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Crescent Growth Capital, LLC

Crescent Growth Capital, LLC

Structuring project financing to incorporate tax credit equity.

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Historic Tax Credits

The Celestine (Hotel Maison de Ville)

July 22, 2016 by

Very few structures within New Orleans’ French Quarter predate the two fires, in 1788 and 1794, which destroyed most of the early building stock of the city. The circa 1800 service wing of 727 Toulouse appears to be one of the oldest structures still standing in New Orleans. It retains numerous features characteristic of dependencies constructed within New Orleans’ period of Spanish Colonial rule (1763-1803): brick masonry construction of solid walls without framing on the 1st floor, topped with a heavy timber, brick-between-posts effort on the 2nd floor, wooden balcony with simple wooden railing, the balcony covered by an extension of the roof unsupported by columns, unadorned bracket design and an interior devoid of corridors. The service wing’s front elevation is also individually noteworthy due to its step-back, accomplished by an attractive curve in the exterior masonry wall. The structure’s significance has long been recognized, as it was the subject of an Historic American Building Survey project in 1936.

The ground floor of the main house on the property is approximately two decades younger than its dependency. First mentioned in 1822, the main house documents an evolution typical of French Quarter properties throughout the 19th century. In the mid-1800s, the house was the residence of Antoine Amede Peychaud, inventor of the Sazerac cocktail. Sanborn Fire Insurance maps confirm that as late as 1885, the main house was 1 and ½ stories in height, with a five-bay ground floor topped with a side-gabled roof possessing two dormers facing Toulouse Street. Not long thereafter, the main house acquired a full second story; the 1896 Sanborn map depicts a 2-story structure now dedicated to commerce. “2nd-hand furniture store” is the listed business, and the service wing was used at that point as a stable and for storage. The late-19th century addition exhibits Eastlake detailing, with the new second story Toulouse Street façade sporting six bays of uniform dimension, occupied by four-over-four windows characteristic of the time, in turn allowing for access to a balcony finished with an elaborate cast iron railing.

By the mid-20th century, the property was being operated as the Hotel Maison de Ville, an intimate, twelve-room establishment widely recognized as one of the gems of New Orleans’ burgeoning hospitality sector. New ownership committed to a $2.1 million rehabilitation in 2010, and Crescent Growth Capital was retained the following year to provide contingent fee-based historic preservation consulting and historic tax credit monetization services.

Crescent’s in-house historic preservation specialist prepared a seven-element Historic Preservation Certification Application over a prolonged redevelopment period lasting a full five years, submitting Louisiana State HPCAs in conjunction with the federal application parts. Part 3 approval was received on April 28, 2016, with state historic tax credit monetization accomplished by Crescent and tax credit sale proceeds delivered to 727 Toulouse, LLC in July.

Now beginning its third century, 727 Toulouse is today operating as The Celestine, an acclaimed, ten-room boutique hotel in the heart of the French Quarter.

Tulane University – School of Social Work

May 18, 2016 by

127 Elk Place, completed in 1917 to house Elk Lodge #30, is one of the finest neoclassical Beaux Arts structures in existence within the Lower Central Business District National Register Historic District. Though the building’s interior has received repeated renovation at the hands of its subsequent owners, including Gulf Oil, the Institute of Mental Hygiene and, from November 2001, Tulane University, 127 Elk’s beautiful exterior has remained almost completely unaltered from its original appearance, documenting the robust participation of early-20th century New Orleanians in the nationally-significant Benevolent and Protective Order of the Elks.

When Tulane University decided to relocate its School of Social Work – itself an institution of longstanding prominence – from its Uptown New Orleans campus to downtown New Orleans, they again turned to Crescent Growth Capital to handle the historic tax credits. CGC was hired to supervise the state historic tax credit application and monetization process for 127 Elk Place’s $4.5 million conversion into the new home for the Tulane School of Social Work.

