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The Economic and Fiscal Effects of The Mississippi Historic Preservation Tax Incentives Program

An Overview for Decision-Makers

Prepared at the Request of:

Philip Gunn, J.D. Speaker of the House

Mississippi State Research Team

Judith Phillips, M.B.A., ABD, Research Analyst

Kayla Lee-Hopkins, M.P.P.A.

John Harper, M.P.P.A.

Dallas Breen, Ph.D., Associate Director

P. Edward French, Ph.D., Director

August 2015

Mississippi State University Graduate Students

The Stennis Institute of Government and Community Development at Mississippi State University employs Graduate Research Assistants enrolled at Mississippi State University to provide assistance to the Institute to conduct research and to work with Institute staff to conduct a broad scope of work. Funding received by the Stennis Institute is used to provide graduate students with tuition and graduate student stipends, thereby enabling them to pursue graduate level course work at Mississippi State University. These students make a significant and important contribution to all research conducted by the Stennis Institute.

John Harper is from Braxton, Mississippi and graduated from Mendenhall High School in 2007. He

earned an associate’s degree in Business Administration from Copiah‐Lincoln Community College before transferring to Mississippi State University where he received a bachelor’s degree in Political Science. John began his work as a Graduate Research Assistant at the Stennis Institute upon entering the master’s degree program at Mississippi State University. He completed his master’s degree in Public Policy and Administration program in 2013. John is currently pursuing a doctorate degree in Higher Education Leadership to prepare for a career in administration at a college or university.

Kayla Lee‐Hopkins is a native of Brandon, Mississippi and graduated from Northwest Rankin High school in 2007.

Previously, she worked as a Program Support Clerk for the Department of Veterans Affairs in Jackson, Mississippi. Kayla

received her bachelor’s degree in Political Science from Mississippi State University and graduated summa cum laude in

2011. That year, she subsequently entered graduate level study with the Department of Political

Science and Public Administration at Mississippi State, and it was at this time that she began work as a

Graduate Research Assistant for the Stennis Institute of Government. In 2013, Kayla earned a master’s

degree in Public Policy and Administration in addition to the receiving the award for Outstanding

Graduate Student. Currently, she is in the process of pursuing a doctoral degree in Community College

Leadership from Mississippi State’s Department of Leadership and Foundations. Specifically, her

interests in a higher educational context include research and institutional effectiveness; assessment;

and data analytics, reporting, and governance.

THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT

EXECUTIVE SUMMARY

Mississippi enacted a state historic tax credit in 2006; this law was intended to

promote private investment in historic properties with the goal of stimulating job

growth, increasing the tax base, and revitalizing communities. The Mississippi

Historic Preservation Tax Incentives Program provides a 25 percent tax credit for the

rehabilitation of historic structures that are used for residential or business purposes;

eligible expenditures must have been incurred after January 1, 2016 to qualify for the

tax credits. Eligibility for the Mississippi Historic Rehabilitation Tax Incentives

Program first requires that the building be listed individually in the National Register

of Historic Places or certified as contributing element to a National Register-listed

historic district, or be designated as a Mississippi Landmark. Secondly, the project

must meet a substantial rehabilitation test — rehabilitation expenditures must exceed

$5,000 or 50 percent of the total basis of the building; the basis is the purchase price

less the cost of land and prior improvements minus prior depreciation. Finally, as a

condition for receiving the credit, all work on the property must meet the U.S.

Secretary of Interior’s Standards for Rehabilitation and the completed work must be

approved by the U.S. National Park Service and the Mississippi State Historic

Preservation Office of the Mississippi Department of Archives and History.

This report is designed to provide decision-makers with information regarding the

economic impact of Mississippi’s state historic tax credit. The report begins by

providing an overview of federal historic rehabilitation tax credits, which are

commonly used in combination with state historic tax credits to leverage investments

in the rehabilitation of historic structures. To provide a contextual framework, this

report provides a synopsis of the use of historic tax credits by other states and studies

that have been conducted on the economic impact of federal and state tax credits; a

brief review of public policy issues associated with tax incentives is also included in

this report.


EXECUTIVE SUMMARY

To examine the economic and fiscal effects of Mississippi’s historic tax credit

program, the Stennis Institute’s Public Policy Research Group utilized the

Preservation Economic Impact Model (PEIM), a comprehensive economic input-

output model developed by Rutgers University for the National Park Service and used

by the National Park Service to annually evaluate the impact of historic tax credits for

the federal government. The PEIM© model is similar to the more widely known

IMPLAN© econometric modeling software, but the PEIM© model was found to

generate more conservative estimates of labor income, value-added, output, and tax

revenues. Therefore, the analysis of the economic effects of Mississippi’s historic tax

credit program that is presented in this study is considered to be relatively

conservative.

This report focuses only on projects that have been completed and received Part III

approval; it does not include an estimated 45 pending projects that are nearing

completion but have not yet received Part III approval as of August 2015. Part III

approval indicates that all construction work has been completed and approved by the

National Park Service and the Mississippi State Historic Preservation Office and that

the building is ready to be placed “in-service;” it is only after the receipt of Part III

approval that the historic tax credit may be claimed by Mississippi taxpayers.

The study area for the analysis contained in this report is the state of Mississippi; any

economic effects that may occur outside of the state are not included. The analysis

contained in this study is focused only on construction-related spending during

rehabilitation; it does not include the economic benefits of potential new business

activity that will occur after historic buildings are placed in service. Further, this study

does not measure any non-market benefits, such as the aesthetics or intrinsic value of

preserving historic buildings, the contribution of historic structures to promoting

heritage tourism, the impact that the renovation of a historic structure may have in


EXECUTIVE SUMMARY

motivating investments in the surrounding area, or the contribution that historic

rehabilitation may make to community revitalization.

During the 9 years since the state of Mississippi enacted the Mississippi Historic

Preservation Tax Incentives Program, 252 historic rehabilitation projects have been

completed within the state. By allowing owners and developers to invest $59.9

million in lieu of state taxes, Mississippi’s state historic tax credit has stimulated a total

of approximately $269.1 million in local, qualified, non-acquisition related historic

rehabilitation construction expenditures between fiscal years 2007 and 2015. These

construction related expenditures have generated approximately 5,573 full-time

equivalent jobs in the state of Mississippi with income to workers of $148,478,800.

The largest employment impact of historic rehabilitation expenditures has been in the

Construction industry, although historic rehabilitation investments have positively

impacted employment in all sectors of Mississippi’s economy. For example, 2,807

full-time equivalents jobs were created in the Construction industry while there were

approximately 606 full-time equivalent jobs created in the Manufacturing sector, 928

full-time equivalent jobs were created in the Services sector, and approximately 105

jobs were created in the Transportation & Public Utilities Sector. Every dollar the

state of Mississippi has invested in historic tax credits leveraged approximately $2.48

of labor income for residents of the state of Mississippi.

Over the period from 2007 through 2015, the economic effects of construction

spending on historic rehabilitation projects that have been incentivized by

Mississippi’s historic tax credits have created $432.5 million in total economic output.

Therefore, every state dollar invested in historic tax credits has leveraged $5.71 of

economic activity in the state of Mississippi.

Historic rehabilitation projects that used Mississippi historic tax credits generated

$16,399,600 of state and local tax revenues during the construction phase prior to


EXECUTIVE SUMMARY

receiving Part III approval; this indicates that the state of Mississippi recouped

approximately 27.4 percent of its investment of $59,894,173 in historic tax credits in

the form of tax revenues before these buildings were placed in service and taxpayers

were eligible to claim these credits against their state income tax.

From 2007 through 2015, historic rehabilitation investments that have been

incentivized by Mississippi’s state historic tax credit have contributed $198.9 million

to Gross State Product — a leveraging factor of $3.31 for every dollar the state of

Mississippi has invested in historic tax credits; of this amount, $2.98 has been retained

as in-state wealth.

There were an additional 45 historic rehabilitation projects that had received Part I

approval for historic preservation in the state of Mississippi that were not included in

the Stennis Institute’s economic impact analysis of Mississippi’s Historic Preservation

Tax Incentives Program. Of the 45 excluded projects, 20 projects with anticipated

qualified rehabilitation expenditures of $37,370,000 had received Part II approval and

were nearing completion. The Stennis Institute estimates that $59,894,173 of

Mississippi’s $60 million aggregate cap on historic tax credits have been exhausted and

that the 20 projects that have received Part II approval will require, at minimum,

$9.34 million in state historic tax credits.

Over the 9 year period since the enacted of the Mississippi Historic Preservation Tax

Incentives Program, 252 historic rehabilitation projects have been allocated

$59,894,173 in state tax credits; this represents an average annual allocation of $6.65

million in historic tax credits, which is equivalent to approximately 0.12 (0.12%)

percent of average General Fund revenues, one percent (1%) of state revenues from

Corporate Income and Franchise taxes, and 0.38 (0.38%) percent of state revenues

from individual income tax.


EXECUTIVE SUMMARY

In return for its investment in historic tax credits, the state of Mississippi experiences

additional inflows of $45.8 million of federal historic tax credits and private

investments of $173.4 million in historic rehabilitation construction activity, which

generates approximately 5,573 full-time equivalent jobs, contributes $198.9 million to

state gross product, and provides $16.4 million in local and state tax revenues. These

economic benefits accrue to the state of Mississippi during the construction stage of

rehabilitation, before historic buildings are placed in service and taxpayers become

eligible to deduct historic tax credits from their state income taxes. These economic

effects do not include the contribution to economic activity that occurs when the

construction phase of rehabilitation is completed and buildings are placed in use for a

range of purposes to include rental housing and apartments, mixed-use retail, offices,

hotels, restaurants, and conference centers. In many cases, the economic contribution

of rehabilitated historic buildings after the buildings are placed in service may far

exceed the economic impact that occurs during the construction phase; this study

does not examine these additional benefits to the state of Mississippi. Prior research

has found that historic preservation supports community sustainability by revitalizing

communities, raises and protects property values, preserves cultural traditions, and

contributes to heritage tourism — this report did not examine these issues within the

state of Mississippi.

The Public Policy Research Group at the Stennis Institute conducts studies

and provides quantitative analysis for input into the policy decision‐making

process in the state of Mississippi at the request of the Mississippi

Legislature and other elected leaders; the Policy Research Group does not

provide policy recommendations. The information contained in this report is

not intended to be a policy recommendation.

This page intentionally left blank for purposes of formatting.

The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program

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Table of Contents Overview of Federal Historic Preservation Tax Incentives ........................................................................ 5

Overview of State Tax Credits for Historic Preservation .......................................................................... 11

The Economic Benefit of Federal Historic Tax Credits ............................................................................ 17

The Economic Return on Investment for State Historic Preservation Tax Credits ............................. 24

Historic Preservation Tax Credits in Mississippi ........................................................................................ 33

Historic Tax Credit Usage in the State of Mississippi ........................................................................... 37

The Economic Impact of Mississippi’s Historic Rehabilitation Tax Credit Program ...................... 45

Economic Impact of Projects using only Mississippi state historic tax credits ................................. 47

The Economic Impact of Historic Rehabilitation Projects that Combined Mississippi State

Historic Tax Credits with Federal Historic Tax Credits ....................................................................... 49

Mississippi’s Return on Investment in State Historic Tax Credits ...................................................... 51

Additional Benefits of Historic Preservation Tax Credits ......................................................................... 55

The Public Policy Issues ................................................................................................................................. 59

Appendix A: Overview of State Historic Tax Credit Programs ........................................................... LIX

Appendix B: Detailed Economic Contribution by 2-Digit NAICS ............................................... LXXIII

Index of Tables

Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties ....................... 14

Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014 ........ 22

Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax

Credits, 2007 to 2015........................................................................................................................................................ 36

Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015

.............................................................................................................................................................................................. 36

Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified

Projects, 2007 to 2015 ...................................................................................................................................................... 42


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Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of

Investment — Fiscal Years 2007 to 2015 ..................................................................................................................... 43

Table 7: The Economic and Fiscal Effects of Historic Rehabilitation Investments Using Only Mississippi

State Historic Tax Credits, 2007 to 2015 ...................................................................................................................... 46

Table 8: The Economic and Fiscal Effects of Rehabilitation Projects that used State and Federal Historic Tax

Credits, Mississippi Fiscal Years 2007 through 2015 .................................................................................................. 48

Table 9: The Combined Economic and Fiscal Impact of Mississippi's State Historic Tax Credit — Fiscal Year

2007 to Fiscal Year 2015 .................................................................................................................................................. 52

Table 10: Detailed Economic Contribution by All Mississippi Historic Tax Credit Projects by 2-digit NAICS

2007 to 2015 .............................................................................................................................................................. LXXV

Index of Figures

Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State

Historic Tax Credits — 2007 to 2015 ........................................................................................................................... 38

Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for

Mississippi State Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015

.............................................................................................................................................................................................. 38

Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family, Owner-Occupied Residential

Structures — 2007 to 2015 .............................................................................................................................................. 39

Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal

Historic Tax Credits — 2007 to 2015 ........................................................................................................................... 42

Figure 5: Annual Mississippi State Historic Tax Credit Allocations for Projects that Combined State and

Federal Historic Credits — 2007 to 2015 ..................................................................................................................... 44

Figure 6: Comparison of Trends in U.S. Private Construction Spending and Mississippi Historic

Rehabilitation Construction Spending — 2007 to 2014 ............................................................................................. 64

Index of Maps

Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving

Mississippi State Historic Tax Credits —2007 to 2015 .............................................................................................. 40

Map 2: Geographic Distribution of Historic Rehabilitation Projects Using State and Federal Tax Credits —

2007 to 2015 ...................................................................................................................................................................... 54


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5

Overview of Federal Historic Preservation Tax Incentives

Historic preservation was codified with the passage of the National Historic

Preservation Act (NHPA) in 1966; this act created the National Register of Historic

Places and required the creation of state historic preservation offices. The

responsibility for structuring state historic preservations offices (SHPOs) was left to

the discretion of each state; as a result, the organizational structure of state historic

preservation offices differs from state to state. For example, in New York, the SHPO

is housed within the Department of Parks, Recreation, and Historic Preservation; in

Connecticut, the SHPO is housed in the Department of Economic & Community

Development in the Office of Culture and Tourism; in Louisiana, the SHPO is

located within the Office of Cultural Development. In some states, the state historic

preservation office is a free standing agency (e.g. California and Maryland). In

Mississippi, the SHPO is housed within the Mississippi Department of Archives and

History.

Congress created tax deductions for the rehabilitation of historic buildings and the

donation of easements that preserved the façades of historic buildings in the Tax

Reform Act of 1976 (Pub. L. No. 94-455); Congress enacted the federal historic tax

credit (HTC) in 1978 (Pub. L. No. 95-600).1 Current tax incentives for historic

preservation were established by the Tax Reform Act of 1986 (Pub. L. No. 99-514

and Internal Revenue Code Section 47); there are two types of Federal tax credits for

historic preservation:

A 20 percent tax credit for the certified rehabilitation of certified historic

structures; this credit is available for the rehabilitation of commercial, industrial,

1 Author’s note: a tax credit is different from an income tax deduction; a tax credit lowers the amount of tax owed, while a tax deduction lowers the amount of income that is subject to taxation.


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agricultural, or rental residential purposes, but not for properties that that are used

exclusively as the owner’s private residence.

A 10 percent tax credit for the rehabilitation of non-historic, non-residential

buildings built and first placed in service before 1936 and rehabilitated for non-

residential uses.

The 20 percent historic preservation tax credit and the 10 percent historic

preservation tax credit are mutually exclusive.

