Republican efforts in Congress to overhaul the tax code could deal a big blow to historic preservation efforts across the nation. Though a weaker form of the federal Historic Tax Credit (HTC) would remain in the Senate version of proposed legislation, it would be completely eliminated in the House version.

“We think it will have a huge negative effect if it is eliminated in its entirety,” said Peter Meijer, founder of Peter Meijer Architect PC, which specializes in preserving historic structures. “I am basing that on the fact that older properties are tougher on development and construction side. The tax credit has been crucial.”

The HTC provides a 20 percent tax credit for developers who rehabilitate income-producing buildings deemed “certified historic structures” by the U.S. Interior Secretary, through the National Park Service. There is a 10 percent tax credit for non-historic buildings brought into service before 1936.

The HTC has helped developers transform aging structures into housing or mixed-use spaces rather than demolishing them. Locally, the credit helped pay for revitalization of the White Stag Block, the Wells Fargo Building, the Erickson Fritz Apartments and others.

“(The Erickson Fritz Apartments) was a $15 million project and we had $2.2 million worth of HTC,” said Julie Garver, housing development director for Innovative Housing Inc. “It was a critical funding source. It covered the cost of the seismic retrofit and a lot of the historic elements.”

The HTC can be combined with other incentives to move forward projects that wouldn’t otherwise. Critics say the credit doesn’t do enough to warrant its cost.

“It is a very small percentage of development,” Meijer acknowledged. “There are far more (projects) that don’t take the tax credits.”

Part of that is due to program restrictions. In order to qualify for the HTC, developers must spend at least as much as the structure’s assessed value. While only a few developers may use the credit, proponents argue it’s essential for certain projects.

“It isn’t a huge program, but it packs a huge punch,” said Peggy Moretti, executive director of Restore Oregon.

The HTC has been used by Oregon developers on projects totaling nearly $640 million since 2001, according to Restore Oregon. Nationwide, the credit has leveraged more than $84 billion of improvements and helped preserve 42,293 structures since its inception in 1976, according to the National Park Service.

“The value of the projects is quite significant,” Moretti said. “It has benefited Portland greatly. Portland has gotten the lion’s share. It makes more sense from a sustainability standpoint to refurbish buildings that are already there. It has helped retain the sense of place.”

Moretti also pointed to a 2015 Rutgers study that found the program produced an estimated $1.20 in tax revenue for every $1 spent.

“There is no downside to this from an economic or public policy standpoint,” she said.

The Senate passed a bill that would keep the HTC at 20 percent, but at 4 percent per year over five years. That version is before a conference committee as it seeks to work out differences from the House version. So, the HTC’s fate essentially hasn’t been decided yet.

“I just think it defies logic to do away with something that turns a profit,” Moretti said. “Some of these tax breaks are pork, but that is not the case with this one. We’re hoping reason will prevail.”

If legislation eliminates or significantly weakens the tax credit, many preservationists would likely look elsewhere for financial assistance.

“There has been the discussion at the state level to craft a state version (of the HTC),” Garver said. “The state credit could step in and help save some of those projects.”

The preservation community is hoping that won’t be necessary. Developers, architects and preservationists are lobbying members of Congress in an attempt to save the HTC. One of their biggest allies has been U.S. Rep. Earl Blumenauer, D-Ore.

“Why would House Republicans take away a tool that has been used in more than 100 projects around Oregon and created millions of jobs across the country,” Blumenauer stated via email. “It’s ridiculous.”

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The $15.9 million restoration of a pair of historic buildings in Old Town/Chinatown is nearly complete, and a grand opening celebration will be held this week. The Erickson Saloon and Fritz Hotel Buildings, located on Southwest 2^nd Avenue and Southwest 3^rd Avenue, respectively, have been combined and turned into the Erickson Fritz Apartments. The mixed-income project features 62 studio and 1-bedroom apartments, which project developer Innovative Housing, Inc. expects to be fully leased by the end of August.

Innovative Housing, Inc. purchased the buildings from the Bill Naito Co. last year and hired LRS Architects to design the Erickson Building remodel, and ORANGEWALLstudios to design the Fritz. The project’s general contractor was Silco Commercial Construction Inc., which subcontracted Djoseland Construction Services for project supervision, framing, and finish work. The grand opening celebration will be held Thursday, July 23^rd from 5-7 pm at 9 N.W. 2^nd Ave.

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Renovations to convert a former saloon in Portland’s Old Town Chinatown neighborhood into workforce housing are nearly complete.

