Job Creation Boosts State Rehab Tax Credits

Turn on the evening news or open your morning paper and it’s a safe bet that you will see something about jobs…job creation, job levels rising/falling, job training, and so on. Preservationists have made the point for years that rehabilitation projects create jobs at the local level and that state tax incentives make these projects economically feasible. Now new studies are supporting their arguments and lawmakers are paying attention.

In Virginia, for example, the state tax incentive program helped generate more than 10,700 jobs and $444 million in associated wages and salaries over a 10 year-period.1 Across the Potomac River, Maryland’s tax credit program also led to a significant number of new jobs. A 2009 report for the Abell Foundation found 72.5 jobs (45.5 on-site) were created just during the construction period for each $1 million investment by the state.2

To date, 31 states in the country offer credits against state income taxes to provide incentives for the appropriate rehabilitation of certified historic buildings. In most cases these tax credits mirror the very successful federal income tax credit for historic rehabilitation prescribed in Section 47 of the Internal Revenue Code. Significantly, 25 states offer a tax credit for the rehabilitation of owner-occupied residences, unlike the federal program.

Over the past year, with a need to stimulate jobs to help speed economic recovery, a new crop of state legislators have begun recognizing the benefits of historic preservation tax credits.

Jobs, Jobs, Jobs

Recognizing rehabilitation as an economic driver, Minnesota’s legislators placed a historic preservation tax credit high on their list of priorities, and on April 1, 2010, Minnesota became the 31st state to offer such an incentive. After 11 years of promoting the economic benefits of a rehabilitation tax credit program, preservationists were gratified to see legislation in both the House and Senate call for a 25 percent historic preservation tax credit (SF 1724, HF 1974) and also included in the amended Building Jobs Coalition Bill (SF 2078, HF 2364). But ultimately, the program made its way to the governor when the chair of the House Taxes Committee included a 20 percent historic rehabilitation tax credit as part of a comprehensive jobs bill (HF 2695) she authored. Minnesota preservationists were joined in their support of these measures by members of the Building Jobs Coalition—primarily because it is estimated that historic rehabilitation projects would create 5.7 more jobs per $1 million in output than manufacturing and two more jobs per $1 million than new construction.3

Arkansas became the 30th state to offer a historic preservation tax credit program when Governor Mike Beebe signed Act 498 in March 2009.

A recent Job Growth Roundtable report caught the attention of Connecticut legislators. Now they’re considering ways to expand the state’s historic preservation tax credit programs to ramp up the number of jobs created.

In Illinois, legislators are considering two bills, House Bill 4823 and Senate Bill 2559, both based on the highly successful Missouri tax credit enacted in 1997, which has since generated nearly 40,000 jobs for Missourians. The Illinois plan would allow a credit on Illinois taxes equal to 25 percent of the cost of a qualified historic rehabilitation.

In Kansas, advocates are using job creation statistics from a Rutgers University study to encourage the elimination of a cap imposed on the tax credit program in 2009. The study showed that the tax credits created an average of 541 jobs per year. On March 30, Senate Bill 430 passed out of both the Kansas House and Senate.

Under Attack

Despite their proven success in job creation, such incentive programs sometimes come under attack from those seeking to cut budget costs. During the last legislative session in Missouri, advocates fought hard to save their historic preservation tax credit program. They emerged bruised but not beaten, with a compromise that provides:

  • a per-project residential cap of $1 million in qualified rehabilitation expenditures (QREs) for owner-occupied single family homes; 
  • a $140 million annual aggregate cap on historic tax credits; and 
  • a small-project exemption for projects with $1.1 million in qualified rehabilitation expenditures (QREs); these do not count toward the $140 million cap.

But there is no rest for the weary. This session, some senators have sought to have all tax credit programs subject to annual appropriation.

Success Breeds Success

Fortunately, in other states preservationists enjoyed great success promoting tax credits for rehabilitation during the last legislative session.

The Ohio program was amended to allow the property owner conducting the rehab work to pass along the credit to other entities with tax liability. This will facilitate completion of numerous Ohio historic tax credit projects impacted by the credit crisis.4

Iowa legislators raised the annual aggregate cap from $20 million to $50 million.

In New York, legislators voted to increase the tax credit from 6 percent to 20 percent, gradually increase (over five years) the commercial credit cap from $100,000 to $5 million and the residential credit cap from $25,000 to $50,000, and offer a tax rebate for lower income homeowners as a stronger financial incentive.