The Tax Reform Act of 1986 also established a tax credit for the acquisition and

rehabilitation or new construction of low-income housing. This tax credit for low-

income housing can be combined with the tax credit for the rehabilitation of certified

historic structures, within the guidelines established by the Internal Revenue Service.

The low-income housing tax credit is approximately 4 percent per year for 10 years

for projects subsidized by tax-exempt bonds or below market Federal loans and is

approximately 9 percent per year for 10 years for projects not receiving certain

Federal subsidies.

This paper is concerned only with the 20 percent tax credit for the certified

rehabilitation of certified historic structures and uses the term HRTC to indicate the

20 percent federal credit program.

The federal historic rehabilitation tax credit (HRTC) provides an income tax credit for

qualifying expenses related to the rehabilitation of historic, income-producing

buildings that are certified historic structures as determined by the Secretary of the

Interior through the National Park Service. Federal historic rehabilitation tax credits

provide a dollar-for-dollar offset against the owner’s federal tax liability.


7

The HRTC program is administered by the National Park Service in tandem with the

Internal Revenue Service and local state historic preservation offices2 to ensure that

qualifying investments in historic properties are in compliance with the Secretary of

the Interior’s Standards; these standards provide separate guidelines for each of the

four approaches — preservation, rehabilitation, restoration, and reconstruction.

Rehabilitation is the most prevalent treatment for the use of Federal historic

preservation tax credits; as codified in 36 CFR 67, rehabilitation is defined as “the

process of returning a property to a state of utility, through repair or alteration, which makes possible

an efficient contemporary use while preserving those portions and features of the property which are

significant to its historic, architectural, and cultural values.” The Internal Revenue Service

administers the U.S. Department of the Treasury’s allocation of Federal historic

preservation tax credits and defines qualified expenses for which the historic

preservation tax credit may be taken. Within IRS guidelines, developers and/or

property owners may transfer historic tax credits to investors in return for equity

investment in a project. Investor equity lowers the amount of debt that is required by

the developer to finance a project, reduces the developer’s debt burden, and reduces

the risk exposure of lenders, thereby facilitating the developer’s ability to secure debt

financing for historic rehabilitation projects. In addition to offsetting the risk of

complex preservation projects and the additional costs that arise from the combined

effects of unforeseen complications that arise during construction and the added costs

of remaining in compliance with the Secretary of the Interior’s Standards for historic

preservation, the historic tax credits provide added financial security to private-sector

lenders.

2 In Mississippi, the State Historic Preservation Office (SHPO) is within the Mississippi Department of Archives and History.


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The federal HRTC program is national in scope and may be used in every state; it is

not limited by geography or by the income level of the community (or census tract).

An investment in any geographic location may qualify as long as the proper steps are

taken to qualify the building for the HRTC program. The federal HRTC program has

broad application because there are no federal ceilings on the amount of the credits

that may be used on a single project; the use of the HRTC is determined by the

eligibility of the historic structure and not by funding ceilings. If the building meets

the criteria of the National Park Service and the state historic preservation office, the

project will be eligible for federal HRTCs without a cap on the amount of tax credits.

Property owners and tenants under long-term leases3 may apply to the federal HRTC

program; to qualify for the tax credit, the work must be performed on behalf of the

party applying for the tax credit and that party must claim the depreciation for that

property on its federal tax return. The benefit of the tax credit may be transferred to

a tax credit investor in exchange for an equity investment in an entity created by the

property owner or the tenant (e.g. a limited liability corporation or partnership). To

qualify for the federal HRTC, the taxpayer must complete and submit an application

to the National Park Service; this application is submitted through the state historic

preservation office (SHPO) in the state where the property is located.

The first step in the federal HRTC process is the submission of a Part 1 application to

the SHPO to determine project eligibility; for the 20 percent HRTC,4 the building

must be individually listed in the National Register of Historic Places or be certified as

contributing to a registered historic district. Upon the determination of project

3 Author’s note: Under current federal regulations, long-term leases are leases that have a remaining lease term of more than 27.5 years for residential property or more than 39 years for non-residential property. 4 Author’s note: A Part 1 application must also be submitted to determine project eligibility for the 10% federal tax credit for non-significant buildings built before 1936 that are being rehabilitated for income-producing, non-residential purposes and in cases where applicants are seeking a charitable donation for a historic preservation easement.


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eligibility, owners who are seeking a 20 percent HRTC submit a Part 2 application to

the SHPO for designation as a “certified rehabilitation.” The Part 2 application

contains detailed architectural plans and drawings for the proposed work and is

reviewed by the SHPO to assure conformance with the standards; the Part 2

application is then reviewed by the National Park Service to assure that the

rehabilitation is in conformance with the Secretary of the Interior’s Standards for

Rehabilitation contained in 36 CFR 67. Certified rehabilitation projects must be

“consistent with the historic character of the property and where applicable, the district in which the

structure is located.” Part 2 applications include estimated qualified rehabilitation costs

(QREs). Normally, work conducted under a Part 2 application is completed within 24

months; projects can be phased in under a special 60-month provision. Certified

qualifying rehabilitation expenditures (e.g. construction hard costs, development fees,

architectural, engineering, and surveying fees)5 are reported on a Part 3 Project

Completion form; these are the qualifying costs of the rehabilitation and do not

include other costs that may be associated with the project such as property

acquisition, furniture, equipment, new construction, and the ancillary costs of

improvements such as parking lots, sidewalks, or landscaping. The HRTCs may be

claimed during the tax year that the project is placed in service; for phased projects,

the HRTCs may be allowed before the rehabilitation is complete as long as the project

meets specific “substantial rehabilitation” requirements. The federal HRTC has a

carry-back of one year and a carry-forward of 20 years; federal HRTCs may be subject

to recapture unless the owner or long-term lessee maintains an ownership interest in

the historic structure for five years following the completion of the project. If the

owner disposes of the building within one year after the building is placed in service,

5 Author’s note: Qualified rehabilitation expenditures are expenditures that are chargeable to the capital account for real property, which can be depreciated under §168 of IRS §47(c)(2).


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100 percent of the HRTC may be recaptured; after one year, the tax credit recapture

amount is reduced by 20 percent per year. During the five-year holding period, the

National Park Service or the state historic preservation officer may inspect the

rehabilitated structure at any time; if the work was not conducted in compliance with

that approved in the Part 2 certification or if unapproved alterations have been made

to the building, the HRTC eligibility certification may be revoked. There are multiple

provisions, including passive activity limitations and at-risk guidelines contained in the

Internal Revenue Code that govern the treatment of HRTCs — these provisions are

not described in this document.

Generally, historic preservation projects are costlier and have higher risks than new

construction, which makes these projects more difficult to finance; many projects are

located in deteriorating downtown areas, in buildings that have been vacant over a

long period of time, and/or are prohibitively expensive. Federal HRTCs provide

funding for developers that rehabilitate certified historic landmarks and other

buildings to reuse them as income generating properties that create jobs and promote

economic revitalization. The most common uses of HRTCs are:

Commercial offices and retail properties

Mixed-use (commercial/residential) properties

Hotels and hospitality properties

Entertainment and cultural facilities

Community centers

Educational facilities

Factories and industrial facilities

Agricultural facilities


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Historic tax credits are attractive to a range of individual and institutional investors

that have substantial federal tax liability; banks and other financial institutions are

frequent participants in HRTC projects because these investments enable banking

institutions to meet their Community Reinvestment Act requirements. HRTCs act as

incentives to enhance the ability to finance challenging projects by:

Creating a source for lower-cost equity investment in marginal projects, enabling

equity investors to contribute capital to the project and improving investors’ rate

of return

Reducing the developer’s project cost and improving the developer’s project cash

flow; tax credits improve the developer’s return on investment in the project

HRTC projects also create multiple opportunities within the banking and financial

sector to offer a range of products and services related to rehabilitation projects; these

include: predevelopment and acquisition loans, letters of credit, warehouse lines of

credit, mezzanine or bridge loans, construction loans, and permanent mortgage

financing.

Significant development investments that might not otherwise be feasible can be

successfully financed by coupling HRTCs with a range of federal, state, or local

incentives that may include Low-Income Housing tax credits, New Market Tax

Credits, Community Development Block Grants, Brownfield Economic

Development Initiative Grants, USDA Rural Development Loan Programs, Tax

Increment Financing, and state-level historic preservation tax credits.

Overview of State Tax Credits for Historic Preservation

There are approximately 35 states in the U.S. that provide state-level historic tax

credits to encourage the preservation and rehabilitation of historic structures.

Generally, state historic preservation tax credits mirror the characteristics of the


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federal HRTCs: a criteria for establishing qualifying buildings, standards for

rehabilitation, a method for calculating the allowable tax credit based upon a

percentage of rehabilitation expenditures, and a minimum required investment;

however, these policies vary by state. Some states allow developers to use the state

tax credit on single-family owner-occupied housing; the federal HRTC may not be

used for this purpose. State policies also vary with regard to the level of the tax credit

percentage (e.g. 20 percent of the cost of qualified rehabilitation expenditures

[(QREs)] or 25 percent of QREs); for example, the state of Mississippi has a total

aggregate cap of $60 million on its state historic tax credit. In some cases, states have

placed annual caps on the total dollar amount of historic tax credits that may be

authorized (e.g. Connecticut places a $15 million annual aggregate limit on HTCs used

to convert commercial or industrial property for residential use only); other states

have set limits on the amount of tax credits that may be claimed for any single

rehabilitation (per-project caps), or requirements for the geographic dispersion of

investments using state historic tax credits. Certain states also allow a local option

historic tax credit (e.g. Maryland); other states provide a property tax abatement

through a reduction of between 10 and 50 percent to the appraised value of historic

properties that have been rehabilitated. Quite a few states have monetized historic tax

credits allowing eligible entities to opt to take the credit as a refund (in cases where

there is no state tax liability), to convert the tax credit to a mortgage credit certificate

for banks or mortgage lenders who provide financing for the rehabilitation (e.g.

Vermont), or to allow the sale or purchase of HTCs as a credit against franchise tax

liability (e.g. Texas, which does not have a state income tax).

State policies related to annual aggregate caps, individual project caps, and the

transferability of credits will determine the effectiveness of a state historic tax credit

program. States impose aggregate caps on the total dollar amount of credits that may


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be awarded to rehabilitation projects for the purpose of limiting the liability exposure

of the state treasury; in addition to total aggregate caps, some states impose an annual

aggregate cap on the dollar amount of historic tax credits that may be issued. For

example, the state of Arkansas has an annual program cap of $4 million in credits, a

per-project cap of $125,000 in credits for income producing properties, and a per-

project cap of $25,000 for non-income producing properties. Annual program caps

and per-project caps may negatively impact the effectiveness of a state historic tax

credit program because the amount of the credit may be inadequate to provide a

sufficient incentive for large projects and may incentivize projects that do not require

the tax credit while excluding projects that cannot be financed without the credit. To

be rational, state historic tax credits must enhance the feasibility of projects that

would not be able to be financed otherwise or with the Federal rehabilitation tax

credit alone; otherwise, there is no reason to invest taxpayer funds in these projects

except for the purpose of attracting Federal HRTC dollars into a state.

Transferability is a key component to structuring an effective state historic tax credit

policy. An important consideration in the design of state historic tax credits is

whether the state credit will leverage more investment into the state through the use

of Federal rehabilitation tax credits, thereby attracting new dollars into the state and

increasing the economic benefit of rehabilitation investments. All state historic tax

credits are theoretically designed so that projects that qualify for state historic tax

credits (with the exception of single-family, owner occupied projects) also qualify for

federal HRTCs, making it possible to leverage federal HRTCs with state credits. State

historic tax credits only have value to those who owe state income taxes (a relatively

limited universe of investors), while the Federal HRTC is of value to those who owe


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Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties

State Aggregate Per Project Cap Comments

Alabama $20 million $5 million Starts May 15, 2016

Arkansas $4 million $125,000 in credits

Colorado None $50,000

Connecticut $50 million over 3 years $5 million per project

Delaware $5 million None For both homeowners and commercial

Georgia None $300,000

Illinois None None River Edge Redevelopment Zone only

Indiana $450,000 None

Iowa $45 million None

Kansas None None

Kentucky $5 million None For both homeowners and commercial

Louisiana None $5 million per taxpayer In development district

Maine None $5 million per project

Maryland Annual appropriation $3 million per projectApproximately $10 million annual average

appropriation

Massachusetts $50 million None

Minnesota None None

Mississippi $60 million None

Missouri $140 million NoneProjects with eligible costs less than

$1,100,000 are not subject to cap

Montana None None 5% add‐on to federal

Nebraska $15 million $1 million in credits

New Mexico None

$25,000 outside

$50,000 in Arts &

Cultural District

New York None $5 million only in designated distressed areas

North Carolina None None

North Dakota None $250,000 In a “renaissance zone” only

Ohio $60 million $5 million

Oklahoma None None

Pennsylvania $3 million $500,000 Started 2012

Rhode Island $34.5 million None Cap currently set by legislature

South Carolina None None

10% add‐on to federal; 25% for other

eligible properties

Texas None None Started Jan 1, 2015

Utah None Nonelimited to owner‐occupied and residential

property

Vermont $1.5 million None 10% add‐on to federal

Virginia None None

West Virginia None None 10% add‐on to federal

Wisconsin None None 20% creditSource: National Trust for Historic Preservation

Author's Note: Appendix A provides more detailed information on state historic tax credit programs.


15

federal income taxes (a much larger potential universe of investors) — as a result,

state historic tax credits will have value for some potential investors, but not for

others, and the value of state and federal historic tax credits is limited by the tax

liability exposure (and other investment requirements) of each investor. Because few

project developers have sufficient tax liability to make full use of either the state or

the federal tax credits, some mechanism is required to enable the transfer of the tax

credits to those who can use the credit in exchange for money (equity investment).

For this reason, disproportionate allocation is an important consideration in the

design of state historic tax credit policies. Disproportionate allocation allows the

creation of a pass-through mechanism that enables the state historic tax credits to be

used by taxpayers with state income tax liability while also allowing the federal tax

credit for the same project to be used by out-of-state taxpayers (investors).

Mississippi and Kansas are among the states that have policies that allow for the

disproportionate allocation of state historic tax credits (see Appendix A for a

description of state historic tax credit programs). Some states allow the party who

qualified for the historic tax credit to sell the credit to a third party (e.g. Missouri).

States may also allow the historic tax credit to be structured so that it is refundable

(e.g. Maryland, Louisiana, and Mississippi); this structure is very effective because it

increases the flexibility of the credit, is beneficial for smaller projects where the

transaction cost of more sophisticated investment mechanisms are prohibitive, and

benefits those with lower incomes who may not be able to transfer the credit.

Federal HRTCs cannot be “sold” or transferred directly to a third party and must be

monetized to have value; normally, this is accomplished through a complex

partnership or syndication transaction that requires the creation of another entity that

uses a complex multi-tiered investment structure to function as a pass-through for tax

credits. These are sophisticated investments that require highly specialized legal and


16

tax expertise; the transaction costs associated with structuring partnership and

syndication investment mechanisms that comply with Internal Revenue Service safe

harbor guidelines can be quite high, reduce the financial value of the tax credits, and

set a floor on the cost-benefit of using federal HRTCs on specific projects (e.g.

rehabilitation projects where the investment may be less than $2 to $5 million). State

historic tax credits (HTCs) that have a high degree of transferability, have lower

transactions costs, and can be more easily combined with the federal HRTC have

greater value to the project developer and to tax credit investors; state tax credits that

are easily transferable facilitate the use of state HTCs and federal HRTCs on the same

project. This increases the amount of equity financing that is available for

rehabilitating historic buildings, increases the number of significant and capital

intensive rehabilitation projects that can be accomplished within a state, maximizes

the economic impact of historic rehabilitation projects, and may accelerate the state’s

pay-back for recouping its investment in state historic tax credits.