CGC authored all the historic preservation certification applications for the project, translating the design of project architect Eskew+Dumez+Ripple into an easily-comprehensible narrative, resulting in – once again – no conditions attached to the Part 2 approval issued by the Louisiana Division of Historic Preservation.

Subsequent to CGC’s receipt of Part 3 approval on behalf of its client, CGC steered the project through the Louisiana Department of Revenue’s exacting review process. Over $4 million was classed as Qualified Rehabilitation Expenses, with CGC marketing the resulting credits, generating nearly $1 million in sale proceeds for Tulane University.

 

The Old No. 77 Hotel & Chandlery

February 23, 2016 by

Arguably America’s most unique city, New Orleans often triggers in its visitors demand for equally unique lodging options. When New York-based GB Lodging and its partners opted to acquire the Ambassador Hotel in 2013, they intended upon retaining its unconventional elements while updating its décor and amenities. The relaunched hotel, dubbed the Old No. 77, situates upscale, contemporary lodging within an inimitable collection of 19th and early-20th century buildings.

GB Lodging hired CGC to apply for and monetize the state historic tax credits generated by this $33 million project. Directed by the Louisiana Division of Historic Preservation to prepare four sets of historic preservation certification applications – reflecting the past commercial associations of the six individual buildings comprising the Old No. 77 – CGC secured eligibility for state credits and approval of the proposed design without any conditions attached.

Shepherding the project through the Louisiana Department of Revenue’s exacting review process, CGC had over $11 million classed as Qualified Rehabilitation Expenses. CGC marketed the resulting credits and secured an above-market price for its client, who received nearly $2.3 million in sale proceeds in February 2016.

 

Cermak Fresh Market at The Fields

September 16, 2015 by

Originally built in 1874 by Walter E. Olson as the manufacturing mill for the Olson Rug Company, 4000 West Diversey quickly became “the place” to buy rugs in Chicago. In 1935, Walter Olson brought in more than 800 tons of stone and 800 yards of soil to build Olson Memorial Park, and its centerpiece, the Olson Waterfall.  Named as one of Chicago’s Seven Lost Wonders by the Chicago Tribune (August, 29, 2005), Olson Waterfalls and Rock Garden was one of the most beloved family attractions in the City until it closed in 1971.

In 1965, Marshall Field & Company purchased 4000 West Diversey and reopened the facility as a massive department store. In 2005, the warehouse was sold to Macy’s, Inc., as part of its purchase of Marshall Field’s, and the warehouse spent three years as a home for one-off sales, before being shuttered in 2008.

In 2014, 6 years after the building had closed, its ownership began drawing up plans for a a multi-phase redevelopment of the Marshall Field’s facility.  The first phase of this redevelopment included a 68,000 sf Cermak Fresh Market grocery store on the first floor, which would serve as the anchor, catalyzing further development.  Founded in 1986 by Dimitrious “Jimmy” Bousis and his late partner Pantellis Tzotzolis, Cermak Fresh Market has grown from a single 2,500 sf Central Park Produce store to 11 full-service grocery stores, including the recently-completed store in Milwaukee, WI, the operator’s first outside of Illinois. The family-owned business enjoyed early success by catering to the Puerto Rican community in Chicago’s Humboldt Park area.  As it grew, the grocery chain broadened its focus to serving all of Chicago’s various ethnic communities and today, Cermak Fresh Market is a full-service international grocery store.

On September 16, 2015, Crescent Growth Capital and Cermak Fresh Market closed on a stacked $7.5MM State/$6MM Federal NMTC structure, using Illinois State NMTC allocations from the Southside Community Optimal Redevelopment Enterprise (SCORE) and the Valued Advisor Fund (VAF), and Federal Allocation from SCORE.  The NMTC financing provided the necessary funds to renovate a portion of the first floor for Cermak Fresh Market, and the combined State and Federal NMTC subsidy drastically reduced Cermak’s cost of capital, substantially improving the prospects for the new store.

