from Real Estate Weekly, Monday, April 11, 1988.
Tom Anderson, A Brooklyn-based architect/developer, admired the old stable at 159 Carlton Avenue the moment he saw it. With its three wide-arched entrances, its columns, trusses and other decorative details, the 100 year old building suggested the almost vanished flavor of 19th century New York.
"I loved the way it looked and knew it had to be preserved" says Mr. Anderson, who soon learned that the Fort Greene structure was not registered as an historic building and was therefore in danger of being razed or defaced. "I decided to buy it and work toward having it designated as a landmark."
One year, and many meetings with the state and federal historic agency officials later, the building was designated a landmark by the U.S. Department of the Interior's Federal Register of Historic Places. At that point, Mr. Anderson was ready to proceed with his plan to convert the building into a condominium residence with 12 units, each would be unique in its own way.
While landmark status is restrictive in many ways—all renovation work must undergo exhaustive scrutiny by the designating agencies—it can sometimes be economically beneficial to owners and developers, according to Mr. Anderson, whose firm, Anderson Associates, has been involved in several similar projects.
Current tax laws permit investment tax credits equaling 20 percent of qualified expenditures for historic rehabilitation projects, with the proviso that the original investor retain the property for five years or forfeit a portion of the credit, says Mr. Anderson. "Qualified expenditures," he explains, "are defined as practically all the monetary outlay associated with the job except for acquisition costs, taxes and real estate marketing costs."
In order to carry out the $1.4 million gut renovations, Mr. Anderson and his investors formed a limited partnership in which each investor held a number of shares. "The advantage of a limited partnership is that each investor's liability is limited only to his investment. This is particularly appropriate in a construction project, which is often the riskiest phase of a development project," he notes.
In order to carry on with the work, the limited partnership, with Mr. Anderson as the general partner, obtained a construction loan from the Community Preservation Corporation, a private New York lending organization which specializes in funding projects in developing neighborhoods.
Subject to limitations imposed by the current Condominium Law in New York State, the limited partnership provided the opportunity for each investor to exchange his shares, tax free, for ownership of one or more condominium apartments. In that transaction, investors received over $20,0900 in tax credits per apartment, says Mr. Anderson.
"Of course if any of them sell their units before five years are up, they will have to return to the government a percentage of that credit proportionate to the amount of time remaining in the five year period," says Mr. Anderson. "Otherwise, they have complete control over what they do with their condominium." Many of the investors have, in fact, rented out their apartments for attractive prices.
In addition to having greater control over their investment than they would if the buildings had been a cooperative, says Mr. Anderson, the investors were also able to dispense with the noneviction plan which would have been required had the building originally been planned as a rental and later converted to condominium ownership.
As for the apartments themselves, the architect/developer cannot suppress his pride in their individuality. "It's an old canard that you have to make every apartment exactly like the one next door," he says. "It doesn't cost more than a couple of dollars per square foot to put thought into the design and give each apartment a personality of its own."
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