uired a g rea t deal of creati vity.
The Atlanta Empowerment Zone
provided a low interest 1 million
loan that got the project started.
The developer and the general partner provided $3.4 million in equity
and deferred developers fees.
SunTrust Banks, Inc., provid ed equity in vestments of $4.5 m illion (in
return for some historic tax credits
and low-income housing tax credits), and the Urba n Residential
Finance Authority provided $9.9
million in tax exempt bonds
("AAA" ra ted with FHA Mortgage
Insurance). And the city government provid ed $400,000 to complete
the financing package.

At the center of it all is the Fulton
Cotton Mill, filled 1,v ith a great sense
of history but empty for over 20
yea rs. O n occasion, it was used to
make music videos or movies, but
mostl y it served as a re1ninder of
what once was. Fortuna tely, that
has now changed.
Fulton Cotton Mill Associates,
form ed in 1996 to redevelop the
Mill, has begun transforn1ing the
12.5 acre site into the largest loft
development in the country.
Although no project is perfect, this
particular und ertaki ng has great
promise because it has remained
sensiti ve to the historic integri ty of
the buildi ngs as well as the need to
minimize the impact of gentrifica-

The apa rtments in Phase I are
uniqu ely designed, w ith 20 studios,
99 one-bedroom lofts, and 87 twobedroom lofts that all have open
floor plans, large windows, exposed
bricks, and separate utilities. Some
have 18-foot ceili ngs and impressi ve
skyline views. The com plex has a
long waiting list fo r new resid ents,

Rendering of the comple ted Mill development.

Pn rt11ers i11 Co111 11111 11ity n11d £co110111ic Ocz,c/op1111'11t
Federal Reserve Bank of St. Louis

which speaks for itself in terms of
attractiveness. Rents range from
$525 to $900 for studios and onebedroom lofts, and from $625 to
$1,400 for two-bedroom lofts. To be
eligible for low-income housing tax
• credits, 40 percent of the units are
set aside for low-income resid ents.
Ask anyone involved, and they w ill
tell you it has not been easy to put
this dea l together. Experience
counts, and the developer, the
lender, the government, and others
have all had to work long hours
and address cou ntless issues. That
is why a fire as severe as the April
blaze affecting Phase II is so distressing. But the setback is simply
tha t: a setback, especially since the
damage was not irreparable.
TI1anks to the dedica tion and
detern1ination of so many people
who work tirelessly behind the
scenes, thi s project will get d o ne.
And the prid e that the people in
thi s co mmunity have ma intain ed
for over ·100 yea rs w ill be spread
to the res t of th e city as we a ll celebrate the success of this neig hborh ood revita li za ti on. ♦

Safe, decent, a nd affordable
homeownership in a n intown
neig hborhood su ch as
Ca bbc1geto w n is no longe r il n e lu s ive dream for lo w- c1 nd mod erate- in co me residents in At lc1 nta.
C abbc1ge town, a n old mill v illage,
h c1d su ffered il d eclin e for m c1 n y
years du e to th e a rm's hi g h
un emp loy m e nt c1 nd pover ty co nd iti ons . H oweve r, th e Fu lton Bc1g
and Cotton Mill restoration projec t has he lped to s park new li fe
in thi s his toric ne ig hbo rhood
lc1rgely due to the efforts of its
res id en ts and th e fin c1ncia l co mmitment of both th e publi c a nd
pri vilte sectors.

s tron g m c1 nc1 ge ri c1I s kill s to ilt tra ct
developme nt fin c1 ncing from publi c c1 nd pri vc1 te so urces .
Ade rhold Properties, th e loft's
d eveloper, brou g ht ex te ns ive ex p erience to the Mill project th il t
includ ed the recent re no va tion
il nd co n ve rs ion of a noth e r hi s toric
bui lding into lofts in do wntow n
At lc1ntc1. A lthou g h o th er d evelope rs mi g h t hi1 ve balked at the s ize
a nd complex ity of res torin g th e
d ecay ing s tru ctures, Ad erho ld
Properties sc1w th e potentic1 l to
"breilthe new life" into th e old
b uildin gs.
However, ilS is ty picc1 l in th ese
ty pes o f projects, th e re was not a
lo ng li s t of in ves to rs primed to
participate in th e deve lopment' s
fir s t ph ase. John Aderhold , chc1irmc1 n of th e compi1ny, in vested $1
million in equity in to th e project
o n be hc1 lf of Ad e rho ld Prope rties.

