Economic Development Background Information
Reader Comment: "We have many great historic properties in our traditional downtowns, that are privately owned by people that cannot afford to restore and renovate them. The neglect of these properties has a negative impact on the local economies, and the ability of the local commercial districts to attract tenants or customers for existing local businesses. Initiatives need to be developed that help the private sector restore these valuable landmarks so that our community-focused downtowns can be brought back to life."
Over 60 percent of America's historic districts – about 13,600 listed in the National Register of Historic Places – overlap census tracts where the poverty rate is higher than average. In many parts of the country large numbers of abandoned buildings are located in some of our most disinvested communities – places where incentives are needed to create both market-rate housing to stabilize neighborhoods and affordable housing to prevent displacement. Vacant and underutilized historic structures that no longer serve their original purpose – such as warehouses, factories, mills, and department stores – can be successfully adapted for new uses. Many of these historic and older buildings are located near existing transportation hubs, schools, and neighborhood-serving retail where it makes sense to prioritize development and utilize the resources already in-place.
Historic preservation provides investment and jobs, building a better future for the next generation of Americans. It attracts substantial private investment to historic cores of cities and Main Street towns across America. This economic activity generates employment, recognizes the value of infrastructure, enhances property values, creates affordable housing, and augments revenues for federal, state and local governments. For example, since 1977, the National Trust's Main Street Program alone has created more than 67,000 new businesses and 300,000 new jobs nationwide in more than 1,800 urban and rural communities across the country.
In addition, America's historic and older buildings have an intrinsic value that warrants preservation in a slowing economy where non-renewable energy is limited and costs are high. Reusing buildings is not just about the responsible stewardship of our heritage, it recognizes the economic value of these buildings along with the quality construction methods and costly materials used to build many of these structures. Their durability gives them almost unlimited renewability – a fact that underscores the wastefulness of discarding these valuable, sustainable assets. Over the past ten years alone, rehabilitation has resulted in the reuse of over 217 million square feet of commercial and residential space through the use of the federal Historic Rehabilitation Tax Credit.
Historic Preservation is a major tool for positive economic change in the 21st century. Building rehabilitation outperforms new construction as an agent for stimulus. For example, if a community is considering spending $1 million in new construction or $1 million for a building rehabilitation project, the rehabilitation choice would have several advantages:
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$120,000 more dollars will initially stay in the community;
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Five to nine more construction jobs will be created;
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4.7 more new jobs will be created;
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Household incomes in the community will increase by $107 more than they would under the new construction project;
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Retail sales in the community will increase by $142,000 as a result of the $1 million rehabilitation expenditure – $34,000 more than they would under the new construction funds; and
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Real estate companies, lending institutions, personal service vendors, and eating and drinking establishments will all receive more monetary benefit from the rehabilitation than the new construction. (Rypkema, 1998:14)
Historic Rehabilitation Tax Credits
The federal Historic Rehabilitation Tax Credit Program is the nation's largest program to stimulate the preservation and reuse of historic buildings. Administered by the National Park Service in partnership with the State Historic Preservation Offices, it is the most effective federal program to promote community revitalization and to encourage private investment in older towns and cities nationwide. Over 34,800 historic tax credit projects have generated over $45 billion in preservation activity since its inception in 1976. With a 5 to 1 ratio of private investment to federal tax credits, the program is an outstanding means of leveraging private investment in the reuse and preservation of our nation's historic buildings.
Projects approved last year alone created an average of 39 jobs each with a total of 40,755 new jobs nationwide. It leveraged more than $4.34 billion in private investment, produced 6,553 low- and moderate-income housing units, and renovated 18,006 housing units overall. For all these benefits, this tremendous incentive cost the Treasury less than $868 million last year. Besides federal income tax generated from these new jobs, taxes generated from other activities involving these rehabilitations provide further tax revenues to federal, state and local governments.
The National Trust for Historic Preservation supports creation and maintenance of federal and complementary state historic rehabilitation tax credits for restoring older and historic structures, particularly as they relate to preserving community character, creating affordable housing, stabilizing property values, and strengthening central business districts that foster urban and rural economic development activity. We strongly support expanding the historic rehabilitation tax credit. Rehabilitation of older buildings is the most sustainable development practice there is. Our top priority for several years has been to pass the "Community Restoration and Revitalization Act" (H.R. 1043/S. 584), which contains a series amendments to the rehab credit. Elements of this bill were incorporated in the Housing Economic Recovery Act of 2008 but additional amendments would make beneficial changes to the existing historic tax credit. We encourage significantly increasing its effectiveness as a tool for creating new jobs, and reinvigorating older communities by "recycling" historic buildings that not only have plenty of life left in them, but that link people to their past.