From the perspective of a taxpayer, state historic tax credits are worth less than

federal historic tax credits; a taxpayer who uses the state tax credit to reduce state

income tax liability can no longer deduct that amount from the amount of federal

income tax owed; therefore, the taxpayer may experience an increase in federal

income tax liability at the same time that state income tax liability is reduced —

depending upon the tax bracket of the taxpayer, the loss of deduction may reduce the

value of the state credit by up to 35 percent for a corporation and up to 39.6 percent

for individuals, depending upon the effective marginal tax rate of the taxpayer.

Generally, a state historic tax credit has an after-tax value in the range of $0.50 to

$0.60 cents on the dollar; although there are investment strategies that may be

designed to reduce these federal tax penalties, these strategies are extremely complex

and are only feasible for extremely large and sophisticated investments. In structuring


17

investments, the reduction in the face value of the state tax credit may be offset

through the use of the federal historic tax credit, which retains up to 100 percent of its

face value because it is not taxed by the federal government.

Research has consistently found that a state historic tax credit should be set at a rate

that is high enough to provide a meaningful incentive to offset the high cost and risk

associated with rehabilitating historic properties; studies by the National Trust for

Historic Preservation6 and others7 have recommended that state historic tax credits be

in the range of 20 to 30 percent of the qualified rehabilitation expenditures and have

no per-project cap in order to be effective. Of the 33 states that offer tax credits for

commercial historic rehabilitation, 19 states have no total aggregate program cap

(Table 1, page 14); however, even without an aggregate cap, many state historic tax

credit programs fail to effectively incentivize rehabilitation because either the

percentage rate or the per-project cap is set too low, or because there are significant

impediments to the transferability of state historic tax credits.8

The Economic Benefit of Federal Historic Tax Credits

Extensive research has documented the key role that historic tax credits have played

in the redevelopment and revitalization of communities.9, 10, 11, 12 The National Park

Service and the National Trust for Historic Preservation have identified historic tax

6 Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report Produced by the National Trust for Historic Preservation’s Center for State and Local Policy. 7 Kuhlman, R. (2015). A Policy Brief on Return on State Investment. National Trust for Historic Preservation. 8 Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report Produced by the National Trust for Historic Preservation’s Center for State and Local Policy. 9 Birch, E. L. (2009). Downtown in the “New American City.” Annals of the American Academy of Political and Social Science. 626 (November), 134 – 153. Di:10.1177/0002716209322169 10 Filion, P, Hoernig, H., Bunting, T., and Sands, G. (2004). The Successful Few: Healthy Downtowns of Small Metropolitan Regions. Journal of the American Planning Association. 70(3), 328 – 343. Doi: 10.1080/01944360408976382. 11 Listokin, D., Lahr, M. L., and Heydt, C. (2012). Third Annual Report on the Economic Impact of the Federal Historic Tax Credit. New Brunswick, N.J.: Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers – The State University of New Jersey and the National Trust Community Investment Corporation. 12 Sohmer, R. R., and Lang, R. E. (2001). Downtown Rebound (Fannie Mae Foundation and Brookings Institute Center on Urban and Metropolitan Census 03, May). Washington, DC. http://www.brookings.edu/research/reports/2001/05/downtown-sohmer. Retrieved 8-10-2015.


18

credits as “the nation’s most effective program to promote historic preservation and community

revitalization through historic preservation.”13 Birch14 described the transformative impact

of investments in the rehabilitation of historic buildings as follows: “the occupation of

vacant, centrally located buildings, the increased presence of people on formerly empty streets, and

investment in supportive commercial activities and amenities help bring market confidence to worn-out

downtowns.”

Federal and state historic preservation tax credits are market-based incentives

designed to leverage private investment in historic properties. When the private

sector makes investments to rehabilitate buildings using historic tax credits there are

economic multiplier effects that ripple through local and state economies, bringing a

range of benefits that include the creation of jobs, labor income, and tax revenue.

The economic impact of investments in historic rehabilitation projects has been

found to be more significant than the impact associated with many alternative

investments made in other sectors of the economy.15, 16 There are two primary

reasons for the significant impact associated with historic rehabilitation investments:

1) the complexity of the design requirements and the structuring of investments that

use historic preservation tax credits require the engagement of highly skilled

professionals, to include accountants, investment and tax specialists, architects,

engineers, and preservation specialists; and 2) the unique construction requirements

and the labor intensity of historic rehabilitation projects entail more labor, require

labor that is more highly skilled, and create more jobs in the Construction Sector

13 National Park Service. (2012). Federal Tax Incentives for Rehabilitating Historic Buildings: Annual Report for Fiscal Year 2012. Washington, CD: Technical Preservation Services, National Park Service, U.S. Department of the Interior. 14 Birch, E. L. (2002). Having a Longer View on Downtown Living. Journal of the American Planning Association. 68(1), 5 – 21. Doi: 10.1080/01944360208977188 (page 2). 15 Ryberg-Webster, S. (2013). Federal Rehabilitation Tax Credits and the Transformation of U.S. Cities. Journal of the American Planning Association. 79 (4) DOI: 10.1080/01944363.2014.903749. 16 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal Historic Tax Credits for FY 2013, U.S. Department of the Interior, National Park Service.


19

where the pay scale is higher as compared to other industry sectors (e.g. the Retail

Sector, the Service Sector, or the Food and Accommodation Sector). Studies17

conducted by Listokin and Lahr in the states of New Jersey and Kansas found that

the rehabilitation of non-residential historic buildings generated two more jobs in

construction for each expenditure of one million dollars as compared to a one million

dollar expenditure on new construction; studies of rehabilitation programs in other

states have reached similar conclusions.18, 19, 20, 21 A 2012 study by the National Park

Service found that approximately 75 percent of the economic benefits of historic

rehabilitation investments are retained within the state and local economy where the

project is located, and because historic building rehabilitations are more labor

intensive than new construction, these projects require additional workers at higher

wages.22

The rehabilitation of historic properties creates two waves of economic impact. The

first wave of economic impact occurs during the planning and construction phase of a

historic rehabilitation; the second wave of economic impact occurs after the project is

placed in service and the ongoing operations of business activity commences.

Because historic rehabilitation projects repurpose historic structures for multiple

mixed-use purposes, to include hotels and conference centers, retail, office space,

and/or housing, as the rehabilitated buildings are occupied and business operations

commence, the economic activity associated with the ongoing operations of these

17 Listokin, D., Lahr, M. L., Daffern, M., and Stanek, D. (2009). Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers University, New Brunswick, New Jersey. 18 Mason, R. (2005). Economics and Historic Preservation: a Guide and Review of the Literature. Discussion Paper prepared for the Brookings Institution Metropolitan Policy Program. University of Pennsylvania. 19 Lipman, Frizzell, and Mitchell (2003). Historic Rehabilitation and Economic Revitalization Tax Credit Act: Economic and Fiscal Impacts. Pittsburgh: Downtown Pittsburgh Partnership. 20 Rypkema, D. (1998). Economic Benefits of Historic Preservation. Forum News. 4 (5) (National Trust for Historic Preservation). 21 Leichenko, R. Coulson, E., and Listokin, D. (2001). Historic Preservation and Residential Property Values: An Analysis of Texas Cities. Urban Studies. 38 (11): 1973 – 1987. 22 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal Historic Tax Credits for FY 2012, U.S. Department of the Interior, National Park Service. http://www.nps.gov/tps/tax-incentives/reports.htm. Accessed 8-15-2015.


20

activities generates a second wave of employment, purchasing, and spending. This

second wave of economic impact from the ongoing operations of occupants of

rehabilitated structures is of longer duration than that which occurs during the

construction phase because they are continuous over multiple years into the future.

For example, the rehabilitation of an historic property to create a hotel and

conference center will have economic impact during the construction phase of project

activities. During construction, the project will have three types of economic impact:

direct, indirect, and induced. The direct, indirect, and induced effects that occur

during the construction phase of the rehabilitation of an historic property may be

described as follows:

Direct effects are expenditures made by developers and/or property owners who

rehabilitate historic buildings. The design, financing, and rehabilitation of historic

property requires expenditures by developers and/or property owners on the

purchase of goods (e.g. building materials and other supplies) and services from a

number of industry sectors to include architects, lawyers, engineers, and construction

contractors and workers. This initial spending has a multiplier effect across the local

and state economy; these additional multiplier effects are called indirect and induced

impacts.

Indirect Effects are associated with the inter-industry spending that occurs through

the supply chain that provides goods and services to the developer and/or property

owner. As suppliers must make purchases of goods and services from other firms to

accommodate the new demand, the economy is further stimulated.

Induced Effects are the economic effects of spending by employees of the directly

and indirectly affected industries. As businesses in the supply chain must provide

increased goods and services to accommodate new demand, they may need to hire


21

additional workers or pay existing workers for working longer hours. As wages and

salaries increase, workers will have more household income to spend on goods and

services; this spending will generate additional economic effects on the local and state

economy.

The economic impact of historic rehabilitation projects during the construction phase

of the project are a function of the magnitude of expenditures and industry specific

multiplier effects. Generally, the greater the expenditure, the greater the economic

impact (e.g. jobs created and tax revenues generated). Upon completion of the

construction phase of a historic rehabilitation, the economic effects will rapidly

decrease and end as construction related expenditures cease. Once construction is

completed, the rehabilitated historic structure will be placed in service for its intended

purpose and a new wave of spending associated with the intended use of the structure

will commence — owners will occupy residential structures, tenants will occupy

apartment buildings, and businesses will occupy commercial structures — the

economic impact of these activities are identified as the “ongoing operations (of

business activity).” For example, the ongoing operations of an historic building being

rehabilitated to create a hotel and conference center will begin when the historic

building is placed into service; furniture and fixtures will be purchased, staff will be

hired, and other expenditures will occur during start-up. Then, as hotel and

conference operating activities commence, spending associated with ongoing

operations will create a new round of direct, indirect, and induced economic impact

and new visitors will be attracted into the community, generating related economic

impact from their spending on goods and services. The ongoing operations of a

hotel and conference center require purchases of goods and services from suppliers,

and these suppliers also purchase goods and services from their suppliers; this


22

Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014

StatePart 1

Approved

Part 2

Approved

Part 3

Approved

Estimated QRE

at Part 2

Estimated QRE at

Project Completion

(Part 3)

Alabama 20 19 7 $82,449,803 $11,423,841

Alaska 0 1 0 $78,000 $0

Arizona 2 4 1 $57,439,618 $12,014,019

Arkansas 31 22 14 $12,503,023 $18,447,488

California 5 4 10 $65,600,000 $204,098,492

Colorado 7 5 2 $21,512,900 $1,492,681

Connecticut 18 11 3 $103,772,877 $13,513,340

Delaware 3 0 1 $0 $40,000

D.C. 6 3 1 $201,100,000 $18,500,000

Florida 14 5 12 $8,945,000 $77,531,993

Georgia 48 37 17 $72,901,000 $30,356,140

Hawaii 2 2 0 $2,487,385 $0

Illinois 25 17 26 $628,706,937 $726,641,040

Indiana 20 20 6 $107,242,747 $27,251,058

Indiana 1 0 0 $0 $0

Iowa 43 39 16 $88,456,936 $75,993,542

Kansas 13 11 9 $18,379,457 $32,340,132

Kentucky 52 48 20 $75,033,385 $29,669,915

Louisiana 151 106 64 $164,904,530 $228,237,249

Maine 9 10 7 $36,432,419 $59,024,773

Maryland 67 63 21 $118,686,734 $266,317,511

Massachusetts 49 34 48 $162,909,183 $298,369,154

Michigan 46 31 15 $212,675,447 $72,041,995

Minnesota 10 10 8 $253,032,709 $119,677,966

Mississippi 38 28 14 $37,340,000 $20,117,603

Missouri 89 109 60 $619,758,536 $155,051,092

Montana 2 1 3 $75,000 $2,336,631

Nebraska 12 7 8 $16,995,567 $44,003,882

Nevada 1 0 0 $0 $0

New Hampshire 2 4 3 $21,697,884 $30,757,492

New Jersey 18 7 6 $167,187,200 $28,852,602

New Mexico 0 1 1 $5,411,980 $19,421,446

New York 85 89 41 $468,166,306 $382,737,351

North Carolina 53 59 44 $76,080,136 $56,181,236

North Dakota 0 1 0 $9,000,000 $0

Ohio 98 75 52 $825,779,843 $207,910,835

Oklahoma 14 16 9 $82,979,149 $45,094,393

Oregon 6 9 8 $25,163,590 $42,947,470

Pennsylvania 45 37 35 $409,026,043 $430,622,509

Rhode Island 22 19 12 $42,518,655 $88,605,025

South Carolina 25 16 7 $101,296,190 $33,689,897

South Dakota 4 4 4 $7,920,000 $6,238,711

Tennessee 21 15 18 $25,375,000 $30,914,517

Texas 19 6 9 $22,823,000 $70,662,842

Utah 9 7 1 $8,997,000 $14,692,882

Vermont 12 12 9 $8,862,345 $20,557,247

Virginia 129 95 97 $278,310,316 $208,490,454

Washington 8 10 3 $78,150,000 $25,751,910

West Virginia 2 1 5 $3,100,000 $6,265,657

Wisconsin 19 25 5 $139,067,520 $28,892,094

Wyoming 1 1 0 $6,000,000 $0

Total 1,376 1,156 762 $5,982,331,350 $4,323,778,107Source: Federal Tax Incentives for Rehabilitating Historic Buildings, Statistical Report and Analysis for Fiscal Year 2014, U.S. Department of

the Interior, National Park Service

QRE = Qualified Rehabilitation Expenditures


23

generates additional economic impact, or “ripples” of demand for goods and services

throughout the local, state, and national economy (multiplier effects). Direct

spending on goods and services by the hotel and conference center, supplier spending

on goods and services, and purchases by labor also generate new tax revenues for

federal, state, municipal, and county governments in the form of sales and use taxes,

property taxes, income taxes, and other fees and taxes. Although these secondary

waves of economic effects from the ongoing business operations that are created

when rehabilitated properties are placed in service are longer lasting and generally

more significant than the initial economic effect during the construction phase of

historic rehabilitation, these secondary effects may be excluded from studies on the

economic impact of federal historic preservation tax credits.

A 2015 report by the Office of the Comptroller of the Currency indicates that since

the enactment of the Tax Reform Act of 1976, the federal historic tax credit has

rehabilitated more than 39,600 buildings, leveraged more than $109 billion in private

funds, and generated 2.41 million jobs with associated income of $91.5 in the United

States. Advocacy studies have found that “every $1 of federal tax credit ultimately

generates $1.25 in federal tax revenue.” 23 A 2014 study found that every one dollar

of federal historic tax credit leverages a minimum of $4 in private investment, and that

for every $1 million in historic property investment, 16 jobs are created and $2.1

million in economic activity is catalyzed. 24 In fiscal year 2014, 1,156 proposed

projects with an estimated $5.98 billion in qualified rehabilitation expenditures

received Part 2 approval for the use of federal historic tax credits (Table 2, page 22).

Approximately 762 completed projects with $4.32 billion in qualified rehabilitation

23 PlaceEconomics (2013). The Federal Historic Tax Credit: Transforming Communities. The National Trust for Historic Preservation, Washington, DC. 24 Federal Tax Incentives for Rehabilitating Historic Buildings, Annual Report for Fiscal Year 2014, U.S. Department of the Interior, National Park Service, Washington, D.C.