The s uccess of ,rny co mmunity
d eve lopment projec t d e pe nd s o n
the co mmitm e nt of th e key p laye rs. Th e Mill projec t typ ifies th e
level of colli1borc1 tion necessilry to
s tru cture d eil ls that c1 re bo th
uniqu e in d es ig n and fina ncing.
A lthou g h res torin g th e Mill ini ti c1 ll y seemed to be il fo rmidilbl e
til s k, it was th e cooperatio n
a mon g th e d evelope r, loca l and
federal gove rnme nt, ilnd il locil l
banke r a m ong o th ers thc1t m a d e
th e d eil l h ilppen.

The d eveloper's re putc1ti o n, ex p ertise, il nd finiln cial co mmitme nt
WilS key to obta inin g fin ilncin g
from ot he r sources ilnd will go a
long way in ilttrc1 ctin g m o re
inves to rs in th e latte r phc1 ses.

The Developer

Local and Federal Governmen t

T he ce ntral plilyer in il co mmunity d evelo pm e nt project is th e
d evelo pe r. Wh e th e r no nprofit or
for-profit, the deve loper mu s t
hil ve i1 n es tc1bli s hed trac k record
w ith s imililr pro jects ilS we ll ilS

Gove rnment o n th e fed e rc1l , s tilte,
c1 nd loca l level is il key plil yer in
the d evelop m e nt of ilffo rdc1b le
hou s ing through le ndin g il nd
o ther in cen ti ve prog ri1 m s, in clud ing g uarc1 ntees, seco nd ary milr-

kets, direc t loc1 ns, c1nd d evelopment g rant s ubs id ies. T he pri vilte
secto r cc1 nn o t be ex pec ted to do
th ese deal s on c1 "go-c1 lo ne" bc1si s.
Consequ e ntl y, th e g ove rnm e nt's
rol e in th e pc1r tn ers hip is to miti gilte risk, c1ttract in ves to rs, il nd
leve rc1ge i1dditio nc1 l cc1p iti1l.
A totc1 I of $16.8 milli o n in publi c
il nd privc1 te loc1 ns fina nced Phc1se I
of th e projec t. The Ci ty of At la nti1
pro v ided il $400,000 loc1n. In
c1ddition, the A tl a nta
Empowe rm e nt Zon e finc1 nced il $1
million loiln to th e project th il t
a ll owed for c1 dditi o n c1 l fundin g
thro ugh th e Dep il rtm e nt of
H ousing i1nd Urbil n Development
(H U D)
Constru ction c1 nd permanent
fina ncing was pro v id ed throu g h
th e iss uc1n ce of $9 .9 million in
bond s from th e Urbc1n Residentii1 1
Fini1 nce Author ity und e r I IUD's
221 (d)(4) prog ram The
Empowe rm e nt Zo ne loc1n
requ ired th e d eve loper to ea rmilrk
40 pe rce nt of the lofts in l' hi1 se I
for low-inco m e te nilnts, th e reby
qu a lify ing th e d evelo pment to
receive Low- Inco m e Hou s ing Tilx

State Historic Prese rvation Office

51111/1//('/' 1999
Federal Reserve Bank of St. Louis

Til x cred its arc an impo rtil nt
in ce nti ve to developers, especiil ll y
in build ing i1fford ilb le res identiil l
p rope rti es. Low In co me Hou s in g
Til x C redits hilve bee n a n ext re m e-

Fcdan / /?_ cscruc Bn11k of Atln11t11


.rlli.:. .~
ly popu lar incenti ve becilusc they
prov id e a dollar-for-dollar credit
thilt redu ces the fe d era l incom e
til x li ilbility for equity inves tors.
Hi sto ri c preservation ta x credits
hilve il lso been importa nt in the
d evelopm ent of hi storic s tru ctures tha t otherwi se would have
been demo lished because rchab il itiltion costs a re often pro hi bitive.
The Mi ll is loca ted in the
Cilbbage town hi sto ri c distr ict,
w hi ch is lis ted o n the Nil ti o nil l
Reg ister of Historic Pla ces. Thu s,
th e Mill is consid ered a "certifi ed
hi stori c stru cture" a nd is e li g ibl e
fo r histori c prescrvilti on t.i x cred its thil t a rc ild mini stercd throu g h
th e Geo rg iil Hi stori c Preservation
Office . Th e Tax Reform Ac t of
1986 provid es a 20 percent
Investment Tax C redit fo r the
"sensiti ve reha bilita ti on of
in come- producin g hi stori c properti es." Acco rd ing ly, the Nil tion ill
P.irk Service is res ponsible for
ce rtifying that th e rehabi litiltio n
wo rk meets the Secretary of th e
Interior' s Standa rd s for

