This post originally appeared at https://www.badgerinstitute.org/state-preservation-board-does-historic-pivot-on-100-east/

Puts developer one step closer to massive tax break

A reversal by the State Historic Preservation Review Board on the significance of the 35-year-old “postmodern” 100 East building in downtown Milwaukee could mean tens of millions of dollars in tax breaks if the building is fully renovated.

While the board’s focus has ostensibly been on the debatable architectural importance of 100 East, it’s unlikely the mostly unoccupied building would be the target of a major remodeling without the possibility of generous state and federal tax incentives only available if the building is deemed historic.

The reliance of developers around the country on those tax breaks — and their persistence in seeking them — raises anew the question of whether historic designations are as much about money as preserving the past.

100 East Propco LLC, an investor development group that includes Klein Development Inc. and Derek Schneider, has said it intends to convert most of the 35 stories — more than 435,000 square feet of office space — to apartments beginning next year. The development group has made it clear the conversion depends on the tax credits that could cover up to 40% of the cost of converting the building, which is at the northwest corner of Water Street and Wisconsin Avenue.

The tax breaks depend on several different bodies or entities deeming the building historic.

In July, the Milwaukee Historic Preservation Commission — after a discussion that focused primarily on the development deal and financing rather than on history or architecture — voted to nominate the building.

Before approving the nomination that day, the Milwaukee commission engaged in a back-and-forth about high vacancy rates for downtown office buildings, the housing market, and the need for the designation in order to secure financing. Commission staff acknowledged the development package depended on national historic status and the tax credit eligibility that would come with it.

The decision to nominate the building for historic status didn’t much matter at the time because it is only one step in the process, and shortly thereafter the state Historic Preservation Review Board in late August rejected the nomination.

But after that initial rejection, the state Review Board at its quarterly meeting on Nov. 15 heard a new presentation for 100 East’s historic status from Heritage Consulting Group, which describes itself  as a specialist “in securing historic tax credit approvals and other incentives for the rehabilitation of historic properties.”

Amanda Loughlin, senior project manager for the Philadelphia firm, kept her presentation focused on new and detailed information about 100 East as a “pristine example of postmodernism.”

This time, Loughlin made a stronger case, said Valentine Schute, chair of the board’s architectural committee, to the board at its Nov. 15 meeting. It “added pieces that were missing,” he said.

Schute did not elaborate on those pieces when asked in an email by the Badger Institute. When asked about the stronger case, Colleen Lies, assistant director of strategic communications for the review board’s parent organization, the Wisconsin Historical Society, provided a copy of the state’s 97-page application with the National Register to the Badger Institute.

“The 100 East Building is locally significant under CRITERION C because it is the best example of the post-modernist style within the context of this design era that flourished in Milwaukee during the 1980s and 1990s, an era that witnessed a construction boom in downtown,” the document says. 

When asked in an email about the tax credits and her presentation, Loughlin told the Badger Institute, “I cannot discuss the plans for the building or tax credits, but I can chat about the significance of the building. It’s really all about perspective. Some people will never love PoMo (postmodern); however, it’s more than liking a specific style. The National Register is about documenting history, and sometimes ‘history’ happens sooner than we anticipate.”

It was Loughlin’s Heritage Group that persuaded the National Register of Historic Places to list One Bell Center, a 44-story postmodern office tower in St. Louis, in 2022.

Historic designations took a back seat to the desperate need for tax credits for a building the St. Louis Post Dispatch called  “a long-standing albatross — one of three large, vacant structures in downtown that have come to represent a stagnant central business district.”

The building, also called the AT&T Tower, built for $120 million in 1986 and vacant since 2017, was sold to a developer for $4.5 million two years ago and in April to the Goldman Group of Boston for a little more than $3.5 million.

Nothing has been done with the building, but the Post Dispatch estimated that a developer doing a full renovation could claim as much as $80 million in state and federal tax credits because of the historic designation.

At the time One Bell Center was being considered for historic status, critics in St. Louis questioned the legitimacy of the claim and decried the tax credit grab.

“All we know for sure is that when it comes to historic preservation, St. Louis is exceptional. And the phone company’s deserted white elephant is not,” the Riverfront Times wrote in a blistering critique in 2022.

Fortunately, this tax credit chase under dubious historic pretenses and at this scale is rare. In addition to One Bell Center, the Badger Institute review of National Register records could find only one other postmodern example, the Portland Building, designated in 2011.

Critics have called it the most hated building in Portland, dubbing it postmodern shlock. One critic declared, “In professional architectural jargon, the building is, in fact, a turd.”

Critics at one time called 100 East “a bad joke” and “a parody of City Hall.” The area where the building stands is hardly blighted, as the One Bell Center neighborhood is in St. Louis, but it is uncertain the market will be favorable to convert this “exceptionally significant” building, as Loughlin said, to apartments in 2025 as planned.

The application for 100 East now moves on for consideration by the National Register of Historic Places, a branch of the National Parks Service. A review and decision on an application generally takes about 45 days, according to the National Register website.

If approved, the developers are eligible to apply through the Parks Service for historic preservation tax incentives.

They are also eligible for state historic preservation tax credits through a program run by the Wisconsin Economic Development Corporation.

Mark Lisheron is the Managing Editor of the Badger Institute.

Any use or reproduction of Badger Institute articles or photographs requires prior written permission. To request permission to post articles on a website or print copies for distribution, contact Badger Institute President Mike Nichols at mike@badgerinstitute.org or 262-389-8239.

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