What restrictions on historic and cultural buildings should be considered before purchasing investment property?

My clients are interested in purchasing a historic property in New York for office space development. We are concerned about the potentially significant restrictions given the buildings status as a historic landmark.

  • Dan Flanigan

    Chair, Real Estate and Financial Services Department, Polsinelli
    December 27, 2017

    In New York City, the building could itself be a designated landmark or located within a landmark district. Buildings designated as landmarks are extraordinarily difficult to redevelop. Landmark districts may be more flexible, e.g. permitting "facademies" where the facade is retained but the building behind it is replaced.

  • December 14, 2017

    Historic landmarks in the United States can be subject to extensive controls on renovation, construction and alteration in use. Restrictions may exist on the local (city), state and federal level. In addition, there may be private agreements governing the use of historic landmarks. Finally, changes in use, design or other renovations may be subject to political scrutiny and challenged by local non-governmental interest groups. I worked for many years as a project development attorney and was also the owner of a registered historic building. I can advise in engaging and coordinating the review of the applicable requirements by local experts. I have a long track record of working for Chinese investors on overseas projects, including commercial buildings.

  • Sheri Chromow

    SPC Advisors, LLC
    December 18, 2017

    Your clients are correct in that there are significant restrictions on historic buildings. I will give you a short synopsis of the restrictions on buildings that are within a historic district and those that are specifically designated as landmarks. In order to assess the practical results, I highly recommend two or three people, who are experienced in the process and known to the appropriate agencies. The Landmarks Preservation Commission ("LPC") is the group that offers approvals over the designation as well as the scope of changes to a project. There are differences between a building that is designated within a historic district and a building that is designated as an individual landmark. Historic districts are collections of landmark buildings. Individual landmarks are stand-alone structures that have architectural, cultural or historical significance. Owners of individual landmarks and buildings within historic districts are required to obtain permits from the Landmarks Commission for most types of alterations. Only ordinary repairs and maintenance don't require approval. Interior work may require approval in some circumstances. In your question, you mention office space development. LPC would have approval over interior work when the work requires a buildings department permit, if the interior is designated as an interior landmark and when work on the interior affects the exterior. While there are burdens involved in buying and renovating historic/landmark buildings, the party doing the renovations can qualify for historic tax credits. I would appreciate the opportunity to work with you. You can contact me directly via my profile.