Rehab ilitation. The Mil l project
received $4.5 million in lowin come ho using il nd his toric ta x
credits for Phase I of th e d evelopment.
The Banker

In the pils t 20 yea rs, the p ri va te
sector has assu med a more
promine nt ro le in community
deve lopment projects. With the
pilssage of the Community
Reinvestment Ac t a nd the dec line
in fe d era l resources, loca l instituti ons h.i ve become
more ac ti ve in pilrtne rs hips w ith
the publi c sector to prov ide
affo rdable housing a nd s mall
business lending. The susta in ilbi lity of this capita l inflow into
low- a nd mod erate-income co mmunities w ill largely depe nd on
these d eil ls being stru ctured in ii
sil fe, sound , a nd profitilble manner.

formed to acqu ire, renova te, and
own the 182- unit loft apar tm ents
in Pha se I of th e d evelopment.
SunTrust is the 99 perce nt
Limited Partn er a nd wi ll receive
th e commensurate p ropo rti on of
th e tax credits il ll oca ted to the
project. FC M Partn ers, L.L.C. , is
th e 1 percent Ge nera l Partner.
The cap ita li zatio n of the
Pa rtnership consists of Su nTrus t's
eq uity in ves tme nt u p to a maximum of $4.6 million and a $1 m illi on equ ity in ves tm en t fro m the
Genera I Partner.
The co ll ilboration a nd partnershi p be tween the key p layers in
th e Mi ll project have opened a
new chilptcr in the li fe of a hi storic Atla n ta neig hborhood. By
drawing o n the resources of the
public il nd privilte sectors, as well
ilS ga rn erin g the com mun ity support, thi s develop ment w ill ha ve
ii las tin g im pilct on future revita lizatio n efforts in th e ilreil. ♦

SunTru st Bilnks, Inc., in ves ted in
Fulton Cotton Mill (FCM)
Associa tes, ii limited pilrtnership

Regula tors, b.inke rs, a nd d evelopers all contribute to neig hborhood revita liza tion prog rams. Above, Ron
Z immerman, vice president of the Federa l Reserve Bank of Atlanta; SunTru st Ba nks, In c. representatives
Jim Mynatt, group v ice president, a nd La ll a Ha rris, C RA officer; and Jo hn Aderho ld, cha irman of
Ad e rh o ld Properti es, meet to discuss rev ita li za ti on opportunities in the At lanta area. Federa l ba nk a nd
thrift regulators serve as a key rol e for helping e ncourage a nd promote affordable housing and investment in low- to mod era te- in come areas in complia nce with the Community Re in ves tmen t Act. Ba nks a rc
p rimary so urces of fu nding for suc h programs by providing equity invest ments a nd d ed ica ted loa n prog rams. And the developers are th e key to tra nsformin g plans a nd resources in to results.

Pnrt11er5 i11 Co11 11111111it_11
Federal Reserve Bank of St. Louis

n11d Eco110111 ic Ot'vciop111e11t




Th is discus sion o f the Federal Historic Pre se rvation Tax In cen tives Program is limited lo o brood o vervie w. For more d e ta iled
information, copies o f application fo rms, regulations, and othe r program information, contact one o f th e o ffices listed a l the end
o f this article. In addition, beca use o f the complexity of the Tax Re fo rm A ct o f 1986, readers a re advised to consult a n accountant, lax attorney, or the Intern a l Re venue Service for assistance in determining specific tax a nd other financial implications.