Construction work on the Erickson Saloon building, at Northwest Second Avenue and West Burnside Street, is scheduled to wrap up in time for an unveiling party later this month, said Sarah Stevenson, executive director of Innovative Housing Inc. The nonprofit organization led a $15.9 million project to convert the Erickson building and the adjacent Fritz building into the 62-unit Erickson Fritz Apartments, which include a mix of affordable and market rate housing.

“The finishing touches are still going in,” Stevenson said.

A renovation to create 19 apartments in the smaller Fritz building, which faces Northwest Third Avenue, has already been completed and it’s now fully occupied, she said. Most of the 43 units in the Erickson building are pre-leased and Innovative Housing is awaiting final approval from Portland building officials that will allow those tenants to move in. The entire complex should be completely leased up by the end of August, Stevenson said.

Innovative Housing will host a free public opening celebration on July 23 from 5 to 7 p.m. at the new apartments. The festivities will include food and drink provided by Old Town restaurants, craft beer and spirits, a photo booth and live music. In the complex’s two courtyards, attendees will have a chance to view newly installed art installations inspired by the history of the buildings and that use items found during the renovation project.

Silco Commercial Construction Inc. served as the project’s general contractor with Djoseland Construction Services subcontracted for supervision, framing, and finishing work. The Erickson Building remodel was designed by LRS Architects, while the Fritz was done by Orangewallstudios.

The Erickson’s Saloon or Erickson’s Workingman’s Club was a Portland landmark that opened in the 1880s. The saloon took up most of the block and was known for its 684-foot bar. When the Willamette River rose in 1894, Erickson’s set up a floating bar on a barge at Northwest Second and Burnside.

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A skylight frame built to cover a light well at the Erickson Building in Old Town/Chinatown was assembled and lifted into place last week. Innovative Housing, Inc. is converting the building and the adjacent Fritz Building to a 62-units of workforce housing.

A total of four skylight-covered light wells have been cut into the buildings to provide natural light for interior units and ground-floor atrium space. Concrete shear walls have been poured in the light wells to provide seismic support.

The skylight frame was fabricated and erected by Buffalo Welding, and lifted into place by Axis Crane. The project’s general contractor is Silco Commercial Construction Inc., with Djoseland Construction Services subcontracted for supervision, framing, and finishing work. The Erickson Building remodel was designed by LRS Architects, while the Fritz was done by Orangewallstudios.

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­A pair of historic Old Town/Chinatown buildings are undergoing a major overhaul to become a mixed-income housing development. The Erickson Building on Northwest 2^nd Avenue and the Fritz Building on Northwest 3^rd Avenue abut at the center, and are being connected to form a 62-unit apartment building.

The project’s developer, Innovative Housing Inc., purchased the buildings from the Bill Naito Co. earlier this year and hired two firms to design the remodel. LRS Architects is working on the Erickson Building, while Orangewallstudios is handling design work for the Fritz. The project’s general contractor is Silco Commercial Construction Inc., and Djoseland Construction Services is subcontracted for supervision, framing and finish work.

Work on the Fritz Building is scheduled for completion this December, and the Erickson is slated to wrap in May 2015.

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Innovative Housing Inc. has closed on its purchase of the historic Erickson and Fritz buildings in Old Town Chinatown, and moved a step closer to its $15.5 million renovation.

The nonprofit affordable housing developer bought the two adjacent buildings (which front Northwest Second and Third avenues, between Couch and Burnside streets) from Bill Naito Co. for $2.2 million. Innovative Housing plans to turn the combined 51,381-square-foot space into workforce housing.

Both buildings have colorful stories beyond their decorative brick facades and elaborate cornices. The Erickson opened in the 1880s as Erickson’s Saloon – a roughneck haunt named for patron August Erickson. The Fritz was named for Fred Fritz, who operated a saloon and cabaret theater during the same time period.

Innovative Housing will preserve the exteriors while converting the interiors into 62 workforce apartment units. Ten units will be market-rate, but most will be for individuals earning 50 to 60 percent of the area’s median family income.

A full seismic upgrade will be required; however, instead of reinforcing the exterior frame, Innovative Housing will create an interior courtyard with concrete shear walls that run from the foundation to the roofline, Executive Director Sarah Stevenson said. The approach preserves the historic appearance, which is critical to project financing.

Innovative Housing is raising equity for the project through the sale of federal historic tax credits and a federal low-income tax credit. The Portland Housing Bureau also awarded the developer an approximately $6.3 million cash grant, which is tied to a commitment to provide affordable housing for 60 years.

