State Rehabilitation Tax Credits
Older properties are often located in economically depressed central business districts of both small towns and large urban areas. According to a National Park Service study, 58% of the historically and/or architecturally significant contributing buildings in 10,000 of the nation's historic districts are located in census tracts where the poverty rate exceeds 20%.
To date, thirty states across the country have adopted laws creating credits against state taxes to provide incentives for the appropriate rehabilitation of historic buildings. Download our model policy resource to learn more and to see state snapshots.
In towns such as Providence, Richmond, and St. Louis, these areas are coming back to life through rehabilitation of their historic buildings. This economic revitalization is being driven by federal and state tax credits.
After World War II, social and economic forces produced a migration away from cities leaving behind a huge inventory of historically or architecturally significant older buildings. To spur more private investment in these neighborhoods, thirty states now offer state rehabilitation tax credits. The National Trust for Historic Preservation believes that state historic preservation tax incentives are critical to the revitalization of our country's older communities.
Latest News and Updates
- Missouri Program Threatened: In a special session, lawmakers will consider legislation that would cripple Missouri's successful Historic Tax Credit Program. Part of Governor Nixon's "Made in Missouri Jobs Package" would: a) place the first-ever cap ($10 million) on annual allocations for small projects; b) eliminate the ability to combine the Historic Tax Credit with other types of credits; and would sunset the entire program in seven years. In response, the National Trust urges Missouri residents to contact their legislators and ask them to keep the program working at full strength. More information can be found on Missouri Preservation's web site.
- Maine Extends Program: In July 2011, Governor LePage signed LD 742 that extends the Maine Historic Preservation Tax Credit program through 2023. A recent article in Maine Biz shows how effective this program has been in stimulating economic development. A full report on the economic impact of continuing Maine's credit is also available for download.
Model Policy
Not all state tax credit programs are created equal. Some state programs have been extraordinarily productive in stimulating rehabilitation activity. Many others have produced mixed or minimal results. What causes these programs to fall short? In general, two factors greatly influence the effectiveness of state historic tax credits: a limit or cap on the amount of a credit and a lack of transferability. Download Our Model Policy Resource >>
Preservation = Jobs
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. Read More >>
Making the Case
State tax credits offer a range of benefits (one-pager). States like Delaware, Missouri, North Carolina, Ohio, and Virginia tout the many benefits.
A recent report for the Abell Foundation (summary) examines the environmental impacts of Maryland's Heritage Structure Rehabilitation Tax Credit and shows that there's a $8.53 return on every state dollar invested and details the resulting environmental benefits as well.
In Massachusetts, a Preservation Massachusetts report shows how the state leverages $50 million in credits annually to revitalize communities throughout the Commonwealth.
Rutgers University examined Missouri's preservation program and found that every $1 invested by the state leveraged almost $4 in historic rehabilitation -- a four to one return on its investment. Because of the program, Missouri garnered 6,871 jobs and $60 million in total taxes in 3 years. Looking at the same program, researcher Donovan D. Rypkema of Place Economics found that rehabilitation creates 6.3 more jobs than manufacturing.
In January 2008, the Virginia Commonwealth University teamed up with the Virginia Department of Historic Resources to study the effects of its ten year incentive program. The Preservation through Prosperity study found that the program helped create more than 10,700 jobs and $444 million in associated wages and salaries over a 10 year period.
In their 2007 study of Rhode Island's credit, Lipman Frizzell & Mitchell LLC found that the state's investment of $1 leveraged $5.35 in total economic output.
In Pennsylvania, advocates led by Preservation Pennsylvania are using two reports by Pennsylvania works! in conjuction with the Young Preservationists of Pittsburgh and the Preservation Alliance for Greater Philadelphia to help make the case.
Although the New Jersey legislature passed the Historic Property Reinvestment Act in 2010, Governor Christie vetoed the measure. Walter Gallas, director of the National Trust's Northeast Field Office, testified in support. The National Trust Policy Fellow, Shawn Kravich, used the Rutgers University Preservation Economic Impact Model on three deteriorating historic buildings to show the economic benefits that would be generated by such a tax credit program.
Studies also show that state tax credits increase the use of the federal rehabilitation tax credit. During the 5-year period preceding enactment of the state historic tax credit program (1996-2001), Rhode Island attracted less than $10 million in federal historic tax credit investment. For the 5-year period since enactment (2002-2007), more than $78 million dollars in federal historic tax credits were awarded to Rhode Island projects - an increase of more than 700 percent. This echoes Missouri's experience when the number of projects using federal rehabilitation tax credits doubled after the introduction of the state credit. The Iowa State Historic Preservation Office found that the amount of federal tax credits issued increased by $3.7 million after the introduction of a state tax credit.
Partnerships
Many stakeholders promote historic preservation incentives. The Coalition for Neighborhood and Economic Renewal boasts over 60 diverse groups supporting a state historic preservation tax credit for Rhode Island. Recognizing rehab tax credits as one of the best smart growth incentives, Smart Growth America offers a policy toolkit. To find a smart growth organization in your state, visit Smart Growth America.
Advocacy
Minnesota Gains a Credit: On April 1, 2010, Minnesota became the 30th state in the country to offer a state rehabilitation tax credit to incentivize historic preservation. Click here for a case study prepared by the National Trust Community Investment Corporation on this important win.
Heritage Ohio offered a series of workshops across the state to encourage the use of state rehabilitation tax credits. This map shows the location of all the tax credit projects to date which helps legislators, including state senators, understand the program's breadth. Advocates led by Heritage Ohio are also using this fact sheet to encourage expansion of the initial pilot program. Preservation New Jersey's website allows advocates to share their own stories about how a rehab tax credit will benefit their community. Missouri advocates filmed business owners, city council members, and residents describing the work undertaken with the state's rehab tax credit. Historic Hawaii developed a white paper to show how a tax credit will help preserve the state's heritage. Grow Smart Rhode Island made recommendations in a briefing book for candidates.
Iowa advocates created a brochure describing the benefits of expanding their program. The Michigan Historic Preservation Network commissioned an economic benefit study to show how changes would generate more revitalization. This type of outreach pays off. In 2009, the Iowa legislature raised the programmatic cap and in 2008, the Michigan legislature significantly expanded the program.
Case Studies
Read about use of state tax credits to rehab buildings in West Plains, Missouri and in Michigan.
National Trust Assistance
Along with our regional offices, the Center for State and Local Policy offers technical assistance for those working to encourage state rehabilitation tax incentives. For assistance, call 202-588-6000 or e-mail policy@nthp.org. For specific questions about state or federal tax credits, please contact your State Historic Preservation Office or the National Park Service, respectively.