24

expenditures received Part 3 certification for federal historic tax credits in fiscal year

2014 (Table 2, page 22). A study by the Rutgers University Center for Policy

Research funded by the National Park Service found that completed projects certified

in fiscal year 2014 created an estimated 77,762 jobs in the United States.25 In fiscal

year 2014, over 50 percent of completed federal historic tax credit projects certified by

the National Park Service combined the use of federal and state historic tax credits.26

The Economic Return on Investment for State Historic Preservation Tax

Credits

A review of the research on state historic tax credit programs indicates these

programs have positive economic benefits and return the states’ investment within a

period of approximately seven years. Similar to federal historic rehabilitation tax

credits, state historic tax credits have economic effects that occur in two stages; the

first stage of economic impact occurs during the pre-construction and construction

phase of a historic rehabilitation, and the second stage of economic impact occurs

after the structure is placed in service, the buildings are occupied, and businesses

commence operations.

The payback period for state historic tax credits will vary depending upon the final

use of the renovated building. For buildings that are intended for commercial use or

mixed-use, the payback period for state historic tax credits and the magnitude of state

revenues related to income tax, sales tax, and other tax revenues will generally be

greater over the long-term as compared to single-family, owner-occupied residential

rehabilitation projects. For example, an historic renovated building that is used as a

hotel will have significant economic impact after the building is placed in service and

business operations commence. Employees are hired, purchasing and spending to

25 Ibid. 26 Ibid.


25

support on-going operations is continuous, and new visitors are attracted into the

community; this generates state tax revenues and payback occurs quickly. During the

construction phase of single-family, owner-occupied residential rehabilitation projects,

the hiring of labor and material purchasing will have positive economic effects in

terms of job creation and the generation of tax revenues (e.g. income and sales tax);

however, upon completion of the construction phase, the increased property value of

the residential structure and the stabilization of residential neighborhoods may be the

primary benefit once the building is placed in service. Because property tax revenues

accrue to the benefit of local counties and municipalities but not to the state, the state

may recognize relatively little payback on state historic tax credit investments in

single-family, owner-occupied residential structures when these investments are not

an element of a more comprehensive community revitalization strategy. For example,

in many communities, historic residential properties are an element of cultural

heritage and tourism — which attracts new visitors into the community — and new

tax revenues are derived from tourism related spending. When residential historic

rehabilitation occurs on a large scale within a community, this may contribute to the

revitalization of downtown areas, incentivize new business formation, and may also

enhance the community’s ability to attract businesses that consider the quality of life

during the site selection process. Historic rehabilitation projects that enable the

occupancy of formerly vacant or abandoned buildings can also contribute to the

reduction of crime and may incentivize new construction activity within communities.

Most states require that the rehabilitated building be placed in service before the state

historic tax credit can be claimed; this means that the rehabilitation must be

completed prior to occupancy and that all construction expenditures be completed (or

in the case of phased projects, some portion of the rehabilitation must be completed

for occupancy). Once the building is placed in service, the historic tax credit may be


26

claimed on the taxpayer’s tax return during the following year. Therefore, the

economic and fiscal payback of state investments in historic preservation tax credits

are front-loaded because tax revenues are generated during construction activities

prior to the time the building is placed in service and the historic tax credit may be

claimed. The state may also recognize tax revenues associated with ongoing business

operations for up to one year after the building is placed in service depending upon

the timing of the completion of construction activities, the occupancy of the building,

and the commencement of business operations. Therefore, states may start receiving

payback on the state’s investment in historic tax credits for multiple years prior to the

time the cost of these tax credits impact the state’s treasury. Depending upon the

project and the time it takes to complete construction, place the building in service,

and the time it takes to commence business operations, states may recognize tax

revenues from historic rehabilitations for multiple years prior to taxpayers claiming

the historic tax credit against their state income tax.

The majority of studies that have been conducted to examine the economic impact of

state historic tax credit programs and the return on states’ investment in historic tax

credit programs have found that states receive a significant and positive return on

their investment in historic tax credits; examples include:

Maryland. Maryland allows a 20 percent state historic tax credit for expenditures on

qualified rehabilitation projects; the state also provides a 5 percent additional credit

for high performance commercial rehabilitations that achieve LEED ratings and a 10

percent credit for non-historic, “qualified” rehabilitated structures for commercial

properties located in designated “sustainable” communities. A study by the

Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit

found that for every dollar of tax credit investment by the state, the state received an

average return of approximately $1.02 during the first year after a project’s completion


27

and $3.31 within five years after project completion.27 The Maryland taskforce found

that Maryland’s state historic tax credit program is “self-financing and does not require an

outside revenue source. The total fiscal benefits of the Program, taken as a whole, far exceed the cost

to the Treasury.” 28 The study found that large, commercial mixed-use historic

rehabilitation projects with multiple office and commercial tenants had the most rapid

rate of return on the state of Maryland’s investment in tax credits, and, many projects

were found to have a break-even period of one year or less. The study also found that

single use commercial rehabilitation, such as retail establishments or restaurants had a

break-even period of approximately five years.29

Wisconsin. Starting in 1989, the state of Wisconsin had provided a 5 percent HTC

on qualified rehabilitation expenditures; there is no aggregate cap on the state’s HTC

and no per-project cap. On January 1, 2014, Wisconsin increased its HTC from 5

percent to 20 percent of expenditures on qualified rehabilitation projects. Prior to

increasing its HTC, Wisconsin’s HTC program averaged 11 projects per year; in 2014,

31 projects were approved with $35.1 million in state HTCs. A study by the

University of Wisconsin-Milwaukee’s Historic Preservation Institute and Baker Tilly

Virchow Krause, LLP.30 produced the following findings on the economic impact of

25 of the 31 projects that qualified for Wisconsin’s state historic tax credit program in

2014:

the state’s investment of $35.1 million in HTCs leveraged an additional $211

million in private investment expenditures

27 Final Report of the Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit, 2004. 28 Ibid. 29 Ibid. 30 Baker Tilly Virchow Krause, LLP. (2015). Wisconsin Historic Tax Credit: Impact Analysis. http://milwaukeepreservationalliance.org/wp-content/uploads/2015/05/Wisconsin-Baker-Tilly-HTC_FullReport_Final.pdf. Accessed 7-14-2015.


28

2,185 full-time equivalent jobs would be created during the construction phase

with an associated labor income of $127.4 million

the projects would have an overall economic impact of $353.3 million throughout

the state

the projects would generate $14 million in new tax revenues before the projects

were placed in service and any tax credits were claimed

the investment in HTCs would be paid back within 7 years (this included the

construction phase and the impact of ongoing operations after the structures were

placed in service)

by the 10th year of business on-going operations, an estimated $46 million in tax

revenue would be generated, indicating a 133 percent return on the state’s original

$34.9 million investment in state historic tax credits

Ohio. Ohio enacted a state historic tax credit program in 2006; the program has an

annual cap of $60 million and is jointly administered by the Ohio Historic

Preservation Office, the Ohio Department of Taxation, and the Ohio Development

Services Agency; it allows a tax credit of 25 percent of expenditures on qualified

rehabilitation projects. The tax credits are awarded during two application periods per

year. The Ohio Legislature requires a cost-benefit analysis for each HTC project

during the application process and the state determines whether awarding the credit

will result in a net revenue gain in state and local taxes once the building is placed in

service. Over the period from 2007 to 2013, the state of Ohio awarded $246,393,097

in state historic tax credits to 111 projects; the total construction costs associated with

these 111 projects was $1,411,551,249, and federal HRTCs represented $210.4 million

of construction costs while private funding accounted for $951.9 million of total


29

construction costs. A study conducted by Cleveland State University 31 examined the

impact of Ohio’s historic tax credit program over a period from 2007 through 2025.

This study modeled the staged construction impacts over a period from 2007 through

2015 and the economic impact of the ongoing operations of business activities upon

completion of construction activities over the period from 2010 through 2025; the

findings of this study included the following:

every $1 of state historic tax credits generates $40.58 of impact during the

construction phase and from ongoing business operations upon completion of

construction

every $1 of state historic tax credits leveraged $8.25 in construction spending

for every $1 million in state historic tax credits, approximately 83 construction jobs

were created

the state of Ohio recovered $0.31 of every dollar invested prior to the

disbursement of any tax credit funds from the Treasury

every $1 of state historic tax credit leveraged $0.85 in federal HRTCs

an annual average of 2,942 full-time equivalent jobs were created based upon

construction impacts that were modeled over the period from 2007 through 2013

during the operation phase of rehabilitation investments, the study projected the

creation of 4,602 full-time equivalent jobs with wages of $4.6 billion, generating

$254.2 million in total state revenues and $92.3 million in local government

revenues

31 O’Brien, K. and Robey, J. (2011). Estimates of Economic Impact of the Ohio Historic Preservation Tax Credit Program. The Great Lakes Environmental Finance Center of the Maxine Goodman Levin College of Urban Affairs of Cleveland State University. https://development.ohio.gov/files/redev/OHPTC%20Economic%20Impact%20Study%20-%20May%202011.pdf. Accessed 8-14-2015.


30

during the operations phase, the redevelopment of the 111 historic buildings was

projected to leverage $32.33 in operating benefits for every $1 of state historic tax

credits and create 298 jobs for every $1 million in state historic tax credits over the

period from 2010 to 2025

the payback for the state of Ohio’s investment of $246.4 million in historic credit

was projected to take 9 years

Georgia. The state of Georgia enacted a state income tax credit for rehabilitated

structures in 2002 (O.C.G.A. § 48-7-29.8); Georgia’s program is administered by the

Georgia Department of Natural Resources’ Historic Preservation Division and the

Georgia Department of Revenue. Georgia provides a 25 percent historic tax credit

for both owner-occupied residences and income-producing certified expenditures;

there is a $100,000 credit cap for owner-occupied residential investments and a

$300,000 tax credit cap for rehabilitation investments in income-producing buildings.

Georgia also allows an additional 5 percent historic tax credit for residential historic

rehabilitations that are located in HUD targeted areas. In 2013, the Georgia

Legislature considered increasing the per-project cap on income-producing historic

rehabilitations to improve the effectiveness of its state historic tax credit program; to

examine the impact of modifying Georgia’s tax credit program, a study was conducted

by the Georgia Tech Research Institute. 32 This study found that over a 20 year

period, Georgia’s historic tax credit program would have the following impact:

the estimated cost of Georgia’s historic tax credit program to the state treasury is

$89.65 million; these tax credits were projected to leverage $668.07 million of

construction spending within the state

32 Georgia Tech Research Institute, The Projected Economic and Fiscal Impacts of Improvements to Georgia’s Historic Rehabilitation Investment Incentive, March 2013.


31

spending associated with the construction phase of historic rehabilitations was

projected to support 10,911 full-time equivalent employment (direct, indirect, and

induced) and create $541.66 million in associated labor income

during the construction phase of rehabilitation, $54.37 million in tax revenue

would be returned to the state treasury; this indicates that approximately 60

percent of the state’s investment in historic tax credits would be returned prior to

the tax credits being claimed after the buildings were placed in service

after the buildings are placed in service, the estimated annual recurring tax

revenues associated with the ongoing operations of business occupants of

rehabilitated historic structures were projected to be $19.7 million

for every dollar the state invests in historic tax credits, it will collect $3.49 in new

tax revenues; this included the impact of the construction phase and the ongoing

operation phase of business activities

The positive economic yield on state investments in state historic tax credits has

motivated multiple states to implement historic tax credit programs or to expand their

existing tax credit programs. For example, six states including Minnesota, Illinois,

Pennsylvania, Texas, Alabama, and Nebraska have adopted state historic tax credit

programs since 2010; Texas, which does not have an income tax, allows the state

historic tax credit to be applied against franchise tax. As previously discussed, in

2014, Wisconsin increased its HTC from 5 percent to 20 percent of expenditures on

qualified rehabilitation projects; in 2014, Colorado increased its program cap to $10

million; and in 2015, and Georgia increased its state historic tax credit HTC program

by $25 million for projects with over $300,000 in qualified rehabilitation expenditures.


32



33

Historic Preservation Tax Credits in Mississippi

In March 2006, Governor Haley Barbour signed Senate Bill 3067 to create the

Mississippi state historic preservation tax incentives program to encourage the

rehabilitation of historic buildings; the Mississippi Department of Archives and

History is responsible for the administration of the program. The state of Mississippi

provides a 25 percent historic tax credit (Mississippi Code § 27-7-22.31) for qualifying

rehabilitation expenditures on certified historic structures. Mississippi’s guidelines for

qualified rehabilitation expenditures generally mirror the requirements for federal

historic tax credits; under Mississippi’s historic tax credit statute, properties that

qualify for the 20 percent federal preservation tax credit will also qualify for the state

tax credit. Mississippi’s historic tax credits may be carried forward for 10 years. Two

major differences exist between Mississippi’s HTCs and federal HRTCs: 1) Mississippi

does not require qualifying properties to be income-producing and allows the use of

historic tax credits on owner-occupied residential properties; and 2) when the amount

of the tax credit is greater than $250,000 and the amount of the tax credit exceeds the

total state income tax liability of the taxpayer, the taxpayer may elect to claim a refund

in the amount of seventy-five percent of the excess in lieu of the ten-year carry-

forward. These refunds are paid in equal installments over a two-year period and

there are specific regulations regarding the ownership structure of pass-through

entities (e.g. partnerships, limited liability corporations, multiple owner property). 33

In the state of Mississippi, the aggregate amount of state historic tax credits is limited

to $60 million. The state of Mississippi permits the transfer of state historic tax

33 On January 17, 2011, Representative Percy W. Watson introduced House Bill 1311 to allow the owners of historic property income tax credits for rehabilitation expenses to claim a refund for seventy-five percent of the amount of the credit that exceeds a taxpayer’s liability, rather than to carry the tax credit forward; this bill was passed unanimously by the Mississippi House of Representatives and the Senate, and signed into law on March 30, 2011 by Mississippi Governor Haley Barbour. House Bill 1311 amended Mississippi Code § 27-7-22.31.


34

credits by disproportionate allocation; however, disproportionate allocation may not

be used in conjunction with the refund provision.

Mississippi’s allowance of a tax refund for historic tax credits achieves multiple

purposes:

It maximizes the value of the historic tax credit and reduces the risk associated

with making rehabilitation investments in Mississippi’s historic structures. When

historic tax credits are not allowed to be used to receive a refund against state

income tax liability and the developer (owner) of a rehabilitated property is unable

to use the historic tax credit, a limited partnership may be created to allow third-

party investors to use the tax credits. Under these circumstances, third-party

investors may significantly discount the monetary value of the tax credits, resulting

in a reduction in the amount of the equity investment made by the third-party

investor. For example, assume a developer or owner intends to make a

rehabilitation investment that will create a historic tax credit with a “face value” of

$500,000. A third-party investor may discount the value of the tax credit by 50

percent; hence, the developer or owner will receive an equity investment of only

$250,000 rather than the full value of $500,000 for the HTC. The difference

between the “face value” of the HTC and the discounted value of the HTC

($250,000) represents an increase in the amount of debt financing that is required,

and this changes the rate of return on the investment because the developer must

borrow more money to complete the project and increases the risk profile of the

investment.

The refund of historic tax credits has the potential to reduce the state of

Mississippi’s liability exposure to revenue losses associated with the redemption of

historic tax credits. For example, assume a developer or owner intends to make a


35

rehabilitation investment that will create a historic tax credit with a “face value” of

$500,000. If the developer or owner selects to receive a refund of 75 percent of

the “face value” of the HTC, this will reduce the state treasury’s liability exposure

from $500,000 to $375,000 — a potential reduction, or “savings,” of $125,000 for

the state of Mississippi. Based on Mississippi’s current historic tax credit aggregate

limit of $60 million, the allowance of a refund might be equivalent to savings of up

to $15 million to the state treasury, assuming all holders of state historic tax credits

exercised the option of taking a refund rather than deducting the full “face value”

of the historic tax credit from their income tax liability.