Histori c bu ildings re present our
link to the past, provid ing a sense
of id enti ty, cha racter, and s tability
to o ur communities. Recognizing
their , ·a lue in revita lizing cities,
towns, and rura l areas, the fed e ral
go ve rnment enco u ra ges th eir
preserva tio n in several ways. One
of the wa ys is through g ra nts fo r
p la nning a nd p reserva tio n from
the I listoric Preservatio n Fun d.
Another wa y, w hi ch we w ill d iscuss here, is through the Fed e ral
Historic Preserva ti o n Tax Incentive
progra m .
Fede ral Tax Credits

Fed e ra l His tori c Preservation Tax
Incentives a rc ava ilable fo r buildings listed in the Na ti o nal Regis te r,
a nd certain historic districts th,1t
und ergo substa ntial re habil ita tion
fo r income-p rodu cing purposes.
These reno va ti o ns mus t be in comp lia nce w ith sta nd a rds set by th e
Secreta ry o f the Interi or. The progra m is jointl y managed by th e
a ti o nal Pa rks Service ( PS) a nd
the Inte rna l Revenue Service (IRS)
in pa rtnership w ith Sta te Historic
Preserva tio n Offices. C urrentl y,
the incenti ves includ e a 20 percent

S11111111cr 1999
Federal Reserve Bank of St. Louis

ta x cred it fo r the reha bi lita tio n of
certified historic s tru ctures and a
10 percent ta x credit fo r the rehabili tatio n o f no n-historic, no n-resid entia l bui ld ings bu il t before 1936.
In both insta nces, the rehabilita tio n
mus t be substa ntial a nd mus t
in volve a d epreciable bu ilding.
Tha t is, the buil ding m ust be used
in trad e o r business o r held fo r the
production of inco me.

tax credit is a va ilable for re no vating non-histo ri c bu ildings co nstru cted before 1936. 1n both
insta nces, the tax credi t pe rcentage
is based on the re habilita ti on costs,
a nd d oes not includ e th e p urchase
p rice. So, for example, a qu a lifying re habilita tio n tha t costs S50,000
o n a bui ld ing tha t was pu rchased
for Sl 00,000 wi ll be awa rd ed a
10,000 ta x cred it. (20 pe rcent
times $50,000 re ha bilita tio n costs.)

Wh at is a Tax Credit?

Unli ke a n inco me tax d edu cti o n,
w hich lowers the a mo un t of
income subject to tax illio n, a tax
cred it lowers th e a moun t of tax
owed genera ll y resu lting in a do lla r-for-d olla r redu ction in fed eral
inco me taxes. In o th e r words,
eve ry dolla r in ta x credit red uces
th e a mou nt of inco me tax owed by
a do llar.
Summary of th e Rehabilitati o n
Tax Credits

T he 20 percent rehabilita ti o n tax
credit is eq ua l to 20 percent of the
a mou nt spe nt in a certi fied rehabilita tio n of a certified historic stn ICture. The 10 percent in vestm ent

The tax cred it applies to th e
building ow ner 's fed eral income
tax fo r th e yea r in w hich th e project is completed a nd approved. If
it is no t all needed in tha t yrn r, the
cred it may be carried back for
three yea rs, or fo rward fo r 15
Buildings that Qualify

The 20 percent histori c re habi li tati on ta x credi t is ava ila ble for
buildings lis ted in the Na tion;i l
Register of Histo ri c Places which,
a fter rchabi lit;i ti on, a rc used for
comme rci;i l o r residential rental
use. The building may a lso qu alify if it is loca ted in a registered histo ri c district - a district listed in
th e a tiona l Register of His toric

Fcda nl Rcscruc Bn11k of Atln11tn


Places - and certified by the
Na tional Pa rk Service as contributing to the historic significa nce of
th at district. A state or loca l histori c
district may also qualify as a registered historic d istrict if th e d istri ct
and the enabling statute arc certifi ed by the Secretary of the Interi or.
Work on th e interior or exterior of
th e building qua lifies for the ta x
credit; however, la nd sca ping and
new add itions do not qualify. The
Na tiona l Park Service must certify
th e work on a histori c buildi ng.
This is d one by completin g an
application and submitting it to th e
NPS along wi th "before" a nd "after"
photos show ing a ll work areas.
The 10 percent non-historic tax
credit is av;iilable fo r build ings constru cted prior to 1936 that are used
for co mmercial, but not residentia l
renta l purposes. The work does not
have to be reviewed for th e 10 percent cred it. Neither in vestment tax
credit is ava ilable for the re habili tation of a pri va te, owner-occupied
resid ence.

