Tax credit sought for eatery/depot project
Jul 30, 2013 at 10:10 AM
Plans for the future home of Tupelo Honey Cafe at the historic CC&O Railroad Depot in downtown Johnson City are moving forward as the building’s owners and architects are seeking a tax credit through the Investment Tax Credit Program.
The income tax credit, which is one of two offered, is 20 percent of what an owner spends rehabilitating the building.
Asheville, N.C.’s Glazer Architecture has been tasked with the design of the both the depot itself and Tupelo Honey Cafe.
The architecture firm has worked on about 40 different projects in historic downtown Asheville, N.C., including a mixture of restaurants and residential units. About 15 of those projects have utilized tax credit programs.
When it comes to restoring a historic building, being eligible for a tax credit is often times a saving grace for developers, according to Glazer Architecture principal architect Patti Glazer.
“For a lot of these projects, the tax credit made the different for the developer in having the numbers work,” she said.
To be eligible for the program, the building must be listed on the National Register of Historic Places or listed as a contributed structure within a National Register Historic District, the adjusted value of the building must be spent during restoration, and the rehabilitation must meet The Secretary of Interior’s Standards for Rehabilitation and Guidelines for Rehabilitation of Historic Buildings.
Glazer said tax credits are only meant to be used for major renovation projects.
Most states offer an additional 20 percent tax credit program for preservation of historic properties. but Tennessee does not have its own.
Glazer said that’s why those types of projects done in Tennessee tend to have a more challenging road ahead than they would across the mountain in North Carolina or in Virginia, where projects can qualify for both state and federal tax credit programs.
“We’ve done enough of these projects that we know generally what’s going to be accepted or not accepted or approved by the state Department of Interior, who are the ultimate deciders,” she said.
The application process for Tennessee’s tax incentive program includes documenting the history of the structure and its role in the development of the area, documenting all historic features of the property and submitting detailed drawings and plans of what is being done to the building during the construction, repair and restoration process.
After all of the paperwork and preliminary photos are submitted, the final part of the application requires photos to be taken of the finished product to show what original features are still in place.
“Once all of that is signed off and approved, that’s when the historic tax credits kick in,” Glazer said.
Since the application and approval process is such a lengthy endeavor, Glazer said it’s extremely helpful to get guidance from officials with historical commissions in order to make sure there won’t be any significant speed bumps along the way.
“Most projects can’t afford to sit around and wait until you find out sort of the verdict of whether or not a certain thing is approved and that’s why we do these preliminary walkthroughs to get kind of a sense or a reading of how they will be interpreted and sometimes they can make valuable suggestions,” she said.
In terms of the depot project, Glazer said they visited the site with Louis Jackson, historic preservation specialist with the Tennessee Historical Commission, to look at three details of their plans that could potentially be controversial in regard to gaining approval for the tax credit.
The first aspect deals with plans to put windows in the back brick wall that overlooks the train platform.
“Functionally, for Tupelo Honey Cafe to work, they are putting entrance back there and they also want to have good visibility from indoors to the outdoor eating area,” Glazer said.
After they visited the site a few weeks ago, Glazer said Jackson found building plans from 1909 that show openings in the back wall.
Knowing that not all the brick is original will help with their argument for installing windows in that wall, Glazer said.
The second aspect relates to a covered outdoor room that is planned to be put in between the entrance and the outdoor seating area.
Jackson selected one of three designs for that area that Glazer said would be most likely be suitable for the building as they move forward with their application.
The final aspect of the plans deals with the possibility of having to install an exterior staircase on the two-story structure that not house Tupelo Honey Cafe.
Glazer said she and the building owners will be conducting a building code study to determine whether a second exit is required in that portion of the structure.
While the depot is in need of a lot of work, Jackson said it’s still in great condition.
“The building is a neat building. It’s still very intact and I walked through with the architect from Tupelo Honey, as well as the owner and ... usually you find that places like that have been gutted. Downstairs is fairly intact. The walls have been rearranged a little bit,” he said.
Once the building is restored and approval for the tax credit is received, Jackson said the depot’s restoration could lead to a second chance for more historic buildings in downtown Johnson City.
Other than the long process that’s ahead of everyone involved, Glazer said she doesn’t see anything that could keep the depot from being restored and Tupelo Honey Cafe opening by their projected date in fall 2013.
“It was intended for industrial, heavy-duty use and the railroad guys didn’t mess around. They built really strong structures. There is remedial work that needs to happen, but nothing that is a deal-killer,” she said.
Tupelo Honey Cafe owner Steve Frabitore said he would like to see the restaurant open by Sept. 1 of next year.
Until then, Frabitore is excited about the opportunity to revitalize a historic landmark of Johnson City into something that will benefit the entire community.
“The depot in Johnson City is a great example of everybody winning. That building is falling apart. The city really wanted to see it remain an iconic landmark. The developer and the city had already come toegether ... and we, as a tenant, it’s just a win-win-win,” he said.
The Asheville, N.C.-based eatery has been reaching out to its new local fan base with its new Facebook page at www.facebook.com/tupelojohnsoncity, which features updates from the restaurant, including renderings of what Tupelo Honey Cafe’s Johnson City home could look like.
Editor's note: An earlier version of this article incorrectly referred to the federal Investment Tax Credit Program as the Tennessee Investment Tax Credit Program. Historical preservation projects done in the state are eligible for the 20 percent income tax credit offered at the federal level. Tennessee does not offer an additional program as stated in the earlier version of the article.