OP/ED: Give historic buildings a break -- and create jobs
Posted August 6, 2009 | Contact pr@nthp.org or 202-588-6141
By Richard Moe | April 14, 2009
Washington, D.C. Published in the St. Paul Pioneer Press.
As Minnesota legislators consider a state tax credit for rehabilitating historic buildings, one question is uppermost in their minds: Does it create jobs?
In a time of economic turmoil and budget deficits, that threshold question is the starting point for most legislative debates in St. Paul.
In this case, the question is easy to answer. A historic rehab tax credit program offers taxpayers one of the best dollar-for-dollar returns on investment of any state program -- and it's also an outstanding example of a state policy that promotes sustainable development. In short, it provides the kind of economic incentive that is critical to the revitalization of Minnesota's -- and America's -- communities.
How does a tax incentive for rehabbing historic properties help create jobs, and how can it make a dent in the recession? As many homeowners know from personal experience, rehabbing an older house is more labor-intensive than building a new one, and it requires more skilled labor than new construction. That means wages for this kind of work are usually higher, as are income taxes paid by workers on rehabilitation projects.
What's more, materials for rehab projects tend to be purchased locally, so sales tax revenues stay in-state. On top of this, the tax credit is not awarded until the work is completed, so the state gains revenue from the taxes paid on materials and labor before the building is occupied, meaning that revenues flow into state coffers faster.
Nationally, there is overwhelming evidence that rehab tax credits are job-creators. Studying projects in Missouri, economist Donovan Rypkema found that 6.3 more jobs are created for every million spent through rehabilitation than through manufacturing. Rutgers University also examined the impact of Missouri's historic preservation tax credits and found that between 1998 and 2001, the state garnered 6,871 jobs and $60 million in tax revenue, an astonishing 4-to-1 return on the state's investment in the tax-credit program.
In Maryland, a recent report by the Abell Foundation showed that over the past 12 years, completed rehabilitations of historic, commercial properties generated $1.74 billion in total economic activity and employed an estimated 15,120 persons. Construction labor alone totaled an estimated 9,248 workers. While this short-term impact is impressive, it's worth noting that the greatest return on the state's investment comes from the long-term increase in employment and property taxes on these rehabilitated buildings.
Having a state program increases the use -- and the economic impact -- of the federal rehabilitation tax credit program. Once Rhode Island offered a state tax credit, rehabilitation projects leveraged $78 million in federal historic tax credits over a five-year period, an increase of more than 700 percent. In Missouri, the number of projects using federal rehabilitation tax credits doubled after the introduction of the state credit. Minnesota leaves federal money on the table by not having a state tax credit.
State tax credits not only spark jobs and spur additional investment, they do it in a way that supports sustainable, "green" development practices. At the National Trust for Historic Preservation, we've been tracking these "green" tax incentives for the past 15 years. The revitalization of our historic neighborhoods, typically located in or adjacent to Main Streets, helps reduce sprawl and protects agricultural lands.
By encouraging the reuse of existing buildings and maximizing the community's investment in infrastructure that is already in place, historic preservation tax credits also help decrease our dependence on fossil fuels, reduce the carbon emissions associated with demolition and new construction, and lessen the pressure on our landfills.
Minnesotans should urge their legislators in the House and Senate to support the proposed historic preservation tax credit, which has demonstrated its effectiveness in stimulating revitalization, sparking reinvestment in existing communities, and creating jobs in 30 other states. We've always known that preserving our heritage is good for the soul. In times like these, it's important to remember that preservation is good for the pocketbook, too.
Richard Moe is president of the National Trust for Historic Preservation. Moe is a native of Duluth who also served as chief of staff to Walter Mondale when Mondale was vice president of the United States.
The National Trust for Historic Preservation is a non-profit membership organization bringing people together to protect, enhance and enjoy the places that matter to them. By saving the places where great moments from history – and the important moments of everyday life – took place, the National Trust for Historic Preservation helps revitalize neighborhoods and communities, spark economic development and promote environmental sustainability. With headquarters in Washington, DC, nine regional and field offices, 29 historic sites, and partner organizations in all 50 states, the National Trust for Historic Preservation provides leadership, education, advocacy and resources to a national network of people, organizations and local communities committed to saving places, connecting us to our history and collectively shaping the future of America’s stories. For more information visit www.PreservationNation.org.