Other Considerations

In order to qua lify, the rehabilitation
expenditures m ust exceed the
g rea ter of th e adjusted basis of the
buildi ng or $5,000. The ad justed
basis is th e purchase price, less th e
va lue of the land and any depreciation already take n by th e current
owner, plu s any capi tal improvements. For example, on a recentl y
purchased property:
Purchase price
- Land va lue
Ad justed Basis

$ 80,000

Rehabili tation ex penses must
exceed $80,000.
In another examp le in w hich th e
property has been owned for a
w hile:
Purchase ,~rice
- Land v;i ]ue
- Deprecia tion
+Ca pita l Im provements
Adjusted Basis

$ 40,000

Rchabilit;ition expenses mus t
exceed $40,000.

P11r t11ers i11 Co111 1111111ity 11 11d Eco11o lllic Deue!oplllent
Federal Reserve Bank of St. Louis

Rehabilitated pro perty is depreciated using th e stra ight-line meth od
over 27.5 years for residential property a nd over 39 years fo r non-residentia l property. The d epreciable
basis of the rehabilitated building
must be redu ced by the fu ll amount
of the ta x credit cla imed.
Sale of a Rehabilitated Building

In order to avoid any reca pture of
the ta x credit by th e federa l government, a building must be held for a
minimum of fi ve yea rs. If the
owner disposes of th e bu ild ing
w ithin a year after it is p laced in
service, 100 percent of the cred it is
reca ptured. For properti es held
between one and five years, th e tax
credit reca pture amoun t is redu ced
by 20 percent per yea r. ♦

For a copy of the Department of the
Interior regulations governing th e procedures for obtaining historic preservation certifications, please refer to Title
36 of the Code of Federal
Regulations, Part 67. The Internal
Revenue Service regulations governing
tax credits for rehabilitation can be
found in Treasury Regulation Section
1.48- 1.

Contac•1rg Your State ~i5toric Pre~ervallon Off,re nr the Nnt ona Park Service
To learn more about the Federal Historic Preservation lox Incentives, contact :
Federal Historic Preservation lox Incentives
Heritage Preservation Services
Notional Pork Service
1849 C Street NW
Washington, DC 20240
Phone: Michael Auer (202) 343-9594
Contact your State Historic Preservation Office. Sixth District contacts ore :
Mr. lonice Borrell, Commissioner
Deportment of Noturol Resources
500 The Healy Building
57 Forsyth St,eet, NW
Atlanta. Georgia 30303
Phone (404) 656-2840

M r. George W . Percy, Director
Division of Histor1col Resources
RA Gray Build,n
500 S. Bronaugh Street
Tallahassee. Florido 32399
Phone (850) 488-1480

Stole Historic Preservation Officer
468 South Perry Street
Montgomery Alobomo 36130
Phone (334) 242-3184

Mrs. Gerri J. Hobdy
Assistant Secretory
Office of Cultural Developnenl
PO Box 44 247
Baton Rouge lou,s,ono 70804
Phone (504) 342-8200

Mr Elbert Hilliard, D,rector
Stole of M ississippi Deportment of Archives
and History
PO Box 57 1
Jackson, Mississippi 39205
Phone (601) 359-6850
Mr. Milton H. Hamilton, Jr
Commissioner, Deportment of
Environment and Conservation and
State Historic Preservation O ficer
294 1 Lebanon Rood
Nashville Tennessee 37243
Phone (615) 532-0105

Community Development Beyond Our Borders
The \'a lue of community development is not limited to the Southeast
or the United States. Community
development finance has value
world wide, and the
Federal Reserve System
is active in promoting
these goa ls beyond our
borders. Recentl y, the
Atlanta Reserve Bank's
ommunity /\ffairs
tea m hosted ii contingent of 18 French
bankers a nd their developers interested in
learning more about
affordable multi-family
housing development
in Atlanta .
The officiills included
two consultants / trilnslators from
Kl-I Compa ny; eight officials from
the banking company, DFE; ilnd
eig ht officials from several national
profit de\'clopment companies,
ca lled H LMs. DFE is a subsidia ry

S11111111cr 7999
Federal Reserve Bank of St. Louis

of du Groupe C DC (Cil isse des
Depots et Consigmtions), a nil tionil l
orga ni,:a tion chartered to help promote econom ic development.

