Mr. Tess

Architecture & Design

Historic Hotels: What does it mean to own and manage a hotel listed on the National Register

By John Tess, President & CEO, Heritage Consulting

At first, the notion might be intimidating: Being responsible for properly maintaining a building on the National Register of Historic Places. In this competitive world, isn't it challenging enough just keep the property well-managed to keep the guests and the owners happy? In fact, the maintenance of a historic hotel should not be any more worrisome than any other professionally managed property. It simply requires a bit more for thought.

There are three fundamental areas of concern: The first is legal. As a National Register property, what are my legal obligations? The second relates to obligations created with the use of preservation incentives. Third and final is operational. Does being listed on the National Register create any operational issues?

The first question is that of legal obligations. Does National Register listing add any additional burden on the property manager? When I want to make changes to the building, who do I need to call for approvals? Are there circumstances whereby the National Register designation may be revoked?

It is important up front to note that the National Register of Historic Places, managed by the National Park Service, does not impose any legal restrictions on a property. On the national level, the listing is purely honorific. There is never an occasion when someone from the National Register will come inspect the property. Once a property is listed on the National Register, it is listed permanently. No one periodically reviews the listing for continuation. The only potential for losing National Register designation is if something happens that undermines the basic integrity of the structure: this could be something catastrophic, such as major fire, or a major remodeling gone awry. Bathroom remodels, restaurant updates, these generally have no impact on listing in the National Register.

So, on the national level, there is no added burden and there is slight risk of a National Register listing being revoked. And there is no one to call to examine renovation plans or proposed changes. Again, the National Register listing on the national level is purely honorific.

The local level is something quite different. Many cities and towns-directly or indirectly--use the listing in the National Register as a basis for determining what is and what is not historic in their communities. Here it is important for a property manager to know what the exposure is. Generally, local land use laws for historic resources relate only to design review on the exterior. If you want to replace the windows, repaint the facade, and install a new sign - these initiatives typically require review by the local government. The process and cost depending on the degree of change. If relatively minor, these changes may be reviewed and approved by staff at a nominal fee. If major, or particularly controversial, the proposal likely will go to the Local Landmark Commission to be reviewed at public hearing. Landmark hearings tend to be both time consuming and expensive.

In general terms, historic design review relates only to the exterior of a building. Many Landmark Commissions attempt to assert interior design review authority, and in some communities and for some properties, there is interior design review authority.

Again, the wise property manager will endeavor to determine their exposure prior to a specific situation. Landmark rules are found in the City Code, often in the Zoning Code. Increasingly, this information can be found on-line at the city or town's website. For some, code language is easily understandable; for others, it may be better to hire a planning or preservation consultant for a couple of hours to explain the code. It is possible to speak to a city's preservation staff directly, however, in our experience, not infrequently, staff tends to interpret the code and its authority broadly.

In short, being listed on the National Register does not result in any national obligation, but usually opens the door to local design review when changes are proposed for the exterior and in rare cases the interior. The key to success is for the property manager to be familiar with local zoning laws, or in lieu, to have a trust resource person who has that familiarity.

The caveat to the discussion above is when the property has used preservation incentives as part of the redevelopment. This is our second area of concern. While some properties are listed on the National Register for the honor and distinction, equally often they are listed as part of a redevelopment incentive package. The federal government offers an investment tax credit worth 20% of the rehabilitation costs (including soft costs) for buildings that are rehabilitated according to the Secretary of Interior Standards for Rehabilitation. State governments offer similar incentives. To secure these credits, the rehabilitation-interior as well as exterior--must be reviewed by the National Park Service and the State Historic Preservation Office.

The trick is that in addition to the initial review, the incentive carries with it a five year window during which time the Park Service (and by extension, the State Historic Preservation Office) maintains design review authority. Simply put, any physical changes (exclusive of fixtures) during this five year needs to be review and approved by the National Park Service. The five years begins when the building is put into service. After the five years, the authority is extinguished and there are no residual review authorities.

However, some incentives extend beyond the five years. The State of Oregon has a Special Assessment for Historic Properties. The incentive freezes the assessed value of a historic property for fifteen years and in return the State Historic Preservation Office has design review authority for the life of the incentive. Similarly, local incentives - such as transfer of development rights - or easement donations - likely involve preservation agreements that extend beyond the Park Service five year window.

As with the zoning issue, it is important for the property manager to be fully aware of his exposure. Again prior to any specific requirement, he should investigate whether the hotel used any particularly federal, state or local historic preservation incentives and become familiar with the requirements of that incentive.

The third area of concern is in operations and maintenance. The value of being listed in the National Register of Historic Places is the marketing cache that it attached to the honor. It connotes a place of history, an ambiance, and a story. The value particularly is in distinguishing the property from vanilla box new construction.

One of the tenets of heritage tourism is that people seek places that offer stories which they can then relate. For example, the Blackstone Hotel in Chicago, is a beautiful building built in 1909. But one of the salient facts in its history is that this was where "the deal" was cut to make Warren G. Harding the Republican nominee for the Presidency in 1920. People can walk by the specific "smoke filled room." Without taking anything away from the building's architecture, that story adds value in distinguishing the hotel in the guest's experience and results in significant word-of-mouth promotion.

Every building on the National Register carries with it a story. That story is usually found in the document nominating the building to the National Register. The property manager can get a copy from the State Historic Preservation Office. Appropriately used, these stories can add substantially to a property's cache.

At the other end of the spectrum, being listed on the National Register carries an expectation of quality and design in the eye of potential guests. That expectation is found in the ambiance, the finishes, the furnishings.

Sometimes, however, meeting these expectations can be a problem. The problem is exposed when cleaning and maintenance lags. Historic hotels, like historic houses, are often challenging. Historic surfaces and spaces often require intensified maintenance with specific cleaning treatments. Equally problematic are the inevitable repairs to historic fabric. Caught off-guard or without attention, inadequate maintenance and inappropriate repairs can fundamentally undermine the historic character of the hotel.

Once again, the solution is to be pro-active. In addition to standard housekeeping, a historic hotel needs to embrace the notion of cyclical inspection and maintenance. It is critical that the property manager come to understand the historic materials in the hotel, the proper maintenance techniques for each material and the proper cleaning solutions for each material. In this regard, a wise practice is to create a cyclical maintenance manual for the property that details the who, when and how of proper historic maintenance.

The key to successful management of a National Register property is coming to understand the history of your building, understanding its most recent redevelopment and understanding its maintenance requirements. Critical tools include securing a copy of the National Register nomination, gaining access to the most recent redevelopment plans (including any incentives used) and developing a cyclical maintenance plan for the property. Pro-active planning can prevent substantial headaches in the future.

John M. Tess is President of Heritage Consulting Group, a firm that assists property owners, attorneys, accountants, financial institutions and investors maximize the value of historic real estate assets through the use of federal tax incentives and other tools. Heritage has represented projects totaling more than $1 billion. Heritage specializes in linking developers with corporate and institutional investors active in historic tax credits. Heritage Consulting Group is headquartered in Portland, with offices in San Francisco and Washington, D.C. Mr. Tess can be contacted at 503-228-0272 or jmtess@heritage-consulting.com Extended Bio...

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