Aug. 16 2002 - HOUSTON � During the Roaring '20s, most visitors to the Humble Oil boardroom were finance moguls and oil barons. 

But starting next spring, all you'll need is a reservation to stay in the one-time executive enclave with its carved stone fireplace and lofty domed ceiling. 

That's because the Houston office building � along with the ninth-floor boardroom space � will be turned into two Marriott hotels and apartment space. 

Through its tax credit program, Kimberly-Clark is helping to restore the historic Humble Oil Building in Houston. The building will be redeveloped into hotels and apartments. 

The 81-year-old downtown landmark that once housed Humble Oil � a forerunner of Exxon Mobil � is being transformed thanks to a Dallas company better known for Kleenex tissues and Huggies diapers than restoring historic buildings. 

Irving-based Kimberly-Clark Corp. sells almost $15 billion in disposable consumer products each year, but its preservation of some of the country's landmarks promises to be a more lasting legacy. 

"We don't seek a lot of PR for our historic investments," said Tony Gamron, Kimberly-Clark's vice president and treasurer. 

"But when we go to a grand opening and people from the community come up to you, you can see in their eyes how much it means." 

That's a big return on investment for a Fortune 500 company that got into renovations as a way to offset its annual tax bill. 

"We started about eight years ago looking for ways to reduce our effective tax rate," said Mr. Gamron. "Tax credits were one of the initiatives we identified." 

Unlike tax deductions, federal tax credit programs for historic buildings and affordable housing allow a company to cut its tax bill directly. In general, a dollar of tax credit reduces the amount of income tax owed by one dollar. 

Since 1994, Kimberly-Clark's real estate tax credit subsidiary, Housing Horizons, has invested more than $300 million in real estate projects. 

Last year, the program generated almost $30 million in tax credit for the company, Mr. Gamron said. 

Along with the tax savings, Kimberly-Clark has found another benefit. 

"After we got into it, the societal benefits just jumped out at us," Mr. Gamron said. "Over time, we saw that these redevelopments were becoming a cornerstone of various cities' downtown revitalization efforts." 

Kimberly-Clark has helped restore the American Can factory building in New Orleans. 

Kimberly-Clark's renovation projects � almost always done in partnership with developers � have included everything from a historic high school in South Bend, Ind., to a canning factory in New Orleans. 

They are as small as an 11-unit apartment project in a converted school in Wisconsin and as large as an 1,100-room hotel in Missouri. 

"We are at over 15 historic properties including those currently under construction and in development," said Lynn Fournier, director of Kimberly-Clark's tax credit investments division. "We are now comfortable enough with it that oftentimes we know more about the restoration business than the people bringing us the transaction." 

At the Humble Building in Houston, Kimberly-Clark joined the project after it was planned. 

Kimberly-Clark and its partner, San Antonio-based Leddy Ventures Ltd., are spending more than $70 million to turn the Main Street office building into three uses: a 191-room Courtyard by Marriott hotel, a 171-room Residence Inn by Marriott and 82 apartment units. 

"This is a very complicated project," said senior project manager Stephen Swan of Leddy Ventures, who's overseeing construction of everything from rooftop swimming pools to basement parking. "There has been a learning curve for us, but we've finally gotten our arms around the project." 

It also is working on a project to renovate two vacant historic buildings in St. Louis. 

The redevelopment of the brick-and-stone tower � actually three buildings constructed in 1921, 1935 and 1940 � should be finished next year. 

Adding to the construction time will be restoration of the building's neoclassical exterior and preservation of interior items such as metal elevator doors and old plaster. 

"It's no small feat to get this project finished and all the historic elements restored," Mr. Swan said. "But it gives everybody a good feeling that we are going to maintain the building." 

Preservationists in Houston credit Kimberly-Clark and other investors with helping to revitalize the downtown area. 

"More people are becoming aware of preservation as an economic development tool," said Ramona Davis, executive director of the Greater Houston Preservation Alliance. "It's an alternative to tearing things down and filling up the landfills." 

The tax credit programs that prompted Kimberly-Clark to invest in restoring old buildings and creating affordable housing have been a boon for preservationists and communities, said Carolyn Hewes Toft, executive director of the Landmarks Association of St. Louis. 

"Based on a study Rutgers University did of completed projects, the leverage seems to be 4-to-1 on the return to the taxpayer," Ms. Toft said. "It spurs economic development by promoting preservation." 

In St. Louis, Kimberly-Clark's investment is turning two vacant historic buildings into a $270 million, 1,081-room convention-hotel complex. 

The landmark Gateway Statler Hotel (built in 1917) and the Lennox Hotel (opened in 1929) are being remodeled into a 916-room Renaissance Grand Hotel and 165-suite Renaissance St. Louis Suite Hotel. 

The Lennox is already open, and the Gateway will be completed in the spring. 

The project's developer, Historic Restoration Inc. of New Orleans, would not have been able to undertake the venture without an equity partner such as Kimberly-Clark. 

"It certainly gave them a lot of credibility," Ms. Toft said. 

HRI, one of the country's largest redevelopers of historic buildings, has done three projects with Kimberly-Clark, said chief executive Pres Kabacoff. 

"These are very complex deals and many times pioneering," Mr. Kabacoff said. 

"Lots of companies have community reinvestment programs, but in this case they have gone way beyond that," he said. 

In New Orleans, Kimberly-Clark worked with HRI to convert the historic American Can factory building into 268 loft-style apartments. 

The four-story former industrial complex, located in New Orleans' Mid-City neighborhood, had been empty for 20 years. 

Kimberly-Clark's portfolio of current and upcoming restoration projects is a long one. 

Just blocks from the Humble Oil Building in Houston, the company has bought the vacant Texaco Building, which was built in 1915. 

In downtown San Antonio, the investor plans to transform the landmark Alamo National Bank building on the Riverwalk into hotel rooms and retail space. "The idea is to reorient the building toward the Riverwalk," Mr. Gamron said. 

So far, the redevelopments have met expectations. 

"We get three different cost estimates on each project," Ms. Fournier said. "Since we've been doing this, we've found that we are either on track or under budget. 

"Of course, there are some unexpected issues in every building," she said. 

In a department store in Toledo, Ohio, for instance, renovators discovered huge steel beams hidden in the walls that weren't on the original plans. 

"The way the apartments were laid out, the doors to some units would have opened facing those beams," she said. 

Long term, Kimberly-Clark intends for the tax credit investment division to become self-sustaining with investment funds coming from property operations and sales of completed buildings. 

The operation is run with four full-time employees and heavy reliance on outside real estate design and engineering expertise. 

Some institutional and corporate tax credit investors are only interested in the balance sheet, but Kimberly-Clark's officers are emotionally involved in the deals. 

"Some investors do this and never visit their [properties]," Mr. Gamron said. We can't do that. We are very hands-on investors." 

The company's direct participation in preserving these buildings also is meant to ensure that they will pass the toughest scrutiny. 

"As a consumer products company, our name is everything to us, and we only want to be associated with the highest quality," Mr. Gamron said. "My commitment to our board of directors is we will never make an investment in a building that I wouldn't be proud to take them on a tour of." 

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(c) 2002, The Dallas Morning News. Distributed by Knight Ridder/Tribune Business News. XOM, KMB, MAR,