The HLMs that were represented
ilre special nonprofit housing development companies that borrow
substantial fu nds from DFE to constntct specu lative mu lti-fami ly

The Fre nch conti ngent wa~ interested in seeing the kinds o f development that a re possible a nd
leilrning about how successes ca n
be repeated. The
agendil included a
tour of the restored
Imperial Hotel a nd
meeting PRI , a
state-wid e non -profit development
compa ny; ii meeting
with officiab of the
Atlanta Housing
Au thority; tours of
Centenni ill Place
il nd the East Lake
Meodows Housing
developments; a
meeting with
unTrw,t Banks officia ls; a nd tours of the MLK
Historic District ilnd

Federa l Reserz,c Bn11k of A lln11tn



Taking Note of Annual Reports
Neighborhood Reinvestment Corporation (NRC) 1998 Am1 ... al Report features The Business of Building
Com1T'u111t1es. Through the use of expressive photographs and narratives. the report highlights the redevelopment • It,a11ves of tre Ne1ghborWorks "etv,,ork of 184 '10nprof t organizations t'l·oughout the cour•ry
Total investment In Ne1ghborWorks communities was $819.3 million In 1998, ..1p $266 million from 1997 During 1998, the
network created or preserved 13.769 affordable housing units for families and repaired 12. 702 units The Neighborhood
Housing Services of America Is a secondary market serving the Ne1ghborWorks network, and its annual Ioan activity also
grew during 1998 from $37.5 million to $42.8 million. The NeighborWorks network launched an aggressive campaign last
year to bring 35,000 lower-income families into homeownership by year-end 2002
The chairman of NRC is Laurence H Meyer, member of the Board of Governors of the Federal Reserve System. Other
notable me-nbers of the NRC board include Ellen Seidman. director of the Office of Thrift Superv1s1on: Andrew C. Hove,
Jr vice crairman of the Federal Deposit Insurance Corporation; John D. Hawke Jr vice cha1rmar of the Comptroller of
the Currency; and Andrew Cuomo. secretary of the U S. Department of Housing and Urban Development

The Enterprise Foundation 1998 Annual Report provides an in-depth overview of this nonprof1t's mission to ensure
that all low-income people In the United States have the opportunity for fit and affordable housing and to move up and out
of poverty into the mainstream of American life. The Enterprise Network consists of over 1,100 nonprofit communitybased organizations in 400 locations. Enterprise is helping to build a national movement to promote housing and community development in low-income neighborhoods by partnering with nonprofit organizations and state and local govern
In 1998, Enterprise helped to create more than 880 home ownership opportunities and to bring more than 3,400 rental
homes to market. In add1t1on, Enterprise committed more than $24 million in short-term loans and provided almost $6
million ,n grants to 117 organizations. In 1998, Enterprise received an $8 million grant from the U.S Department of Labor
for ,ts Community Employment Alliance InitIatIve to help secure Jobs for 1,525 welfare recIpIents ,n seven cites. Other
sources of funding include corporate contributions. grants and contracts received, and investment and interest income
Enterprise trained more than 700 community residents and police In community crime prevention and collaborative problem solving. In addition, Enterprise graduated more than 4.300 volunteers and AmeriCorps members from the Enterprise
Volunteer and Leadership Institute this past year. Furthermore, Enterprise offered 55 training events for nearly 1,900 participants, not to mention a host of other accomplishments that were achieved with other organizations.

local Initiatives Support Corporation (USO 1998 Annual Report features the initiative of helping to provide better
housing, vibrant commercial areas. safer streets, a,:id more Job opportunities by knitting private uwestment and the work of
volunteers, entrepreneurs. government, churches, professionals, and families. Founded in 1979 USC channels grants
investments. and loans nto Community Development Corporations (CDCs) - the nonprofit organizations that develop
housing and businesses, perform essenllal neighborhood services, and assemble whole communities out of the 1nd1v1dual
energies of residents, entrepreneurs, volunteers, and government agencies
Through thousands of CDCs 111 41 states and metropolitan areas, plus 59 rural communities. USC helps communities
create safe. attractive environments where markets can function effectively and families find the goods and services they
need, close to housing they can afford. Three affiliated organizations supplement USC's work by attracting additional private capital for CDCs, tailored to particular investment goals The National Equity Fund, The Local Initiatives Managed
Assets Corporation. and The Retail Initiative. In 1998. USC committed a record $605 million for community building. a $65
million increase over 1997 Primary sources of funding include contributions and grants plus interest and income from

