The Westin
St. Louis -- A
True Public/Private Partnership
The State
of Missouri has multiple tax credit programs to provide incentives
for investments and charitable contributions to approved projects.
This regular column
will feature examples of how the various Missouri state tax credit
programs benefit the State, generally, and St. Louis in particular
Ten years
ago, the historic, turn-of-the-century Cupples Station warehouse
complex was almost demolished. The old warehouses had been abandoned
for years and had become eyesores in downtown St. Louis. By next
fall, however, the former old Manhattan Coffee Co. warehouses
will be magnificently transformed into the luxurious Westin St.
Louis Hotel. The renovation will ensure the preservation of this
unique complex that was designed by noted architects Eames &
Young. The 10 warehouses in the complex were originally built
between 1894 and 1917.
Instead
of being lost forever, the Westin St. Louis will provide 242 luxurious
guestrooms and 15 suites with a variety of popular amenities.
In addition to these features, the hotel will provide ample conference
facilities and a mini spa. The Westin St. Louis is the first phase
of a $350 million mixed-use redevelopment of the Cupples Station
complex. The developer, McCormack Baron & Associates, is a
national leader in adaptive reuse and rehabilitation of historic
structures. In addition to The Westin St. Louis, the Cupples Station
complex will also eventually include more than 400,000 square
feet of first class office space, on-site restaurants, banking,
retail services, and covered parking.
The
renovation of abandoned warehouses into luxury hotels, offices
and retail space, however, is not cheap. The transformation of
four buildings of the Cupples Station complex into the elegant
Westin St. Louis will cost approximately $59 million. Although
most of the financing for this project will come from the private
sector, through equity and other private financing provided by
McCormack Baron, its partner Sun America, Inc. and Mercantile
Bank of St. Louis, a significant "prince" in this Cinderella story
is the State of Missouri. In 1997, the Missouri General Assembly
and Governor Mel Carnahan provided a powerful and increasingly
popular economic development tool to help ensure the restoration
and preservation of Missouri's historic landmarks through the
enactment of the Missouri Historic Preservation Tax Credit program.
But for Missouri's historic rehabilitation credit, renovation
of the Cupples Complex into the spectacular Westin St. Louis could
not have occurred.
Developers
like McCormack Barron that incur costs to rehabilitate commercial
or residential property qualify for Missouri's historic rehabilitation
tax credit if the proposed development meets certain criteria.
The property must have been certified by the Missouri Department
of Natural Resources as either an historic structure or a structure
that is located in a certified historic district. If the property
meets this standard, developers are eligible to receive a tax
credit equal to 25 percent of the qualified costs and expenses
of the rehabilitation to the extent that the qualified costs and
expenses exceed 50 percent of their basis in the property. There
is no per-project or annual
state limitation for the amount of credits that the Department
of Economic Development can award. The rehabilitation must also
meet standards established by the United States Department of
the Interior as adopted by the Missouri Department of Natural
Resources and the Missouri Department of Economic Development,
in order to guarantee the historic accuracy of the renovation.
Artist's renderings
depict the renovated Manhattan Coffee Co. Warehouse that is being
transformed into the luxurious Westin St. Louis Hotel, scheduled
to open this fall.
Missouri's
historic rehabilitation tax credit program is carefully designed
to ensure that a developer will receive the maximum economic benefit
from the credits. To the extent that a developer cannot use the
credits to offset their own Missouri tax liabilities, Missouri's
program permits developers to transfer, sell or assign them. The
good news for a developer like McCormack Barron is that there
is a ready market for the Missouri historic rehabilitation credits.
The Missouri Tax Credit Clearinghouse, a division of the Mercantile
Community Development Corporation, was the first bank to receive
federal approval to invest in, and then resyndicate these credits.
The Clearinghouse will purchase the Missouri rehabilitation credits
from a developer and resell them to taxpayers that can use them.
Above:
Actual display models of the rooms, shown here, can be viewed
now.
Missouri
is not the only state that is using economic development incentives
to help preserve historic landmarks like the Cupples Station complex;
14 other states now offer similar financial incentives to help
fund certified historic restoration projects. As with most other
states' programs, the Missouri historic rehabilitation program
is partially based on the federal historic tax credit program.
Missouri's program, however, is unique because it is the only
state historic tax credit program that permits a developer to
transfer the credits upon issuance in order to raise much needed
project funding. The transferability feature is key, because "but
for" the developers' ability to sell the credits, many historic
projects would not be economically feasible and many of Missouri's
historic landmarks would be lost forever. Fortunately for St.
Louis, Missouri's historic tax credit program is ensuring that
the Cupples Station complex will not be one of them.
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Left: The Westin St. Louis