Mississippi’s allowance of a tax refund for historic tax credits may encourage

Mississippians who have an interest in the preservation of Mississippi’s historic

landmarks but who do not own historic structures to help fund preservation

projects that increase local property taxes, enhance commercial activity, and

contribute to community revitalization.

Projects that piggyback federal historic tax credits and state historic tax credits are

able to attract equity investment from outside of the state; this represents a new

source of capital investment coming into the state of Mississippi. With no per-project

cap, a relatively high aggregate program cap of $60 million, proportional allocation,

and refund provision, Mississippi’s state historic tax credit program is designed to

effectively utilize both federal and state historic tax credits.

According to the National Park Service, from 2001 to 2013, a total of $45,601,295 in

federal historic tax credits were awarded to 172 rehabilitation projects in the state of

Mississippi; the total development expenditures associated with these projects was

$274,706,595. This indicates that every one dollar of federal historic tax credits

leverages $6.00 of construction expenditures in the state of Mississippi.


36

Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015

Year

Qualified

Rehabilitation

Expenditures Part

3 Approval

Projects using

Only Mississippi

Historic Tax

Credits

Projects using

State and

Federal Historic

Tax Credits

Total

Projects

Percent of Projects

using Federal and

State Historic Tax

Credits Combined

2007 $1,698,016 8 5 13 38.46%

2008 $5,747,803 11 10 21 47.62%

2009 $7,711,314 9 12 21 57.14%

2010 $78,419,963 10 12 22 54.55%

2011 $46,591,248 11 23 34 67.65%

2012 $9,926,976 11 17 28 60.71%

2013 $36,758,981 24 14 38 36.84%

2014 $16,015,382 21 10 31 32.26%

2015 $36,707,007 26 18 44 40.91%

Total $239,576,690 131 121 252 48.02%

Annual

Average$26,619,632.25 15 13 28 48.02%

Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History

Year

Projects using Only

Mississippi Historic

Tax Credits

Projects using

Federal and State

Historic Tax Credits

Combined

Total Qualified

Rehabilitation

Expenditures

2007 $985,317 $712,700 $1,698,016

2008 $1,491,045 $4,256,757 $5,747,803

2009 $865,464 $6,845,851 $7,711,315

2010 $518,242 $77,901,721 $78,419,963

2011 $1,535,854 $45,055,394 $46,591,248

2012 $632,050 $9,294,926 $9,926,976

2013 $1,798,524 $34,960,456 $36,758,980

2014 $1,223,445 $14,791,937 $16,015,382

2015 $1,561,550 $35,145,457 $36,707,007

Total $10,611,490 $228,965,200 $239,576,690

Annual

Average$1,179,054 $25,440,578 $26,619,632

Source: Stennis Institute compilaton of data provided by the Mississippi Department of Archives and History

Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax Credits, 2007 to 2015


37

Historic Tax Credit Usage in the State of Mississippi

The Mississippi historic tax credit was enacted in fiscal year 2006; state fiscal year

2007 was the first year that properties became eligible to claim Mississippi’s historic

tax credit. From fiscal year 2007 through fiscal year 2015, Mississippi’s historic tax

credit has leveraged an aggregate estimated project dollar total investment34 of $279.1

million in 252 completed historic

rehabilitation projects in the state

of Mississippi (Table 3, page36).

Over the 9 years since the

enactment of Mississippi’s

historic tax credit, the total

qualified rehabilitation

expenditures (QREs) that

received Part 3 approval from the

Mississippi Department of

Archives and History was $239.6

million (Table 4, page 36). Of the

252 total projects that used

Mississippi historic tax credits

over the period from 2007 to 2015, 131 projects have used only state historic tax

credits and 121 projects (approximately 48 percent) have combined state historic tax

credits with federal historic tax credits (Table 3, page 36).

34 Author’s note: this estimated total investment includes the portion of total project costs that qualify for the state tax credit (qualified rehabilitation expenditure) and “non-qualifying” expenses (i.e. outlays that are ineligible for the state historic tax credit), such as landscaping, sidewalks, or parking lots. While “non-qualifying” expenses are ineligible for the state tax credit, these expenditures are included in the economic impact analysis presented in this study.

By the end of fiscal year 2015, the total qualified

rehabilitated expenditures for projects that had

completed Part 3 certification totaled $239.6

million. Assuming all completed projects receive a

state historic tax credit, taxpayers are eligible for a

total of $59,894,173 in Mississippi state historic tax

credits — this indicates that Mississippi is close

to reaching its $60 million aggregate cap on tax

credits. At the time of this report, there were an

additional 45 projects that were completed or

reaching completion with estimated qualified

rehabilitation expenditures of $37.4 million —

these projects will require an additional $9.4

million in state historic tax credits.


38

Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for Mississippi State Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015

Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State Historic Tax Credits — 2007 to 2015


39

Of the 131 projects that have used only state historic tax credits, 122 projects (93

percent) were single-family, owner occupied residential structures that are not eligible

for federal historic tax credits; the qualified rehabilitation expenditures associated with

single-family, owner occupied residential structures was $10,156,002. Single-family,

owner occupied residential rehabilitation projects qualified for $2,539,000 in

Mississippi state historic tax credits over the period from 2007 to 2015; this indicates

that the average state historic tax credit received by single-family, owner-occupied

homes was $20,811 over the 9 year period.

The number of single-family,

owner-occupied residential

structures qualifying for

Mississippi state historic tax

credits has trended upward over

the period from 2007 to 2015,

increasing from eight projects in

2007 to 25 projects in 2015

(Figure 1, page 38). The

qualified rehabilitation expenditure

(QRE) associated with single-

family, owner-occupied residential homes ranged from a low of $5,272 to a high of

$1,100,000; approximately 42 percent of single-family, owner-occupied historic

rehabilitations had QREs of less than $25,000 and eight projects had QREs that

exceeded $250,000 (Figure 2, page 38). The total amount of Mississippi state historic

tax credits that have been approved for single-family, owner-occupied residential

projects has exhibited significant variation and a slight upward trend over the period

Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family, Owner-Occupied Residential Structures — 2007 to 2015


40

Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving Mississippi State Historic Tax Credits —2007 to 2015

Jackson

Biloxi

Tupelo

Hattiesburg

Vicksburg

Starkville

Canton

Brandon

West Point

Natchez

Oxford

Bay St. Louis

Aberdeen

Senatobia

Ocean Springs

Holly Springs

Greenwood

Cleveland

Hazlehurst

Crystal Springs

Tylertown

Raymond

Church Hill

Woodville

Friars Point

Carrollton

Pass Christian

$2,173,838

$27,278

$95,910

$378,487

$8,392

Not in data

$453,358

$97,301

$100,078

$88,819

$1,211,989

$109,731

$206,832

$1,898,475

$132,006

$132,082

$591,591

$253,613

$172,983

$94,765

$484,854

$44,067

$173,396

$214,848

$380,000

$551,817

$79,491

Total Qualified Rehabilitation Expenditures for Single-Family, Owner-Occupied Buildings2007 to 2015

®

Total Qualified RehabilitationExpenditures 2007 - 2015

$10,156,002(excludes $455,488 of QRE

for additional projects usingonly MS Tax Credits, but were

not used for owner-occupancy)


41

from 2007 to 2015 (Figure 3, page 39); state historic tax credits have ranged from a

low of $129,560 in fiscal year 2010 to a high of $429,871 in fiscal year 2013.

As shown in Map 1 on page 40, single-family, owner-occupied residential projects that

receive state historic tax credits are reasonably well-distributed throughout the state of

Mississippi, with investments tending to cluster around larger cities within the state.

Over the period from 2007 through 2015, Mississippi state historic tax credits issued

for single-family, owner-occupied residential structures represented approximately

95.7 percent of the total tax credits for projects that used only state historic tax credits.

Over this period, state historic tax credits authorized for single-family, owner-

occupied residential structures represented approximately 4.24 percent of the total

$59.9 million in state historic tax credits that were issued for all historic rehabilitation

projects in the state of Mississippi (this includes projects that used state tax credits

only and projects that combined state tax credits with federal historic preservation tax

credits).

There were 9 historic rehabilitation projects that used only Mississippi state historic

tax credits that may have been eligible for federal historic tax credits (e.g. buildings

that were rehabilitated for commercial, multi-family apartments, or retail use), but did

not use federal tax credits for some reason. The qualified rehabilitation expenditures

associated with these 9 historic rehabilitations was $455,488 and these projects

received $113,873 in state historic tax credits.

Over the period from 2007 through 2015, an estimated $2,652,873 in state tax credits

were approved for 131 projects that used only state tax credits (Table 5, page 42).


42

Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified Projects, 2007 to 2015

Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal Historic Tax Credits — 2007 to 2015


43

Of the 252 projects that used Mississippi state historic tax credits over the period

from 2007 to 2015, 121 projects combined state tax credits with federal historic tax

credits. On average, across the 9 years since the state of Mississippi enacted a state

historic tax credit, 48 percent of all projects combined state and federal historic tax

credits to finance rehabilitation projects (Table 3, page36). The total qualified

rehabilitation expenditures associated with the 121 projects that combined state and

federal historic tax credits was $228,965,200 (Table 4, page 36); the state historic tax

credits associated with these projects was $57,241,300 and the federal historic tax

credit was $45,793,040 (Table 5, page 42).

In the state of Mississippi, rehabilitation projects that combined state and federal

historic tax credits were used for a range of purposes to include the renovation of

historic properties for adaptive reuse as apartments and residential rentals, commercial

offices, retail and businesses services, and for mixed-use that combined business use

with residential housing. Historic structures that were rehabilitated strictly for

business use with no residential component represented the most frequent use of

historic tax credits; over the period from 2007 to 2015, approximately 54 percent of

qualified rehabilitation expenditures in the state of Mississippi were devoted to

rehabilitating structures for business purposes (Table 6, below). The second most

common use of state and federal historic tax credits was for investments that

rehabilitated historic buildings to provide rental housing; these investments

Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of Investment — Fiscal Years 2007 to 2015

Project TypeNumber of

Projects

QRE Part 3

Completion

Percent

of

Projects

Percent of

QRE

Amount of

State Tax

Credit

Federal Tax

Credits

Leveraged

Estimated

Total

Construction

Costs

Apartments and Residential Rental 45 $84,193,919 37.2% 36.8% $21,048,480 $16,838,784 $98,506,885

Commericial, Retail, Business Services 55 $123,678,418 45.5% 54.0% $30,919,605 $24,735,684 $144,703,749

Mixed‐Use with Business & Housing

Components21 $21,092,863 17.4% 9.2% $5,273,216 $4,218,573 $24,678,650

Total 121 $228,965,200 100.0% 100.0% $57,241,300 $45,793,040 $267,889,284Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History


44

represented 36.8 percent of all qualified rehabilitation expenditures that were made in

the state of Mississippi over the period from 2007 to 2015 (Table 6, page 43).

The annual allocation of

Mississippi state historic tax

credits varies significantly from

year to year; in 2010,

approximately 19.5 million in

state historic tax credits were

allocated (Figure 5, at right).

The dollar amount of state tax

credits is a direct function of

the qualified rehabilitation

expenditure per project and the

number of projects that are completed in a fiscal year. Over the 9-year life of

Mississippi’s state historic tax credit program, the average annual qualified

rehabilitation expenditures for all investments that used both state and federal historic

tax credits was $25.4 million (Table 4, page 36) and the average annual allocation of

state historic tax credits was $6,360,144 (Table 5, page 42). From 2007 to 2015, the

average qualified rehabilitation expenditure for projects that were developed solely for

business use (e.g. commercial buildings, offices, retail, or business services) was

$2,208,543 and the average qualified rehabilitation expenditure for projects that were

developed for mixed-use was $1,004,422. Qualified rehabilitation expenditures for

significant projects skew the annual averages for QREs and related state tax credits

upward; for example, one large project — the King Edward Hotel with a total QRE

of approximately $75.8 million and approximately $18.9 million of state historic tax

credits — accounted for approximately 97 percent of the state tax credits that were

Figure 5: Annual Mississippi State Historic Tax Credit Allocations for Projects that Combined State and Federal Historic Credits — 2007 to 2015


45

allocated in 2010. Over the period from 2007 to 2015, there have been only 8 historic

rehabilitation projects with a qualified rehabilitation expenditure that exceeded $5

million. Although these large projects represent a significant investment of state

funds, they also have the greatest economic impact during construction and after the

buildings are placed in service.

Rehabilitation projects that do not use federal historic tax credits leverage $4.33 in

total construction investment for every $1.00 of state tax credit. For projects that

combine state and federal historic tax credits, every $1 of investment in state tax

credits made by the state of Mississippi leveraged $0.80 in federal historic tax credits

and $4.68 of total construction spending.

The Economic Impact of Mississippi’s Historic Rehabilitation Tax Credit Program

State historic tax credits are designed to encourage rehabilitation investment activity

to create jobs and stimulate economic activity that generates revenues for state

coffers. The U.S. Department of the Interior and the National Park Service’s

National Center for Preservation Technology contracted with the Edward J. Bloustein

Center for Urban Policy Research at Rutgers State University of New Jersey to

develop an econometric input-output model to analyze the economic effects of

historic preservation; this model is known as the Preservation Economic Impact

Model (PEIM). The PEIM model has been utilized by the U.S. Department of

Interior, the National Park Service, the Internal Revenue Service, the National Trust

for Historic Preservation, and by numerous state historic preservation offices over the

last 10 years to quantify the economic impact of federal and state historic tax credits.

The PEIM model was used by the Stennis Institute to examine the economic impact

of state historic tax credits in the state of Mississippi over the period from Fiscal Year

2007 through Fiscal Year 2015 using data provided to the Institute by the Mississippi


46

Table 7: The Economic and Fiscal Effects of Historic Rehabilitation Investments Using Only Mississippi State Historic Tax Credits, 2007 to 2015

I. TOTAL EFFECTS (Direct and Indirect/Induced)* Output Employment (FTE) Income Gross State Product

Private

1. Agriculture $15,300 0 $1,500 $4,800

2. Agricultural Services, Forestry, & Fishing $146,300 5 $66,800 $64,000

3. Mining $148,400 1 $45,100 $45,000

4. Construction $4,865,300 101 $2,815,400 $3,724,700

5. Manufacturing $3,065,700 24 $739,000 $1,184,700

6. Transportation & Public Utilities $742,400 6 $192,700 $494,900

7. Wholesale $617,200 7 $251,000 $333,100

8. Retail Trade $949,800 26 $350,600 $619,900

9. Finance, Insurance, & Real Estate $713,600 8 $236,800 $492,500

10. Services $2,264,600 36 $1,069,800 $823,900

Private Subtotal $13,528,500 214 $5,768,700 $7,787,400

Public

11. Government $61,800 1 $18,600 $28,800

Total Effects (Private and Public) $13,590,200 215 $5,787,300 $7,816,200

II. DISTRIBUTION OF EFFECTS/MULTIPLIER

1. Direct Effects $9,111,600 149 $4,329,400 $5,400,600

2. Indirect and Induced Effects $4,478,700 66 $1,457,900 $2,415,600

3. Total Effects $13,590,200 215 $5,787,300 $7,816,200

4. Multipliers (3/1) 1.49 1.45 1.34 1.45

III. COMPOSITION OF GROSS STATE PRODUCT

1. Wages‐‐Net of Taxes $4,966,200

2. Taxes $1,260,200

a. Local $229,700

b. State $226,800

c. Federal $803,700

General $183,200

Social Security $620,500

3. Profits, dividends, rents, and other $1,589,800

4. Total Gross State Product (1+2+3) $7,816,200

IV. TAX ACCOUNTS

Business Household Total

1. Income ‐‐Net of Taxes $4,966,200 $5,787,300 $10,753,500

2. Taxes $1,260,200 $1,092,700 $2,352,900

a. Local $229,700 $97,300 $327,000

b. State $226,800 $103,400 $330,200

c. Federal $803,700 $892,000 $1,695,700

General $183,200 $892,000 $1,075,200

Social Security $620,500 $0 $620,500

INITIAL EXPENDITURE IN DOLLARS $11,196,724

*Terms:

Direct Effects --the proportion of direct spending on goods and services produced in the specified region.