Stevenson said she hopes to close soon on a construction financing package with Wells Fargo so that work can start in June. Silco Commercial Construction Inc. is the general contractor. LRS Architects is handling design for the Erickson building; ORANGEWALLstudios is handling it for the Fritz.

Robert Black, senior vice president for NAI Norris, Beggs & Simpson, brokered the purchase for Innovative Housing. He said the project will follow in the footsteps of the Modern Rich Apartments – a nearby historic building Innovative Housing converted to workforce housing in 2012 – and add to the vitality of Old Town Chinatown.

“(The Modern Rich Apartments) was the model they were trying to leverage off of,” Black said. “That’s nicely populated with good retail on the bottom, and it has these great rehabbed historic units up top. It was a successful project, like this one will be. It’s not the norm of what everyone else is doing.”

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Whiskey, wagers and women all could be found in Erickson’s Saloon.

With a 684-foot bar, card rooms and a brothel, the brick building at Northwest Second Avenue and West Burnside Street was something of an institution when Portland was still a rough-and-tumble logging town. In the flood of 1894, patrons literally paddled in boats to reach the watering hole.

“People were so desperate to get there that they set up a floating bar,” said Sarah Stevenson, executive director of Innovative Housing Inc., a Portland affordable housing developer. “There’s a lot of legend and lore around the Erickson Saloon.”

Today, the building is vacant; however, with a trifecta of public investment, Innovative Housing is hoping to turn it into workforce housing and ignite neighborhood revitalization.

The nonprofit is planning to transform the Erickson building and the adjacent Fritz building into a 62-unit apartment complex. The project will be similar to one that IHI completed in September: For the Modern Rich apartments, a 107-year-old hotel was converted into 34 workforce studios.

The residential portion of that building leased up before construction was even halfway completed, and IHI sees a pent-up need for more housing in the neighborhood.

“There has been a lot of investment going on by businesses and schools, and so the neighborhood is really kind of popping, and people want to be here,” Stevenson said. “They want to be near where they work and go to school, and there hasn’t been any market-rate housing anywhere in the neighborhood.”

Since 2000, approximately $100 million has been invested in Old Town Chinatown to serve institutions like the University of Oregon, the Oregon College of Oriental Medicine and Mercy Corps. Only the Modern Rich and the modest Everett Micro-Lofts have provided market-rate housing, Stevenson said.

The bulk of the Erickson-Fritz’s 62 units will serve individuals earning 50 to 60 percent of the area’s median income – approximately $24,000 to $29,000 a year. Ten units won’t have any income restrictions, and two units will be reserved for very low-income tenants.

Presently, Old Town is active during work hours and late at night. Gary Hartill, president and creative director of ORANGEWALLstudios, which is partnering with LRS Architects on the project, said housing is needed to fill the gaps.

“Once you get people living in the neighborhood, other services follow,” Hartill said. “You get restaurants and coffee shops and amenities that bring more life to the street.”

Old Town Chinatown has many vacant buildings that could play that role, but code requirements present challenges. The Erickson and Fritz buildings will require full seismic upgrades, which Stevenson said would never pencil without public subsidies.

The Portland Housing Bureau last week identified the Erickson-Fritz project as one of three that will be able to draw from a pot of $14 million for affordable housing efforts. Stevenson said the nonprofit also is applying for historic tax credits, as well as a 9 percent federal low-income housing tax credit that the organization will sell to raise equity. IHI is awaiting approval on the latter two funding sources.

As with the Modern Rich, the developer will address seismic issues at the Erickson and Fritz buildings by dropping concrete light wells through their centers. The idea introduces structural support, as well as an opportunity for natural light to reach interior units and courtyards.

IHI is hoping to have all the financial puzzle pieces in place by the end of this year, and then start construction in 2014. Silco Commercial Construction and O’Neill/Walsh Community Builders are partnering to tackle general contractor duties. IHI currently is leasing the property from the Bill Naito Co., and must purchase the buildings by January 2014.

Until then, Stevenson said her organization is looking to partner with the Architectural Heritage Center to host historic tours, so people can witness the building before and after the project. Hartill said that walking through the old saloon is memorable.

“Back in its more sordid history, it was actually … Portland’s biggest brothel, which is kind of creepy because you go upstairs and you just see these tiny rooms – halls and halls and halls of rooms,” Hartill said. “I think we’re excited to bring it into more of a positive use.”

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