The Troubadour Hotel

May 22, 2015 by

Crescent Growth Capital was approached by a tax lawyer in the summer of 2014. Familiar with our experience structuring historic tax credit equity, interfacing with state historic preservation offices and authoring historic preservation certification applications, he introduced a development team comprised of a commercial real estate developer, Slumber Corners, a hotel manager/operator, Commune Hotels & Resorts, and an equity backer. These partners envisioned developing a $42 million, 185-key Joie de Vivre boutique hotel. The development team had under contract for $5.5 million a gutted, fire-damaged, 16-story building dating to 1967: the former Rault Center.

The effort to qualify this structure for Federal and State Historic Tax Credits ran parallel to the project financing track. Though 1111 Gravier was less than 50 years old, its historic significance from the standpoint of building life safety codes justified pursuit of an individual listing on the National Register of Historic Places (Under Criterion A: Buildings associated with events that have made a significant contribution to the broad patterns of our history). Our team’s presentation to the Louisiana State National Register Review Committee was successful, and 1111 Gravier (“The Rault Center”) was ultimately named to the National Register of Historic Places on January 20, 2015.

In addition to working on the HTC eligibility front and related lease-pass through financial structuring requirements, CGC assisted the development team in their search for a senior construction lender, securing a $28 million senior loan.  The total Qualified Rehabilitation Expenses to be incurred will approximate $30 million.

The outcome? A long-abandoned, 16-story building will be returned to commerce as the Troubadour, adding momentum to the ongoing renaissance of New Orleans’ downtown district, post-Katrina.

Ursuline Academy – Fitness and Wellness Center

October 31, 2014 by

Ursuline Academy in New Orleans was founded in 1727, nine years after the city’s establishment. It is both the oldest continuously-operating school for girls and the oldest Catholic School in the United States. For 284 years, Ursuline Academy’s core values have rested upon consistent support for the advancement of women in society, regardless of their family’s station. This conviction has manifested itself repeatedly, and has included through the years a steadfast commitment to the education of African Americans and Native Americans, and an early recognition of the importance of sheltering battered women, among other groundbreaking stances.

In 2005, Hurricane Katrina threatened to extinguish this landmark institution. Floodwaters surged onto Ursuline’s State Street campus, and gale force winds tore holes in the roofs of the school’s historic buildings. Two years of consultations within the Ursuline community produced a compelling roadmap for institutional recovery. A key component of the school’s recovery plan was the construction of a multi-purpose fitness/wellness center. Notably, the Wellness Center was not intended to help Ursuline students alone; it was designed to serve the broader local community by promoting health, wellness, fitness, and good nutrition. The Fitness & Wellness Center’s design provided for the historic rehabilitation of the school’s circa 1935 gymnasium, an adaptive re-use embodying the highest aspirations of the green building movement – as there is no greener building than a re-used building. A new addition was also prescribed, with architecture that complemented but did not imitate that of the historic Ursuline campus.

Following upon its success structuring the financing for Ursuline’s Early Childhood Learning Center, Crescent Growth Capital was retained to arrange a dual New Markets Tax Credit/state historic tax credit financing. In October of 2011, CGC closed on a $5.5 million NMTC financing, permitting the start of construction. Authoring the state historic preservation certification applications for the project, CGC qualified the project for state historic tax credits, resulting in nearly $2.2 million in project costs being deemed Qualified Rehabilitation Expenses. Furthermore, CGC’s Part 2 application so effectively communicated the design of project architects Waggonner & Ball that no conditions were attached to the Part 2 approval issued by the Louisiana Division of Historic Preservation. In October of 2014, CGC completed its historic tax credit arranger services by accomplishing the monetization of the state historic tax credits on behalf of Ursuline Academy.

In the final analysis, Ursuline Academy received a total subsidy of over $1 million on their $6 million project.

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