Indirect Effects--the value of goods and services needed to support the provision of those direct economic effects.

Induced Effects--the value of goods and sevices needed by households that provide the direct and indirect labor.

The Economic and Fiscal Effects of Investments using Only Mississippi State Historic Preservation Credits Fiscal Year

2007 through Fiscal Year 2015

Source: Stennis Institute compilation of data using Rutgers University, PEIM (Preservation Economic Impact Model)

Note: Detail may not sum to totals due to rounding.


47

Department of Archives and History. Projects that received Mississippi state historic

tax credits but not federal historic tax credits were disaggregated and examined

separately from projects that combined Mississippi state historic tax credits with

federal historic tax credits. The findings of these analyses are as follows:

Economic Impact of Projects using only Mississippi state historic tax credits

From fiscal year 2007 through fiscal year 2015, the qualified rehabilitation

expenditures for projects in the state of Mississippi that used only state historic tax

credits was $10,611,490; approximately 93 percent of these projects were single-

family, owner-occupied homes. The qualified rehabilitation expenditures do not

represent the total cost of rehabilitating historic structures; additional costs that do

not qualify as a qualified rehabilitation expenditure may include: some acquisition

costs and realtor’s fees, site work or landscaping costs, the cost of enlargements, sales

or marketing costs, and other soft costs. To develop a conservative estimate of the

total construction expenditures associated with projects that used state tax credits

only, the Stennis Institute assumed that qualified rehabilitation expenditures

represented 95 percent of the total actual expenditures construction expenditures for

these projects; therefore, the total construction investment associated with

$10,611,490 of QREs was assumed to be $11,196,724 over the period from 2007 to

2015. The state of Mississippi’s investment in historic tax credits for the 131 projects

that used only state tax credits was $2,652,873 (assuming a 25 percent state historic

tax credit). Historic rehabilitation spending that was incentivized by Mississippi’s state

historic tax credits (fiscal years 2007 through 2015) on projects that used only the

state historic tax credit created 215 full-time equivalent jobs within the state of

Mississippi generating $13.6 million of output of which $5,787,300 is labor income

(Table 7, page 46). These projects contributed $7.82 million to Gross State Product


48

Table 8: The Economic and Fiscal Effects of Rehabilitation Projects that used State and Federal Historic Tax Credits, Mississippi Fiscal Years 2007 through 2015


Private

1. Agriculture $308,800 2 $25,500 $84,900

2. Agricultural Services, Forestry, & Fishing $1,752,300 54 $795,600 $765,700

3. Mining $2,920,600 29 $855,100 $874,500

4. Construction $119,986,200 2,706 $72,246,600 $94,431,200

5. Manufacturing $78,900,800 582 $18,990,800 $30,926,600

6. Transportation & Public Utilities $13,778,900 99 $3,369,000 $8,532,100

7. Wholesale $13,266,800 147 $5,395,000 $7,159,100

8. Retail Trade $23,243,700 639 $8,576,200 $15,159,000

9. Finance, Insurance, & Real Estate $17,657,000 191 $5,859,500 $12,174,500

10. Services $55,529,200 892 $26,116,300 $20,288,400

Private Subtotal $327,344,300 5,342 $142,229,700 $190,396,100

Public

11. Government $1,532,100 16 $461,700 $713,100

Total Effects (Private and Public) $328,876,400 5,358 $142,691,500 $191,109,200


1. Direct Effects $218,506,100 3,727 $106,703,300 $131,630,500

2. Indirect and Induced Effects $110,370,300 1,631 $35,988,200 $59,478,700

3. Total Effects $328,876,400 5,358 $142,691,500 $191,109,200

4. Multipliers (3/1) 1.51 1.44 1.34 1.45



2. Taxes $30,458,100

a. Local $5,390,700

b. State $5,403,000

c. Federal $19,664,400

General $4,365,600

Social Security $15,298,800



IV. TAX ACCOUNTS



2. Taxes $30,458,100 $26,941,600 $57,399,700

a. Local $5,390,700 $2,399,000 $7,789,700

b. State $5,403,000 $2,549,700 $7,952,700

c. Federal $19,664,400 $21,992,900 $41,657,300

General $4,365,600 $21,992,900 $26,358,500

Social Security $15,298,800 $0 $15,298,800


*Terms:




The Economic and Fiscal Effects of Investments using Mississippi State and Federal Historic Preservation Credits

Fiscal Year 2007 through Fiscal Year 2015




49

and contributed and generated $7,012,500 of in-state wealth (GSP minus federal

taxes). Historic rehabilitation projects that used only state historic tax credits

generated $657,200 in state and local tax revenues during the construction phase of

project activities; this indicates that 24.8 percent of the state’s investment in historic

tax credits is returned in the form of tax revenues. The fiscal benefits accruing to the

state (e.g. income tax and the state’s share of sales tax35) were estimated to be

$330,200 and fiscal benefits accruing to local governments (e.g. property taxes and

municipal shares of sales tax) were estimated to be $327,000 (Table 7, page 46); this

indicates that 12.5 percent of the state’s investment in historic tax credits is returned

to the state treasury prior to the time when buildings are placed in service and

taxpayers are eligible to claim the state historic tax credit.

The Economic Impact of Historic Rehabilitation Projects that Combined Mississippi State Historic Tax Credits with Federal Historic Tax Credits Over the period from 2007 through 2015, there were 121 projects in the state of

Mississippi that were completed and eligible to receive Mississippi state historic tax

credits and which also used federal historic tax credits; the qualified rehabilitation

expenditures associated with these projects was $228,965,200 and the value of

associated state historic tax credits was $57,241,300. The Stennis Institute’s

econometric input-output model assumes that qualified rehabilitation expenditures

represent 83 percent of the total cost of actual project related expenditures during the

construction phase; additional costs that may not be included in qualified

rehabilitation expenditures may include acquisition interest and fees, realtor’s fees, site

work or landscaping costs, the cost of enlargements, and sales or marketing costs. The

econometric input-output analysis that follows is based upon the assumption that

35 Author’s note: To model the economic impact of construction investments, the Stennis Institute assumed all projects are located within municipal boundaries and all sales taxes are generated within municipal boundaries, with cities receiving 18.5 percent of sales tax revenue.


50

total actual construction expenditures were $267,889,284. The econometric model is

constrained to capture only the economic and fiscal effects within the state of

Mississippi, it does not capture additional economic activity and spending outside of

the state.

From Fiscal Years 2007 through 2015, the state of Mississippi authorized $57,241,300

for 121 rehabilitation projects that also used federal historic rehabilitation tax credits;

these state tax credits leveraged an additional $45,793,040 in federal historic tax

credits and $164,854,944 of private investment in historic rehabilitation projects over

the 9-year period. Historic rehabilitation spending that was incentivized by

Mississippi’s state historic tax credits (fiscal years 2007 through 2015) for projects that

combined the use of state and federal tax credits created 5,358 full-time equivalent

jobs and generated $327,344,300 of economic output and $142,691,500 of labor

income within the state of Mississippi during the construction phase of project

activities (Table 8, page 48). These projects contributed approximately $191.1 million

to Gross State Product and increased the state’s total wealth (GSP minus federal

taxes) by approximately $171.4 million. Rehabilitation expenditures that were

incentivized by Mississippi’s state historic tax credit generated $15,742,400 in state

and local tax revenues during the construction phase; this indicates that approximately

27.5 percent of the state’s investment in historic tax credits is returned during the

construction phase of historic rehabilitation projects. Fiscal benefits accruing directly

to the state (e.g. income tax and the state’s share of sales tax36) were estimated to be

$7,789,700 and fiscal benefits accruing to local governments (e.g. property taxes and

municipal shares of sales tax) were estimated to be $7,952,700 (Table 8, page 48); this

36 Author’s note: To model the economic impact of construction investments, the Stennis Institute assumed all projects are located within municipal boundaries and all sales taxes are generated within municipal boundaries, with cities receiving 18.5 percent of sales tax revenue.


51

indicates that approximately 13.6 percent of the state’s investment in historic tax

credits is returned to the state treasury prior to taxpayers claiming the historic tax

credits associated with their investments in historic rehabilitation projects.

Mississippi’s Return on Investment in State Historic Tax Credits

From Fiscal Year 2007 through Fiscal Year 2015, there have been 252 completed

projects in the state of Mississippi that were qualified to receive state historic tax

credits; the total qualified rehabilitation expenditures associated with these 252

projects was $239,576,690 — historic rehabilitation tax credits authorized by the state

of Mississippi have totaled $59,894,173 over the 9 years since the Mississippi

Legislature approved the issuance of historic tax credits. Mississippi’s investment of

$59.9 million in state historic tax credits has incentivized an additional $45,793,040 in

federal historic tax credits and $173.4 million in direct private investment to

rehabilitate historic buildings in the state — every one dollar ($1.00) of investment

that the state of Mississippi has made in historic tax credits has leveraged $4.66 of

rehabilitation construction investment in the state.

Since the Mississippi Legislature authorized the state historic tax credit in 2006,

spending during the construction phase of projects that were incentivized by the tax

credits has generated $342,466,600 in economic output (Table 9, page 52) — this

indicates an output leveraging equivalence of $5.71 in economic output for every

dollar ($1.00) of state tax credit authorized for projects that have been completed.

Over the 9 years since the Mississippi Legislature authorized state historic tax credits,

5,573 full-time equivalent jobs have been created in the state of Mississippi, and the

labor income associated with these jobs is $148,478,800 (Table 9, page 52) — every

one dollar ($1.00) of investment in state historic tax credits has leveraged $2.48 of

labor income in the state of Mississippi.


52

Table 9: The Combined Economic and Fiscal Impact of Mississippi's State Historic Tax Credit — Fiscal Year 2007 to Fiscal Year 2015

Note: This table represents the sum of Table 7 on page 46 and Table 8 on page 48.


Private

1. Agriculture $324,100 2 $27,000 $89,700

2. Agricultural Services, Forestry, & Fishing $1,898,600 59 $862,400 $829,700

3. Mining $3,069,000 30 $900,200 $919,500

4. Construction $124,851,500 2,807 $75,062,000 $98,155,900

5. Manufacturing $81,966,500 606 $19,729,800 $32,111,300

6. Transportation & Public Utilities $14,521,300 105 $3,561,700 $9,027,000

7. Wholesale $13,884,000 154 $5,646,000 $7,492,200

8. Retail Trade $24,193,500 665 $8,926,800 $15,778,900

9. Finance, Insurance, & Real Estate $18,370,600 199 $6,096,300 $12,667,000

10. Services $57,793,800 928 $27,186,100 $21,112,300

Private Subtotal $340,872,800 5,556 $147,998,400 $198,183,500

Public

11. Government $1,593,900 17 $480,300 $741,900

Total Effects (Private and Public) $342,466,600 5,573 $148,478,800 $198,925,400


1. Direct Effects $227,617,700 3,876 $111,032,700 $137,031,100

2. Indirect and Induced Effects $114,849,000 1,697 $37,446,100 $61,894,300

3. Total Effects $342,466,600 5,573 $148,478,800 $198,925,400

4. Multipliers (3/1) 1.50 1.44 1.34 1.45



2. Taxes $31,718,300

a. Local $5,620,400

b. State $5,629,800

c. Federal $20,468,100

General $4,548,800

Social Security $15,919,300



IV. TAX ACCOUNTS



2. Taxes $31,718,300 $28,034,300 $59,752,600

a. Local $5,620,400 $2,496,300 $8,116,700

b. State $5,629,800 $2,653,100 $8,282,900

c. Federal $20,468,100 $22,884,900 $43,353,000

General $4,548,800 $22,884,900 $27,433,700

Social Security $15,919,300 $0 $15,919,300


*Terms:




The Combined Impact of Mississippi State Historic Tax Credit Projects — Fiscal Years 2007 to 2015




53

During the construction phase of rehabilitation projects that have used Mississippi

state historic tax credits (including projects that have also used federal historic tax

credits), $16,399,600 of state and local tax revenues have been generated within the

state of Mississippi — this indicates that the state has recouped approximately 27.4

percent of its investment of $59,894,173 in historic tax credits in the form of direct

tax revenues (Table 9, page 52). Of the $16.4 million in state local tax revenues,

approximately $8,282,900 in tax revenue accrues directly to the benefit of the state

treasury (e.g. in the form of income or sales tax) during the construction phase of

historic rehabilitation projects — this indicates that the state of Mississippi recoups

13.8 percent of its investment in historic tax credits prior to the time when historic

rehabilitation projects are placed in service and taxpayers become eligible to claim the

state historic tax credit.

From 2007 through 2015, rehabilitation investments that have been incentivized by

Mississippi’s state historic tax credit have contributed $198.9 million to Gross State

Product — a leveraging factor of $3.31 for every one dollar ($1.00) the state of

Mississippi has invested in historic tax credits. These investments have contributed

$178,457,300 to the state’s total wealth (in-state wealth encompasses Gross State

Product minus federal taxes) — for every one dollar ($1.00) the state of Mississippi

has invested in state historic tax credits, in-state wealth has been augmented by $2.98

over the period from 2007 through 2015.

The economic and fiscal impacts discussed in the previous paragraphs do not include

the economic activity that occurs after historic buildings have been rehabilitated and

placed in service for a range of uses that create new employment, labor income, tax

revenues for local and state governments, and a range of benefits that are associated

with the rehabilitation of vacant, abandoned, or deteriorating historic buildings.


54

Map 2: Geographic Distribution of Historic Rehabilitation Projects Using State and Federal Tax Credits —2007 to 2015

Jackson

Biloxi

Gulfport

Tupelo

Meridian

Corinth

Hattiesburg

Vicksburg

Starkville

Canton

Laurel

Columbus

West Point

Louisville

Natchez

Oxford

Pascagoula

Baldwyn

Clarksdale

McComb

Bay St. Louis

Aberdeen

Holly Springs

Greenwood

Cleveland

Kosciusko

Columbia

Brookhaven

Water Valley

Stonewall

Lexington

Church Hill

Port Gibson

Woodville

Carrollton

Pass Christian

$118,918,033

$487,549

$9,335,403

$178,489

$2,225,128

$14,289,959

$41,564

$30,495,231

$158,000$1,530,515

$401,863

$3,077,061

$854,882

$467,929

$2,013,611$18,660,423

$681,000

$39,524

$340,000

$2,700,000

$3,405,858

$512,649

$1,621,394

$2,004,018

$287,922

$235,000

$200,000

$459,254

$4,081,349

$95,144

$48,409

$448,699

$4,668,586

$1,242,430

$686,107

$1,530,000

Total Qualified Rehabilitation Expenditures for Projects using Federal and State Historic Tax Credits 2007 to 2015

®

Total Qualified RehabilitationExpenditures 2007 to 2015

$228,965,200


55

Additional Benefits of Historic Preservation Tax Credits

There is array of benefits associated with the use of historic preservation tax credits to

incentivize investments that rehabilitate blighted buildings; these benefits extend

beyond the quantitative economic and fiscal effects that occur during the construction

phase of historic rehabilitation, as discussed in the previous section of this report.

