February 22, 2017

Downtown Durham's Renaissance (With Help From Historic Tax Credits)

By: Jared Foretek

Hill Building Horizontal — The Art Deco building was designed by Shreve, Lamb, and Harmon, the architects of the Empire State Building.

The Hill Building in Durham, North Carolina has a familiar history.

A 1937 Art Deco building in the heart of downtown, its fortunes rose and fell with the surrounding neighborhood. As business, residents, and investment fled the city’s core during the urban renewal period of the late 20th century, its occupancy diminished until it was sold in 2007 and left to languish through the Recession.

But after sitting largely vacant for about eight years, the Hill Building has now been swept up in a new nationwide trend: downtown revitalization with the help of historic tax credits.

A $48 million rehabilitation of the iconic bank building resulted in the March 2015 opening of the 21c Durham Museum Hotel, a 125-room hotel, museum, and meeting space. With a bank loan of only $22 million, the developers relied heavily on state and federal credits, which contributed $3.5 and $7.9 million, respectively.

Hill Building Elevator Entry — The elevator lobby looks much like it did before the rehabilitation.

Hill Building Bank Vault Cocktail Lounge — The original bank vault is now used as a cocktail lounge and gallery space.

“It was an enormous cost to redevelop from office space to high-end boutique hotel, restaurant space, and a museum component,” said Ben Filippo, executive director of Preservation Durham, which assisted in the rehabilitation of the Hill Building and other properties. “So leveraging the credits was definitely an essential component to an efficient timeline. Not seeing it languish for a number of years during the financing process helped, and we see that sometimes in projects where there aren’t historic tax credits involved.”

The repurposing comes in the midst of a renaissance for downtown Durham. Public and private investment has poured into the Central Business District; hotels, dining, and retail have returned in a symbiotic fashion.

And the steel-frame building designed by Shreve, Lamb, and Harmon (architects of the Empire State Building) is once again an important placemaker for the surrounding streets, encouraging redevelopment of other historic properties like the nearby Jack Tar Motel.

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Hill Building Restaurant — A restaurant occupies part of the first floor.

Hill Building Ballroom Main Gallery — The old bank lobby is now the hotel ballroom.

21c Museum Hotel gallery — Art hangs in the museum hotel's galleries.

“Where the downstairs restaurant and cocktail bar is, as well as the museum component, when that opened … it basically helped activate the streetscape in a significant way,” Filippo said.

A booming tobacco industry drove Durham’s rapid expansion in the early 1900s, and with that came the local banking industry. The Hill Building—the tallest in the city when it was constructed—was built to house the Durham Bank and Trust Company, which later became Central Carolina Bank and Trust. After falling on some hard times, the bank’s parent company and building were sold to Sun Trust in 2005.

Two more sales and a nixed renovation project later, 21c made it the site of their fourth museum hotel, buying the building in 2013.

The exterior needed little work beyond fixing the historic windows and cleaning the limestone facade. And while the inside of the building saw major changes, original spaces like the bank’s lobby, vault, and elevator area remain largely intact with new uses, thanks to the work of project architect Deborah Berke Partners.

Overall 140 permanent jobs were created, the majority of which don’t require a higher education.

Hill Building Exterior — The building's limestone was cleaned and its windows were repaired.

“The good thing was the building was in really good shape,” Filippo said. “It never went through any sort of major period of disuse.”

Durham’s resurgence has been so rapid that it now finds itself facing the challenges of speculative investment and housing affordability, issues that Preservation Durham and other organizations are actively taking on.

Plans for community-oriented uses of historic tax credits are also underway. The nearby Whitted School—built in 1922 for one of the segregated city’s black elementary schools—is being turned into low-income senior housing and an adjoining pre-school with federal credits.

“Durham has benefited enormously from the credits,” Filippo said. “It has driven downtown’s revitalization like almost nothing else. If you look at every major reuse project, which is where every significant new business is housed, whether it’s a restaurant, hotel, or something like the Whitted School, it’s always in conjunction with the credit.”