After years of effort, advocates in Michigan celebrated the expansion of the state’s historic preservation tax credit program on December 28, 2008. Now the state offers additional tax credits, increasing annually to reach $12 million by 2013 with 25 percent to be allocated to smaller projects with less than $1 million in qualified expenses. Also, taxpayers are now allowed to assign all or part of the tax credit to another entity with a Michigan tax liability.5

It's Also About Sustainability!

A 2009 report for the Abell Foundation written by Joseph Cronyn and Evans Paull examined, for the first time, the role of the state historic preservation tax credit in “reinforcing smart growth, lowering greenhouse gases, improving water quality, saving greenfields, lowering demand for landfill space, and making better use of existing infrastructure.” Their research was based on the Maryland Historic Tax Credit Program.6

Summarizing the report’s findings in a recent Forum Journal article,7 Paull wrote:

A recent analysis of Maryland’s tax credit program…indicates that historic tax credit projects, in general, even though they may not feature green design, can legitimately claim substantial climate benefits that are attributable to reduced vehicle miles traveled (VMTs). The analysis finds that tax credit projects reduce VMTs by 30 to 40 percent relative to suburban norms, at the high end of the 20 to 40 percent range for VMT reduction generally attributed to "compact development" and smart growth locations. These VMT reductions have been converted into a finding that the state historic rehab tax credit projects (counting all projects since program inception) are now reducing CO2 emissions by between 15,900 and 21,200 metric tons annually, which is the equivalent of taking 2,900 to 3,800 cars off the road for one year.

The study also calculates the embodied energy saved by retaining rather than demolishing historic structures, and notes other environmental benefits that include the conservation of natural resources (because preservation projects use less building material than new construction). 

Maryland legislators are now considering the Sustainable Communities Act which reauthorizes and renames the Maryland Heritage Structure Rehabilitation Tax Credit Program as the Sustainable Communities Tax Credit Program (HB 475 and cross-filed as SB 285). This would be the first program of its kind in the country to provide a bonus for “green building” projects. The new legislation also enhances the program with a $50 million tax credit allocation over three years and creates a 10 percent credit to stimulate the rehabilitation of non-historic properties in Transit Oriented Developments and designated Main Street and “Maple Street” communities. (In Maryland, Maple Street districts apply Main Street principles to residential areas near the business district with the goal of strengthening the relationship between downtown commercial districts and the surrounding neighborhoods.)

As previously noted, 25 states now offer credits for rehabilitating owner-occupied residences. In Maryland, for example, owners of certified heritage structures (listed in the National Register of Historic Places, or a contributing element within the boundaries of a historic district) who use the property as either a primary or secondary residence are eligible to receive fully refundable tax credits for qualified rehabilitation work. These tax credits are a great way to encourage the repair of historic windows or the replacement of inefficient HVAC systems.

Help Is at Hand

The Center for State and Local Policy staff, with the assistance of former National Trust policy director Harry Schwartz and others, help advocates across the country promote, protect, and expand historic preservation tax credit programs. Over the past year, they have advised preservationists in more than 20 states on policy analysis and advocacy strategies. For assistance, call 202-588-6234 or e-mail

In 2009 the Center brought together preservation partners from around the country for a “group think” about successful advocacy strategies. Advocates pointed out the need for creating diverse coalitions (from city managers to chambers of commerce to architects and developers). They also suggested keeping legislative campaigns focused and trying a variety of approaches to make their case, including offering workshops for potential credit users and hard-hat tours of potential tax credit projects in their district for elected officials.

For more about advocacy strategies, visit



1 Preservation through Prosperity: Virginia’s Historic Rehabilitation Tax Credit Program, Department of Historic Resources and Virginia Commonwealth University (2008); available at

2Joseph Cronyn and Evans Paull, “Heritage Tax Credits: Maryland’s Own Stimulus to Renovate Buildings for Productive Use and Create Jobs, an $8.53 Return on Every State Dollar Invested,” The Abell Report, Vol. 22, No. 1 (March 2009); available at 

4 For more information see Section 5747.76 (C) and (D) at the following link:,%205725.151,%205733.47,%205747.76.pdf.

5For more details about the enhancements, visit and Michigan Historic Preservation Network at

6Cronyn and Paull.

7Evans Paull, “Quantifying the Environmental Benefits of the Maryland Historic Tax Credit Program,” Forum Journal, Vol. 24, No. 4 (Fall 2009).