Additional benefits that transpire as a result of the rehabilitation of deteriorating or

vacant historic buildings include: downtown revitalization, the reduction of

investment risk in blighted areas that encourages additional investments, the

promotion of heritage tourism, new business creation, and increased property values.

Downtown Revitalization. Market forces and economic trends have resulted in

the loss of industrial and commercial activity in downtown areas, leaving many

downtown buildings underused or vacant; these same forces have resulted in the

out-migration of downtown populations. The widespread decline of downtown

areas led to the creation of The Main Street Program. The Main Street Four Point

Approach© is arguably the most widespread and effective tool for downtown

revitalization; the Main Street Four Point Approach© was inaugurated in 1977

when the National Trust for Historic Preservation started a three-year

demonstration project designed to save threatened commercial buildings in

downtown areas. The success of this demonstration program led to its adoption

as a model for economic development during the Carter Administration with

funding provided by multiple federal agencies, including the Department of

Commerce, the Small Business Administration, the National Endowment of the

Arts, and the U.S. Department of Housing and Urban Development; 37, 38, 39 over

37 Skelcher, B. (1992). What are the Lessons Learned from the Main Street Pilot Project, 1977 – 1980? Small Town. 23(4): 15 – 19. 38 Keister, K. (1990). Main Street Makes Good. Historic Preservation. 41(5): 38 – 45. 39 Kelly, S. (1996). The Main Street Program in Mississippi. Economic Development Review. 14(2): 56 – 59.


56

the last 35 years, the Main Street Program has become a nationwide program with

Coordinating, Accredited, and Designated Main Street Programs at the national,

regional, state, county, and municipal level. Three elements of the Main Street Four

Point Approach© to economic development and community revitalization include:

creating a positive image that will renew community pride including promoting

cultural traditions, architecture, and history (Promotion); preserving the historic

character of the physical and visual elements of the commercial environment

(Design); and strengthening the existing economic assets of a community while

diversifying its economic base by attracting new businesses with an emphasis on

the creative reuse of historic properties (Economic Restructuring). Historic

rehabilitation tax credits are a significant and critical tool for promoting the

adaptive use of vacant, underused, and deteriorating buildings that can promote

revitalization and bring new life to downtown areas. Historic rehabilitation

investment presents opportunities to convert vacant and underutilized properties

to productive use and are closely aligned with the Main Street Approach© to

revitalization.

Heritage Tourism. Heritage development is a local economic development

strategy that engages residents, businesses, and local and state leaders in the

preservation and promotion of an area’s heritage, culture, and natural resources.

Historic preservation has been found to promote the creation of small businesses. 40, 41, 42 Heritage tourism attracts visitors and tourists to heritage sites, facilities, and

other attractions. Heritage tourists have a significant impact on local economies

because they spend money at hotels, restaurants, gift shops, and gas stations, and

40 Brown, N. (2014). Small-Town Renaissance. Preservation. 66(2): 24 – 31. 41 Karaim, R. (1991). Thinking Small. Preservation. 49: 68 – 73. 42 Moor, B., Tyler, P., and Elliot, D. (1991). The Influence of Regional Development Incentives and Infrastructure on the Location of Small and Medium Sized Companies. Urban Studies. 28(6): 1001 – 1026.


57

on recreational activities; 43 they have been found to stay longer and to spend more

money per trip when compared to other tourists. A 2015 report44 by the

Mississippi Development Authority’s (MDA) Tourism Division found that travel

and tourism was the fourth largest private sector employer in the state of

Mississippi in Fiscal Year 2014. Mississippi tourism generated $2.77 billion in

direct, indirect, and induced payroll income and supported 114,167 jobs (direct,

indirect, and induced). MDA’s report found that Mississippi’s tourism industry

generated $438 million in state and local tax revenues and that capital investment

in tourism infrastructure was $305 million in Fiscal Year 2014. Malcolm White,

the Tourism Division Director for MDA, has stated that cultural heritage (musical

legacy, culinary heritage, literary and artistic traditions) is a key driver of

Mississippi’s creative economy that makes Mississippi’s tourism industry one of its

greatest assets.45 Mississippi’s creative economy has been identified as an

important milepost for economic development and workforce development in

Blueprint Mississippi: Pathway to Progress, a publication from the Mississippi Economic

Council. There is a direct linkage between heritage tourism, Mississippi’s

economic development strategies targeted toward the augmentation of its creative

economy, and the preservation and rehabilitation of historic structures in the state

of Mississippi. A key requirement of heritage tourism is the physical development

of a tourism infrastructure to include the expansion of retailing, entertainment

venues, accommodations, and other services. Investment in the physical

infrastructure creates employment and increases the capacity of local and regional

43 Federal Tax Incentives for Rehabilitating Historic Buildings: 35th Anniversary Report, National Park Service, U.S. Department of the Interior Technical Preservation Services, Washington, DC. March 2013. http://www.novoco.com/historic/resource_files/research/htc_statistical_report_and_analysis_2012.pdf. Accessed 8-19-2015. 44 Van Hyning, T. (2015). Visit Mississippi, Travel and Tourism Economic Contribution Report 2014, Mississippi Development Authority, Tourism Division. http://www.visitmississippi.org/app/webroot/files/ECR%202014.pdf. Retrieved 8-1-2015. 45 Officials Report on Economic Impact of Tourism. Mississippi Business Journal, March 6, 2014. http://msbusiness.com/2014/03/officials-report-economic-impact-tourism/. Retrieved 8-25-2015.


58

economies to attract investment. Vibrant and restored historic sites throughout

the state are an essential component for a healthy heritage tourism industry. For a

heritage tourism area to develop, sources of capital investment are required to

maintain and restore historic structures. Historic preservation tax credits can play

a critical role in attracting the capital investment that is required to fund and

preserve the historic physical infrastructure of communities.

Property Values. A number of studies have concluded that investments in the

preservation of historic structures have a positive impact on property values, 46, 47

including strong positive “neighborhood” price effects for both new and historic

properties. 48, 49, 50, 51 Studies have found that the rehabilitation of “vacant,

deteriorating white elephant buildings” 52 reduces the risk of private investment

throughout communities by demonstrating the capacity of older buildings to

“undergo rebirth through adaptive use, open the eyes of other property owners to the possibilities

for their own buildings as well.” 53 Historic rehabilitation investments that are

incentivized by tax credits act as a catalyst for additional investments.

Historic preservation tax credits incentivize rehabilitation investments in historic

buildings by improving the economic and financial feasibility of preserving historic

structures and the adaptive reuse of historic buildings for a range of purposes that

include: the creation of mixed-use retail with a blend of affordable and luxury

46 Leichenko, R. Coulson, E., and Listokin, D. (2001). Historic Preservation and Residential Property Values: an Analysis of Texas Cities. Urban Studies. 38 (11): 1973 – 1987. 47 Zahirovic-Herbert, V. and Chatterjee, S. (2012). Historic Preservation and Residential Property Values: Evidence from Quantile Regression. Urban Studies. 49(2): 369 – 382. 48 Coulson, N. S., and Leichenko, R. (2004). Historic Preservation and Neighborhood Change. Urban Studies. 41 (8): 1587 – 1600. 49 Schaeffer, P. V., and Millerick, C. A. (1991). The Impact of Historic District Designation on Property Values: an Empirical Study. Economic Development Quarterly. 5:301 – 331. 50 Coulson, N. E., and Lahr, M. L. (2005). Gracing the Land of Elvis and Beale Street: Historic Designation of Property Values in Memphis. Real Estate Economics. 33(3): 487 – 507. 51 Clark, D. E. and Herrin, W. E. (1997). Historical Preservation and Home Sale Prices: Evidence from the Sacramento Housing Market. Rev Reg Stud 27: 29 – 48. 52 Rypkema, D. and Cheong, C. (2011). Measuring Economic Impacts of Historic Preservation: A Report to the Advisory Council on Historic Preservation, PlaceEconomics and the University of Pennsylvania. 53 Ibid.


59

housing; the use of historic homes for owner occupancy, residential rental, and for

lodging (e.g. bed and breakfast facilities); and the use of historic structures for

commercial purposes that may include offices, hotels, conference centers, retail stores,

or restaurants. Investments in the rehabilitation of historic buildings that are

incentivized by state historic tax credits make a significant contribution to the

economic vitality of communities by promoting neighborhood stabilization, creating

educational opportunities, attracting heritage tourism, and encouraging downtown

commercial revitalization while preserving Mississippi’s legacy for future generations.

The Public Policy Issues

Many historic buildings are located in downtown areas where disinvestment occurred

many years ago as new construction and business investment out-migrated to office

parks and large shopping centers where branded ubiquitous retail franchises

aggregated in close proximity to concentrations of higher income suburban consumer

markets. Property owners, investors, and developers all seek an economic return on

the investment of their own money or borrowed capital. The unique characteristics

and location of historic properties do not provide the marketability, higher return on

capital, and predictable costs that are provided by new construction and locations

where market demand is more reliable. Historic rehabilitation projects face significant

challenges in overcoming the need for investors to receive an economic return on

their investment. Historic buildings are difficult and costly to rehabilitate, the

configuration of historic structures may be costly to modify for adaptive reuse, and

unanticipated costs may drive up the final cost of rehabilitation. Most historic

buildings are located in downtown areas with inadequate parking and are frequently

located in dying downtown areas. States provide historic preservation tax credits for

the purpose of overcoming these investment obstacles and to promote private sector

investment in rehabilitation. Because many historic buildings are located in areas


60

where disinvestment is widespread and are generally in lower-income areas, historic

tax credit programs provide public value to poor communities with little access to

traditional financing, such as downtown areas or rural communities. Historic tax

credits attract new private capital investment in the rehabilitation of historic buildings,

bringing needed economic stimulus into declining neighborhoods.

The public policy benefits of historic preservation include the economic benefits of

job creation and revenue growth that occurs during the construction phase of

rehabilitation and the economic benefits that take place after the historic buildings are

placed in service. Economic theory provides a strong justification for government

support and incentives for business investment. Without such government support,

businesses are likely to underinvest because the outcomes of specific investments

cannot be fully appropriated by investors and it is difficult for private investors to

justify such investments. Business investment has become increasingly globalized and

investment decisions are driven by multiple factors, including market growth, lower

costs, and the tax and other incentives offered by cities, counties, states, and

governmental entities. In response to increased competition to attract investments,

government incentives and subsidies to encourage investment have grown

exponentially. Government incentives to attract business investment may take a

variety of forms. It is common for governmental entities to use the tax code to

provide incentives, subsidies, exemptions, abatements, and other forms of preferential

tax treatment to attract business investments. Many of these preferential tax

treatments are industry specific or narrowly defined and may be undiscerning with

regard to the geographic distribution of value added (e.g. sales factor apportionments

that benefit firms that sell goods out of state) and the cost/benefit of these incentives.

Governmental entities may also provide preferential access to low-cost capital or land,

loans or grants, industrial development bonds, and specific incentives for “targeted”


61

industries that have been selected by some governmental entity. In a world of capital

mobility, the growing generosity of tax incentives throughout the United States and

the world reflects the intense competition for business investment and economic

growth.

State policies regarding tax incentives have significant liability implications for state

treasuries because they represent foregone tax revenues. To evaluate policies and the

merit of tax incentives it is useful to examine these incentives within the framework of

the purpose of taxation — which is to raise revenue to fund government functions

and to enhance social welfare. The tax base is state gross product, or value-added by

all types of economic activities including expenditures associated with investment,

labor income, and investment returns. The provision of tax incentives for selected

economic activities is a purposeful reduction of the tax base over a limited timeframe

with the anticipation of future growth in gross state product that ultimately leads to

the expansion of the tax base. From this perspective, a tax incentive program is

worthwhile only if it results in future economic growth and a related increase in the

overall tax base. During a time when many state budgets are struggling to recover

from the Great Recession and continued slow economic recovery has strained state

coffers, policy makers are increasingly examining the cost-effectiveness of state

investments in tax incentive programs. From 2012 to 2014, 10 states and the District

of Columbia passed laws requiring the regular evaluation of tax incentives; states that

have policies in place to evaluate the effectiveness of their tax incentive programs use

economic impact analyses combined with qualitative evaluations to determine

whether tax incentive programs are meeting their goals cost-effectively. It is also

useful to evaluate tax incentives within a framework of the opportunity cost of tax

incentives. A thorough assessment of the cost-benefit of any tax incentive might

include exploring alternative measures, such as across-the-board reductions in


62

taxation, low-cost loans, or direct spending to improve infrastructure that may be

more cost-effective for achieving the same goals as tax incentives. Of particular

concern for decision-makers is the mobility or permanency of the investment that is

receiving a tax incentive; in some cases, the economic benefits of business

investments may be transitory in nature. A firm may locate in a state for a temporary

period and then move out of the state when tax incentives are exhausted or other

market forces lead to workforce downsizing or exodus from the state. All states have

experienced the euphoria of successfully recruiting large industries, only to have these

industries shutdown or substantially reduce their workforce within a few years due to

macro-economic events or global competitive pressures. Investments in the

rehabilitation of historic buildings exhibit less mobility when compared to alternative

investments that receive tax incentives because they are place-based; historic

renovation increases the value of the structure upon completion of construction and

makes an ongoing contribution to the historic aesthetic of the community regardless

of its use upon being placed in service.

From a policy perspective, tax incentives can be justified if they address some form of

market failure, motivate investments that would not be possible in the absence of the

incentive, and produce positive externalities beyond the specific beneficiary of the tax

incentive by generating social returns well in excess of private returns. Positive

externalities include infrastructure projects that encourage business growth and

anchor investments that provide multiplier effects through signaling and by creating

backward linkages into the local economy — rehabilitation investments in historic

buildings that will be adapted for commercial business purposes when the structures

are placed in service meet these requirements prima facie.

The efficacy of tax incentives may also be measured in terms of their wage effect and

their investment leveraging capacity. There have been multiple studies of the efficacy


63

of federal and state historic tax credits. The Stennis Institute’s review of a large body

of research on the economic impact of federal and state historic tax credits found that

the credit is effective in the sense that each dollar of foregone tax revenue causes an

investment of at least one additional dollar in historic renovation. Put another way,

the historic tax credit stimulates at least as much investment in historic rehabilitation

as the state’s investment in the historic tax credit. The Stennis Institute’s examination

of the Mississippi’s historic tax credits found that the state’s investment of

$59,894,173 in credits incentivized a total investment of $299,086,077 in historic

rehabilitations; every dollar of state investment in historic tax credits leveraged an

additional $2.90 of private investment in rehabilitation, $2.48 in labor income,

contributed $3.31 to gross state product, and enhanced in-state wealth by $2.98 over

the period from 2007 through 2015. In addition to private investments in the

rehabilitation of historic buildings, an additional $45,793,039 in federal historic tax

credits where attracted into the state; this indicates that every one dollar of state

investment in historic tax credits leveraged an addition $0.80 cents of investment

related to federal historic tax credits. These metrics demonstrate the economic

efficacy of Mississippi’s state historic tax credit; it is not possible to determine the

level of federal tax credit investment that would have occurred absent the state

historic tax credit and an examination of the opportunity cost of Mississippi’s

investment in state historic tax credits is beyond the scope of this study. Although it

is not possible to determine, with any high degree of accuracy, the magnitude of

investment in historic rehabilitation that would have occurred in the state of

Mississippi absent the state’s historic tax credits, a comparison of trends in annual

U.S. private construction spending and historic rehabilitation spending in the state of

Mississippi over the period from 2007 through 2014,54 when construction spending in

54 Author’s note: Annual U.S. private construction spending has not been reported for 2015 at the writing of this report.