P11rt11crs i11 Co1111111111ity
Federal Reserve Bank of St. Louis

n11d Eco110111ic Dcuc/op111c11t

I I

Introducing CEDRIC - A New Web Site Service
Consumer and Economic Development Research and Information Center
We are pleased to announce a new website that contains a wealth of information to assist community
d evelopment professionals. Sponsored by the Federa l Reserve Bank of Chicago, CE DRJC's principa l
mission is to fos ter resea rch related to consumer and economic development issues such as consumer
and small business fin ancial beha vior, access to credit, afford able housi ng, and community development
and reinvestment. CEDRIC's webpage consists of a repository subject listing, a sea rch engine, upcoming
events, a collection of recom mended lin ks, and links to CE DRI C partners.
The highlight of CEDR[C's webpage is the Repository Subject listings, which include:
Commun ity Economic Development - in vestm ent / d evelopment, urba n stabi lity, em powerment/ enterprise zones, rural/agricultu ra l issues, community development centers, and inner city reju venati on
Consumer Financial Behavior - access to credi t, consumer wealth, mortgage d elinquencies, mortgage
defaults, cred it delinquencies, credit defa ults, ba nkru ptcy, culture and credit, and income distributi on
Hou sing - mortgage lending, loca tion desires, appraisal process, homeownersh ip patterns, priva te mortgage insurance, and housing sea rch process
Indian Reservation D evelopm ent - affordable housing, comm un ity in vestment, lega l considera ti ons,
access to credi t, and ba nking services
Institutional Behavior - branch ba nki ng, cred it scoring, fa ir lending, red lining, affordable/ low income
housing, profitabili ty and regu lations, homeowner insurance, p ricing of credi t, geographic patterns,
fin ancing alternati ves, CRA, ECOA & FH A acti vities, GSE & FHA acti vities, second ary ma rker und erwri ting, and minority-owned institu tions
Small Business - entrepreneurship, fa ilures, m ino rity / women issues, lending, fin ancing, and development.

To the visit site, log on to
and select the Community
Development Research
Center link under

For furth er infonnation, please contact CED RI C's coordinator at

S1111 111 J('r 7999
Federal Reserve Bank of St. Louis

Fcdcrnl Rcscruc Bn11k of Atlnnln

July 30- August 7 Pine Ridge, SD
Shared Visions in a Pine Ridge Building
Summit. Department of Hou sing and Urban
Develop ment l -888-386-5868
August 30- September 3 New Orleans, LA
Neighbarhaad Reinvestment Training far
Reinvestment Training In stitute {800) 4385547 or (202) 376-2642

Sep tember 17 Brookfield, WI
Inve stmen t
Conference. Federa l Reserve Bank of Chicago
and the Federal Home Loan Bank of Chicago
(312) 322-6739

Loon Bank of Chicago, Harris Bank, and
Notional Association of Affordable Housing

Lenders. (202) 293-9855, or fax {202) 2939852

Se ptember 28 Chicago, IL
lnteragency Symposium on Defining Qualified
Community Development In vestme nts. Federa l
Reserve Banks o f Dalla s, Chicago, San
Francisco, and Richmond (804) 697-8463
September 30- October 1 Philadelphia, PA
Development and Redevelopment: Creating,
Financing and Building Projects in Your
Community. Council far Urban Econo mic
Development (202) 223 -4735, or email CUED

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September 13 -15 Washington, DC
Community and Econ omic Deve lopm ent
Conference : Bu ilding Fram a Position of
Strength. American Bankers Association (202)
September 15 Washington, DC
Haw Da Financial Institutions help Small
Businesses Graw2 Busin ess LINC and Sma ll
Business Technical Assistance Conference . Cosponsored by the Federal Reserve System,
CDFI Fund, Department of Treasury, Small
Bu sine ss Administration, Fed era l Hou sing
Finance Board, Federal Deposit In surance
Corporation, Office of Thrift Supervision, and
Office of the Comptroller of Currency (2 02 )

October 5 Des Moines, IA

In vestment
Conference : Building Successful Communities
Through Local Opportunities. Federal Reserve
Bank of Chicago and th e Federal Home Loan
Bank o f Des Moines (3 13) 964-3768, or email
at Harry.J.Ford .
October 7-8 Chicago, IL
It's Not Just Housing Anymore: Financing
Community Development Goes Mainstream.
Co-sponsored by Bank al America, Bank One,
Chase, Citibank , Fannie Mae, Federal Home

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