Blog - Warfield at Historic Sykesville

How You Can Help Change Warfield’s Future Right Now

Things are moving quickly for proposed legislation that could act as a significant boost for Warfield and other large-scale historic preservation projects. Senate Bill 885, a potentially game-changing bill that proposes a tax credit for catalytic revitalization projects like Warfield, will be in front of Maryland’s Senate Budget and Tax Committee at 1 p.m. on Wednesday, March 3, 2021. Here are some main points of the bill, how the tax credit will benefit Sykesville, the Warfield project, the surrounding community, and the state, and how you as a citizen can get involved right now to give this bill the public support it needs to move forward in the legislative process.

Taken in December 2019 at the National Park Service’s Historic Preservation Training Center in Frederick, MD. Left to Right: Roger Conley (Warfield), Moss Rudley (Superintendent of the Historic Preservation Training Center), MD State Senator Katie Fry Hester, Steven D. McCleaf (Warfield), and Nicholas Redding (Preservation Maryland).

Senate Bill 885: Income Tax Credit for Catalytic Revitalization Projects

This bill was introduced by Senator Katie Fry Hester on February 9, 2021. The purpose of the bill is to allow the owners of qualified properties to claim a credit against state income taxes for certain rehabilitation costs and other construction costs for projects in the State of Maryland identified as “catalytic.”

According to the bill, a catalytic project must:

  • Be located in the State of Maryland;
  • Be presently or formerly owned by the State of Maryland or the federal government;
  • Foster economic, housing, and community development within the immediately surrounding communities if developed;
  • Have been previously used as a college or university, K-12 school, hospital, mental health facility, or military facility or installation.

The tax credit would be in the amount of 20% of eligible costs up to a maximum of $15 million. Warfield would be able to make full use of this tax credit in rehabilitating the remaining vacant historic buildings located in Parcel D, which contains all of the project’s historic structures.

You can read the full text of the current draft of the bill here.

What This Bill Means for Warfield, the Sykesville Community, and the State of Maryland

Most large-scale historic preservation projects like Warfield require multiple government incentive programs to achieve financial viability because the cost to preserve and rehabilitate historic structures far exceeds the cost of new construction. Federal and state historic tax credit programs typically play an essential role in bridging this gap.

The Warfield team has worked hard with Senator Hester, the Department of Planning, and the Department of Housing and Community Development on this bill because the existing Maryland Historic Preservation Tax Credit program falls woefully short of what is needed to support the redevelopment of Warfield and similar large historic complexes in Maryland. Current program caps currently stand at $9 million annually and $3 million per project (compared to $100 million in Virginia and even unlimited funding in several states).

All of this said, this bill is not just about saving and preserving cultural resources— it’s also about economic stimulus. When states invest in historic preservation tax credit programs, the result is community revitalization and economic development that pays for the tax credits many times over. Ethan Reed of Real Property Research Group estimates that each $1 of tax credits invested yields the state $8.13 in total economic output. He also indicates that job creation is significant, with 49.2 jobs created during the construction period throughout Maryland for each $1 million investment by the state.

If Senate Bill 885 is successful, Warfield would likely be the first project approved for the new catalytic tax credit given that the Warfield team has been at the forefront of the effort to champion this program. It is also important to recognize the positive impact that the tax credit proposed in this bill could have a huge impact in saving Warfield and several other historic campuses around the state and spurring economic development in the communities in which these complexes are located.

How You Can Get Involved

Public support for Senate Bill 885 is essential and we strongly encourage all members of the community to get involved as soon as possible ahead of the March 3rd hearing date. IF YOU WANT TO LEARN MORE AND HELP, please contact Steve McCleaf as soon as possible but no later than March 1, 2021.

Lastly, please sign up for updates on our website and to follow us on Twitter and Facebook for all the latest updates, as well as information on how to watch the testimony live as it happens. We will be posting links to the livestream on our social channels.

Read More

Maryland DHCD: An Important Strategic Partner for Warfield and the Town of Sykesville

Building H, now occupied by Alderson Loop

In a previous article, we discussed how most large-scale historic preservation projects require multiple government incentive programs to achieve financial viability. In particular, we covered the essential role that federal and state historic tax credit programs play in such projects, and how a proposed Catalytic Historic Tax Credit would help bridge a significant part of the current funding gap for Warfield and other large projects in Maryland.

In this piece, we look at the importance of another state program called the Strategic Demolition Fund, which is a revitalization program run by the Maryland Department of Housing and Community Development (DHCD). More generally, we will discuss the much larger role that the DHCD can play in both Warfield’s and the Town of Sykesville’s future success.  

