The National Park Service has decided the multimillion-dollar rehabilitation of the Davenport Hotel is not eligible for millions of dollars worth of federal historic preservation tax credits, largely because the hotel’s Pennington Wing was demolished in 2001.
Even though hotel owners Walt and Karen Worthy resubmitted their application, excluding the portions of the building that were demolished, Chief Appeals Officer John Robbins said federal regulations require that he consider the entire historic property, as it existed before its rehabilitation.
Robbins’ decision also made reference to floors of the hotel that were “substantially gutted,” corridors which were altered in size, historic fabric and decorative brackets that were removed, and hotel rooms which were “reconfigured.”
“How terribly unfortunate,” said Tom McArthur, the Davenport’s communications officer, in an e-mail to The Spokesman-Review. “If the tax credit for historic preservation does not apply to the Davenport Hotel, certainly no one else will try.”
After paying $6.5 million for the 1914-era hotel, the Worthys spent two years and more than $30 million restoring the prized Spokane landmark
The National Park Service historic preservation tax credit program allows 20 percent of the cost of restoration work to count as a credit against federal income taxes. As more than $25 million was spent on that portion of the rehabilitation, that would have meant at least $5 million in tax credits for the Worthys.
Worthy acknowledged that the decision to demolish the Pennington Wing was a difficult one. However, to make the hotel financially viable, he said, he needed a large ballroom, loading dock and drive-in entry, all of which were built in the place where the Pennington Wing once stood.
“It was a necessary amputation in my mind to have the patient live,” Worthy said. “I’m comfortable the job we did was superb. I would love to have had that windfall, no doubt about it.”
But, he added, “We’re earning our own tax credits every day; the hotel is doing great. If we’d listened to them, we’d be knocking on some bank’s door to get more money, trying to make it one more year.”
Instead, Worthy is building an additional hotel next door which he intends to call the Davenport Towers.
The Worthys did receive some financial benefit through the Davenport’s listing on the Spokane Registry of Historic Places, said Theresa Brum, the city’s historic preservation officer. The local program provides for property tax breaks by reduced a building’s assessed valuation for 10 years, based on the value of rehabilitation work.
“We were also very disappointed that it was denied,” Brum said of the National Park Service’s decision. However, Brum said a state architect warned during the rehabilitation that demolishing the Pennington Wing would jeopardize the Davenport’s application for federal tax credits.
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