Sunday, March 28, 2010
Historic Rehab Tax Credit Means JOBS!
Post by the Hawthorne Hawkman, photo from Ranty
As I've looked around at various landlords' properties, I have come to realize the importance of housing preservation. This isn't just an opposition to a home being demolished, as I could bring you to a dozen houses in Hawthorne alone that should have been torn down ages ago. And this isn't about pricing poor people out of buying or renting homes. I think that people of modest means or who are otherwise disenfranchised deserve quality housing just like the rest of us.
My support of architectural and housing preservation stems largely from the kind of communities that are built when we have and value quality housing. Not only that, because preservation work is more labor-intensive, that means it provides more JOBS. And now there is a chance for our state legislature to enshrine those values...
...through the Historic Rehabilitation Tax Credit (HF2695 & SF2568).
This credit will help homeowners currently restoring their properties, but also communities with older, vacant housing stock, as this tax credit will encourage investment and equity-building.
Here's a little background information, according to the Preservation Alliance of Minnesota:
The Minnesota State Historic Preservation Tax Credit was first introduced at the Legislature in 1998, one year after the successful passage of Missouri’s 25% state rehabilitation credit. Since then, Missouri’s credit has generated $1.37 billion in public and private investment. Almost 7,000 jobs were created in the first four years alone of their incentive.
The Minnesota Historic Structure and Community Reinvestment Tax Credit has been reintroduced yearly since 1998 garnering more and more bipartisan support from rural, suburban, and urban legislators. In 2009, the rehabilitation tax credit was included in a comprehensive jobs bill promoted by the Building Jobs Coalition representing the labor, contracting, design, and real estate industries. The job creation aspects of historic preservation further strengthened interest in the provision and this year, for the first time, the rehabilitation tax credit has been included in both the House and Senate Omnibus Tax Bills.
How Does It Work?
· Allows credit on state income taxes equal to 20% of the qualified cost of a historic rehabilitation.
· Parallels federal historic preservation 20% tax credit for National Register listed properties, creating more development opportunities in Minnesota and leveraging millions of dollars in federal monies not currently flowing into our state.
· Depending on the final legislation, it could be used for both commercial and residential property, developers and homeowners. Federal credit is for income‐producing properties only.
How Does Historic Preservation Create More Jobs?
· Historic rehab is more labor intensive than new construction with 60‐70% of the investment in labor rather than materials, thereby creating more jobs per dollar output.
· Increased labor costs create more jobs than new construction resulting in greater income and sales tax revenue. In Missouri, the cost of the credit was recouped in additional payroll taxes alone.
· In Minnesota, historic rehabilitation projects would create 5.7 more jobs per $1 million in output than manufacturing, 4 more than infrastructure projects, and 2 more jobs per $ 1 million than new construction. An estimated 1,500 jobs would be created per year by tax credit activity. A new report by Rutgers found that the federal rehabilitation tax credit has created 1.8 million new jobs since it was enacted by Congress in 1981.
Why is the tax credit so important?
· The state historic preservation tax credit will more than pay its own way. A 2009 report by the Abell Foundation found that Maryland’s state historic tax credit has returned $8.53 in revenue for each dollar of the state’s tax credit investment and has generated $1.74 billion in total economic activity. Between one-third and one-half of that revenue was returned to the state in payroll and sales taxes prior to the state’s release of funds. A cumulative impact study of the federal rehabilitation tax credit released by Rutgers in 2010 found that there has been a 5:1 return on investment for the American taxpayer.
· This credit would keep preservation development dollars in Minnesota. Thirty other states--including Wisconsin, Iowa, North Dakota, Missouri, and Kansas—have already enacted similar programs and are now reaping the economic and community benefits, which go far beyond the immediate cost to the state. Minnesota is the only state in the Upper Midwest with an income tax that does not have a state historic preservation tax credit, effectively sending preservation development dollars to our neighbors.
· State tax credits leverage other federal funds. The state credit, which in many cases can be paired with the 20 percent federal rehab or low-income housing tax credits, encourages private investment in underutilized historic properties in both urban and rural Minnesota, generating jobs and stimulating local and state economic development. The Rutgers study found that about 75% of the tax credit’s economic effects are retained in the localities and states where the project is located.
I'm going to add one more item to this in terms of job creation: I keep on hearing about how we're training our young people in NoMi to do apprenticeship work on construction projects. It would be great to get a new generation of historic preservation housing contractors trained right here in our neighborhoods. Preservation, quality and affordable housing, jobs for those who need it most...I see no reason why we can't have it all. The historic rehabilitation tax credit helps us get there.
Call Linda Higgins, Joe Mullery, and Bobby Joe Champion and tell them to support this bill!