The name of the Strategic Demolition Fund is a bit misleading given that grants can be used for more than just the demolition of blighted structures. Funds can also be used for activities such as site acquisition and assembly to create redevelopment-sized parcels for solicitation or planned development, site development, and construction-level architectural and engineering design. According to DHCD’s website, the “Strategic Demolition Fund seeks to catalyze activities that accelerate economic development and job production in existing Maryland communities,” which is a much broader mandate that one might initially assume.  

Warfield was recently awarded a $750,000 grant from the Strategic Demolition Fund by DHCD. Funds from this grant will be used to perform wetlands remediation work in Carrie Dorsey Park, the town park situated in the middle of Warfield, as well as other park improvements including additional asphalt trails, bridges, and modifications to the existing man-made oval pond located along Piney Run on the northern edge of the park. Not only will these improvements benefit residents of the Town of Sykesville who use the park, but they will satisfy project regulatory requirements that will enable two of the vacant land bays at Warfield to be developed to their full potential.  

We also intend to use the current grant award to repair and improve an internal road and parking lot serving buildings occupied by ZeteoTech and Alderson Loop, two of the three companies located at Warfield. These improvements are long overdue and will include the milling and repaving of asphalt, curb and gutter and sidewalk repairs, parking lot restriping, and minor drainage improvements. Such improvements are vital to retaining and attracting commercial users at Warfield.

Although grants from the Strategic Demolition Fund alone will be a smaller piece of the long-term funding puzzle than historic tax credits, they are a very important source of early-stage development funding for the project. More importantly, these grants will be part of a much larger package of incentives available through DHCD to support the Warfield project, that we expect will rival and even surpass the financing provided by historic tax credits. These resources could include access to additional tax credits for housing, and tax-exempt bond financing. 

It is important to note that DHCD’s investments in Warfield will also be an investment in the Town of Sykesville and Carroll County. DHCD’s support will enable and accelerate the development of the project, which will result in the expansion of the town’s and county’s respective tax bases, as well as significant economic development. There could even be additional direct state investment in the Town of Sykesville.

In recent years, DHCD has made apparent its willingness to invest in the Town of Sykesville. Since 2011, DHCD has invested over $500,000 in several town projects, most of them related to Main Street revitalization. Since 2013, DHCD has also made approximately $5.5 million in loans to Sykesville residents through Community Development Administration single-family loan programs. This demonstrates a remarkable commitment by DHCD to invest in a small town of 4,000 residents.

For more information on DHCD’s Strategic Demolition Fund, go to https://dhcd.maryland.gov/Communities/Pages/programs/SDF.aspx

For more information on DHCD in general, go to https://dhcd.maryland.gov/pages/default.aspx

Read More

Exploring Issues with the Maryland Historic Preservation Tax Credit

Group photo taken at the Jan 2020 legislative session, including MD State Senator Katie Fry Hester (front row, 3rd from L) and Steven D. McCleaf (2nd row, 2nd from L)

Historic preservation tax credits are the most significant source of project funding for rehabilitating historic complexes like Warfield. In addition to the Federal Historic Preservation Tax Credit Program, which is administered by the National Park Service and Internal Revenue Service, 39 states including Maryland have programs offering historic preservation tax credits. The federal and state programs all require rehabilitation of projects in accordance with the Secretary of the Interior’s Standards for Rehabilitation, which are quite extensive. 

Unfortunately, the existing Maryland Historic Preservation Tax Credit program falls short in many respects as a public policy tool and provides limited incentives for developers to undertake historic preservation projects. We at Warfield have been vocal advocates of overhauling the Maryland program, starting with the removal of (or a significant increase in) current program caps which currently stand at $9 million annually and $3 million per project.  

In general, developers will pursue a project only if it is financially viable without the state credit. The state credit does not provide a huge incentive to undertake difficult preservation projects and is often viewed by developers only as “icing on the cake.” Why is this? Simply put, low program caps make the process of securing state tax credits competitive, and therefore highly uncertain. In short, the current program is insufficient to create a true catalyst for rehabilitation, community revitalization, and economic development. 

Also, the existing caps make the program insufficient to meaningfully benefit large projects. In the case of Warfield, we estimate that a project including rehabilitation of all nine of our remaining vacant buildings at once be mathematically eligible for approximately $10 million in tax credits, which far exceeds the current program caps. Although this $10 million state tax credit alone would not be enough to make rehabilitation of the property feasible, it would be a vital part of a package of incentives including the federal historic tax credit, federal low-income housing tax credit, and various other government grants and financing programs. The Warfield project requires an “all of the above” approach to financing, which is not uncommon with historic preservation deals – particularly large ones.  

The Warfield team is working with state officials to find a solution to overcome deficiencies in the existing state historic tax credit program. In particular, we are working with Senator Katie Fry Hester (District 9) on a bill that would position Warfield to be the pilot project for a new “Catalytic Historic Tax Credit” that would operate outside of the state’s existing historic preservation tax credit program. This bill was originally slated for the 2020 legislative session, but unfortunately the COVID-19 crisis ended the session prematurely and killed any hopes for passage of the bill at that time. An updated bill will be introduced in the 2021 legislative session. 

We believe that a “Catalytic Historic Tax Credit,” originally proposed at $10 million per project, would not only benefit Warfield but would also be a useful tool to help preserve many other state-owned or formerly state-owned historic campuses around the State of Maryland. We are grateful for Senator Hester’s support in sponsoring the legislation to get this potentially transformational program on the table. 

Investment by states in historic preservation tax credit programs results not only in the preservation of historic resources but also in community revitalization and economic development that pays for the tax credits many times over. In The Economic Benefits of Maryland’s Historic Revitalization Tax Credit Program, Ethan Reed of Real Property Research Group estimates that each $1 of tax credits invested yields the state $8.13 in total economic output. He also indicates that job creation is significant, with 49.2 jobs created during the construction period throughout Maryland for each $1 million investment by the state.

Public support for the Catalytic Historic Tax Credit bill will be an important factor in getting this legislation passed. Be sure to follow us on Twitter and Facebook to stay current with the latest information on how you can get involved.

Read More

Understanding the Significance of Warfield Among Maryland’s Historic Complexes

Steering Committee Meeting; Sec. Robert McCord (L, with hand extended) and Senator Katie Fry Hester (R, in pink)

The 2019 Maryland legislative session was an important springboard for the future of Maryland’s (presently or formerly) state-owned historic complexes. Senator Katie Fry Hester sponsored a bill that was ultimately signed into law that required the Maryland Department of Planning to commission a study on the problem of preserving and rehabilitating these properties, namely the funding gap not covered by the existing historic tax credit and other programs. We spent the rest of the year working with a steering committee, headed by Secretary of Planning Robert McCord, and the state’s consultant to complete the study.

The study was released in January 2020 and was the basis for legislation in the 2020 session that would have directly benefited Warfield. This bill, also sponsored by Senator Hester, proposed a new historic tax credit program – called the “catalytic” tax credit – focused exclusively on rehabilitating large state complexes and returning them to productive use. Unfortunately, the COVID-19 crisis ended the legislative session prematurely and killed any hopes for passage of the bill and establishment of the program in 2020.

As we head into the 2021 session, legislators no doubt will be focused on budgetary and other issues related to the pandemic. Still, Senator Hester will be reintroducing the catalytic tax credit bill, and we at Warfield will work hard to promote this important bill with her over the next couple of months. We will delve into the details of the proposed tax credit program in a future article.

Warfield is featured prominently in the study as one of three case studies, outlining the history of the complex, the challenges and opportunities inherent in taking on rehabilitation and redevelopment, and specific recommendations. Some of the generalized recommendations that would benefit all historic complexes statewide and are applicable to Warfield included:

  • Provide incentives in the MD Historic Revitalization Tax Credit program specifically targeted to the redevelopment of state-owned historic complexes, by eliminating the per-project and annual appropriation dollar caps.
  • Increase the MD Historic Revitalization Tax Credit by five percentage points from 20% to 25% for divested government-owned historic complexes.
  • Establish a “catalytic” category in the MD Historic Revitalization Tax Credit program patterned after Ohio’s state historic tax credit (previously discussed above).
  • Permit the MD historic revitalization tax credit to be transferred by developers to third parties.
  • Provide an option for property tax abatement in addition to tax increment financing.
  • Increase funding for the Strategic Demolition Fund and improve access to this fund for divested government-owned properties.

In addition to the above, the study made additional recommendations specific to Warfield including:

  • Explore the availability of funding from the State of Maryland for environmental remediation, building stabilization, and selective demolition using Strategic Demolition Fund and Historic Revitalization Tax Credit funds.
  • Explore the availability of funding from the State of Maryland for the demolition of the decommissioned water tower located in Parcel H and relocation of the connected 12” water main that serves both Warfield and state-owned facilities located along Buttercup Road.
  • Perform an updated study to identify necessary infrastructure improvements on or near the Warfield property that may benefit Warfield and government-owned properties in the immediate vicinity.
  • Explore land-use changes that will permit redevelopment of the Warfield campus in a manner that is responsive to existing market demand based on updated market and feasibility study findings.
  • Explore the transfer to the current owner of Warfield certain surplus land and buildings owned by the State of Maryland and part of the Springfield Hospital Center and Maryland Police and Correctional Training Commissions campuses to support the redevelopment of the Warfield campus.

We will be discussing the finer points of some of these recommendations in future articles.

For more information, you can read the state study online – it provides a good foundation of understanding the importance of the Warfield project, as well as the long road ahead in terms of sourcing the necessary funds for rehabilitation and redevelopment.

Read More

Click Here to Join Our Email List