64

the U.S. was negatively impacted by the Great Recession and the subsequent slow

economic recovery that followed, provides some insight into this question. Over the

period from 2007 to 2014, U.S. average annual private construction spending declined

from $842 billion to $684; over the period from 2007 through 2014, total qualified

historic rehabilitation construction spending in Mississippi increased from $1.7 million

to $16 million, with

average annual spending

of $28.7 million over the

period. The growth of

U.S. annual private

construction over the

period from 2007

through 2014 exhibits a

downward sloping

trendline when compared

to Mississippi’s upward

sloping trendline for

investments in historic rehabilitation projects (Figure 6, above). Construction

investments in historic rehabilitation projects in the state of Mississippi created 2,807

full-time equivalent jobs in the Construction industry from 2007 through 2015 during

a period when the state of Mississippi lost 11,400 jobs in the Construction industry

statewide; these findings indicate that Mississippi’s state historic tax credit provided a

level of stimulus to construction spending and job creation in the state.

The need to maintain historic properties that may endanger the structural integrity of

neighboring properties or threaten the public health and safety if these historic

properties are left abandoned or deteriorating may provide additional justification for

Figure 6: Comparison of Trends in U.S. Private Construction Spending and Mississippi Historic Rehabilitation Construction Spending — 2007 to 2014


65

the use of public funds to rehabilitate historic buildings. Some argue55 that subsidies

for historic renovation should be derived from local property and sales tax revenues

and remain within the domain of local governmental jurisdictions because the

potential benefits of historic renovation projects accrue primarily to the benefit of the

community within which the building is located. 56 However, locally adopted

subsidies or incentives might prove to be cumbersome and unpredictable, thus failing

to meet the distinct needs of investors and/or developers. For example, local

government budgets might place strict limitations on the amount of the subsidy or

incentive that local governments are able to afford and fail to provide sufficient

incentives for major projects that have significant economic impact (e.g. the King

Edward Hotel). Locally authorized subsidies would also fail to provide the elements

of transferability that are required by equity investors, and local governments do not

have the authority to allow taxpayers to make a deduction against their state income

taxes. The transference of responsibility for incentivizing the rehabilitation of historic

buildings from the state government to local governments would introduce

uncertainty regarding the amount of per-project funding that would be available,

introduce an additional level of uncertainty into the decision-making process by

developers and investors, and would most likely act as a significant deterrent to the

redevelopment of historic buildings. Public policy experts 57, 58, 59 have recommended

that eligibility for tax incentives should be based on a clear criteria that is provided by

55 Curry, S. (2015). Historic Preservation Tax Credits: Government Should not Intervene in the Historic Property Business on Economic Grounds. John Locke Foundation, Spotlight No. 462. 56 Author’s note: The assumption that the economic benefit of historic rehabilitation is predominantly constrained to the local level is flawed. As demonstrated by a large body of research that is cited in this paper and the analysis of the economic impact of Mississippi’s state historic tax credits that is presented in this paper, the economic benefits of investments in historic rehabilitation accrue to the benefit of both the state and local governments. 57 James, Sebastian (2013). Tax and Non-Tax Incentives and Investments: Evidence and Policy Implications. Investment Climate Advisory Services of the World Bank Group, International Finance Corporation and the World Bank Group. 58 Klemm, Alexander (2010). Causes, Benefits, and Risks of Business Tax Incentives. International Tax Public Finance. 17: 315-336. COI 10.1007/s10797-010-9135-y. 59 Tanzi, V. (1998). Corruption Around the World: Causes, Consequences, Scope, and Cures. Staff Papers International Monetary Fund. 45 (4), 559 – 594.


66

law and not granted through special permission or individual authorizations to assure

transparency and consistency in administration and control.

The economic benefits of historic preservation are not the sole public policy

justification for providing incentives for investments to preserve historic structures.60

There are additional positive societal externalities derived from the renovation of

historic buildings, these include: promoting the state’s economy through tourism,

preserving a community’s aesthetics, and providing cultural educational opportunities.

Aesthetic justifications include the need to protect historic buildings for their beauty

and harmony with their surroundings. The cultural and educational benefits of

preservation presume that historic buildings have an inherent value beyond their

beauty and the tourists they attract; historic landmarks remind the public of the

“conditions, lessons, successes and failures of earlier eras;” 61 and notable historic buildings can

increase the cohesion of a community by reminding residents of their shared past.62

It is worth noting that public policy decisions that impact historic rehabilitation tax

credits can create significant risk for investors and developers. In addition to the

inherent risk associated with the rehabilitation of historic buildings, investments that

use historic rehabilitation tax credits are not without risk to investors. Including the

risk of recapture, decisions by the Internal Revenue Service and other governmental

entities can abruptly change the investment environment. One example is the 2012

Historic Boardwalk Hall, L.L.C., New Jersey Sports and Exposition Authority, Tax

Matters Partner versus Commission of Internal Revenue (694 F.3d 425 U.S. Third

Circuit Court of Appeals 2012) court ruling which created chaos in the historic tax

60 See Randall Mason, Economics and Historic Preservation: A Guide and Review of the Literature 8 – 9 (September 2005) available at http://www.brookings.edu/research/reports/2005/09/metropolitanpolicy-mason. Retrieved 8-28-2015. 61 Klamer, A. and Zuidhof, P. (1999). The Values of Cultural Heritage: Merging Economic and Cultural Appraisals. In Randall Mason, ed., Economics and Heritage Conservation. Los Angeles: Getty Conservation Institute. 62 Serageldin, I., Shluger, E., and Martin-Brown, J. (2001). Historic Cities and Sacred Sites: Cultural Roots for Urban Futures. Washington: World Bank.


67

credit industry when the IRS challenged whether a tax credit investor (Pitney Bowes)

in the Historic Boardwalk Hall was a true partner in the entity that owned the

building. The IRS won its appeal, thus disallowing the allocation of approximately

$22 million in historic tax credits to the tax credit investor. Subsequent to the Circuit

Court’s ruling in the Historic Boardwalk Hall case, numerous traditional tax-credit

investors refused to close transactions until the IRS provided further guidance on safe

harbor provisions related to the required partnership structure of historic tax credit

investors; the IRS delayed the issuance of safe harbor provisions for approximately 10

months prior to issuing Revenue Procedure 2014-12 at the end of December 2013.

The uncertainty created in the historic tax credit market was further compounded

when the IRS began to conduct large scale audits of the investment portfolios of

major tax credit investors. Although the issuance of IRS Revenue Procedure 2014-12

has provided relatively clear safe harbor guidance to tax credit investors, these new

requirements have placed new restrictions on the structure of tax credit investments,

increased the transaction costs associated with historic rehabilitation tax credit

investments, and have introduced an additional dimension of risk into the historic

rehabilitation tax credit investment environment.

Another risk for developers of historic rehabilitation properties is the imposition of

caps on state historic tax credits. Because historic preservation projects may take

multiple years to complete, it is essential for developers to know that upon

completion of a rehabilitation project, they will receive the tax credit — without this

certainty, an additional dimension of risk is introduced into the economic and

financial feasibility of making investments in the rehabilitation of historic buildings;

this may have long-term consequences that may detrimentally impact future

investments in historic rehabilitation projects. For example, the state of Mississippi

has placed a $60 million total aggregate cap on its state historic tax credit program; as


68

of August 30, 2015, approximately $59,894,172 in state historic tax credits had been

allocated for specific projects and there were an additional 45 pending historic

rehabilitation projects in the state of Mississippi. Of the 45 pending projects, there

were 20 historic rehabilitation projects with qualified rehabilitation expenditures

estimated to be $37.4 million nearing completion — these projects will require

approximately $9,342,550 in state historic tax credits; this will exceed the state’s $60

million total aggregate spending cap on the Mississippi Historic Preservation Tax

Incentives Program.


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Appendix A: Overview of State Historic Tax Credit Programs


LX



LXI

Alabama 25% credit for owners and long‐term qualified lessees of certified

structures (including owner‐occupied residential) and 10% for

qualified pre‐1936 non‐historic structures. Annual program cap of

$20 million for historic properties with a $5 million per‐project cap

for commercial properties and a $50,000 per‐project cap for

residential structures. Nonprofits eligible. Projects reserved first‐

come, first‐served with lottery for applications received on same

day. Project expenses must be certified by a CPA and projects with

expenses exceeding $200,000 must be audited by a CPA.

Applicants must submit an appraisal by a licensed real estate

appraiser. Minimum investment: 50% of owner’s original purchase

price or $25,000, whichever is greater. Carry forward: 10 years.

Transfer permitted by disproportionate allocation. Credits can be

claimed starting on May 15, 2016.

Arkansas 25% credit for certified rehabilitation of eligible income and non‐

income producing properties. Annual program cap of $4 million in

credits; per‐project caps of $125,000 in credits for income‐

producing properties and $25,000 in credits for non‐income

producing properties. Min. expenditures: $25,000. Carry forward: 5

years. Freely transferable by either direct sale or disproportionate

allocation among partners of a syndication

partnership. Applications will be ranked in accordance with the

following criteria: Creation of new business, expansion of existing

business, tourism, business revitalization, and neighborhood

revitalization, in that order. Sunset date: 2021.

Colorado 25% credit against individual and corporate taxes for first $2 million

in Qualified Rehabilitation Expenses (QREs) and 20% on the

remaining QREs for commercial properties. Credit goes to 30% in

designated disaster area. Aggregate cap for FY2015 is $5 million,

and $10 million thereafter. Per‐project cap of $1 million in credits

annually. 50% of credits to be awarded to projects with QREs less

than $2 million; 50% of credits to go to projects with QREs of $2

million and above. Projects awarded on first‐come, first‐serve

basis. Freely transferable by either direct sale or disproportionate

allocation among partners of a syndication partnership. Nonprofits


LXII

can use the credits. Program starts July 1, 2015 and sunsets 2019.

Colorado 20% credit for homeowner properties. No aggregate statewide

continued dollar cap, but per project cap of $50,000 per year. Minimum

investment: $5,000. Carry forward: 10 years. DOI standards apply

and work must be completed within 2 years of inception date of

project.

Connecticut 25% credit for converting historic commercial, industrial, former

government property, cultural building, institutional, or mixed

residential and non‐residential property to mixed residential and

non‐residential uses or non‐residential use (including commercial,

institutional, governmental or manufacturing use). Credit is

increased to 30% if (a) at least 20% of units created are affordable

rental units, or (b) at least 10% of units created are affordable

homeownership units. Caps: $50 million over 3 years and $5

million per project. Carry forward: 5 years. Property must be listed

individually on the national register or located in a district listed on

the national or state register and certified as contributing. Freely

transferable either by direct sale or disproportionate allocation

among partners of a syndication partnership. (Section 10‐416‐b

C.G.S.)

25% credit for converting commercial or industrial property for

residential use only. Caps: $2.7 million per project and $15 million

annual aggregate. Carry forward: 5 years. Freely transferable

either by direct sale or disproportionate allocation among partners

of a syndication partnership. Property must be listed individually on

the national or state register or located in a district listed on the

national or state register and certified as contributing. Minimum

expenditure: 25% of assessed building value. Credit can offset

income tax liability as well as taxes owed by insurance companies

and utilities. Section 10‐416a.

30% credit for eligible rehab of owner‐occupied residence,

including apartments up to 4 units. Eligible properties: National

and/or State Register of Historic Places, must be located in

distressed areas. Cap: $30,000 per dwelling, $3 million annual

aggregate. Recapture period: 5 years. Carry forward: 4 years.

Minimum expenditure: $25,000. Credit can be used only to offset


LXIII

Connecticut corporate taxes. Corporations may qualify either by purchasing tax

continued credits or loan principal reduction. Effective July 2015, the

minimum expenditure will be $15,000, projects will not be limited

geographically while the cap will be $50,000 per dwelling for

nonprofits. (Sec. 10‐416 C.G.S.)

Delaware 20% credit for income‐producing properties and a 30% homeowner

credit. A 10% bonus credit applies for both rental and owner‐

occupied projects that qualify as low‐income housing. Carry

forward: 10 years. Homeowner credit cannot exceed $20,000.

Credits are freely transferable either by direct transfer or

disproportionate allocation. Credits claimed in annual progress‐

based installments with phased projects. The maximum amount of

credits in any fiscal year is $5 million of which $2 million is set

aside for projects receiving under $300,000 in tax credits and

$100,000 set aside for qualified resident curators. Sunset: 2020.

Georgia 25% credit for certified historic properties, both owner‐occupied

residences and income‐producing. Additional 5% credit for

residence located in a HUD target area. Credit cap: $100,000 for

an owner‐occupied historic home, and $300,000 for income‐

producing buildings, including residential rentals. Carry forward: 10

years. Transfer permitted by disproportionate allocation, or if

property is sold and no part of credit taken.

Illinois ** 25% credit for eligible expenditures on rehabilitation of properties

eligible for the federal Historic Rehabilitation Tax Credit located in

** NOT a designated River Edge Redevelopment Zones approved by the

statewide state in portions of Aurora, East St. Louis, Elgin, Peoria and

program Rockford. Minimum investment: greater of $5,000 or 50% of the

purchase price. DOI standards apply. Credits are transferrable by

disproportionate allocation. No per project cap and no aggregate

annual cap on dollar value of credits issuable.

Indiana 20% of rehab costs up to $100,000 for qualifying commercial,

rental housing, barns and farm buildings. Minimum investment

$10,000. Per‐project cap: $100,000. $450,000 annual statewide

cap for commercial credits and $250,000 for owner‐occupied

residences. State register properties qualify. Carry forward: 15


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Indiana years. Preapproval of work required. No fees. DOI standards apply.

continued Owner‐occupied residential: 20% of rehab costs. Costs must

exceed $10,000.

http://www.in.gov/legislative/ic/code/title6/ar3.1/ch16.pdf

Iowa 25% credit of qualified rehabilitation costs for eligible commercial

properties, owner‐occupied residential properties and barns.

Annual cap: $45 million. Allocation of credits: 10% of credits for

small projects under $750,000; 30% for projects located in Cultural

and Entertainment Districts or the Great Places programs; 20% for

disaster recovery projects; 20% for projects that create more than

500 permanent new jobs, and 20% for projects. No project cap.

Fully refundable with interest, if appropriate, or any excess credit

can be carried forward as an estimated payment to the next year.

Minimum expenditure for commercial property: 50% of the

assessed value of the commercial property, excluding the land or

$50,000 whichever is less. Minimum expenditure for non‐

commercial properties: the lesser of $25,000 or 25% of the

assessed value, excluding the land. The project shall begin before

the end of the fiscal year in which the Part 2 application was

approved. The project must be placed in service within 60 months

of the Part 2 approval or within 72 months if more than 50% of the

qualified rehabilitation costs are incurred within 60 months of the

approval date. Credits in excess of min. established by Dept. of

Revenue are fully transferable and all tax credits reserved for a

fiscal year on and after July 1, 2012 may be transferred by

disproportionate allocation.

Kansas 25% income tax credit for commercial and owner‐occupied

residential properties. 30% income tax credit for nonprofits. Annual

cap of $3.75 million in credits claimed for FY2010. No per‐project

cap. Carry forward: 10 years. $5,000 minimum on qualified

expenditures necessary. Credit freely transferable either by direct

transfer or disproportionate allocation.

Kentucky 30% income tax credit for owner‐occupied residential properties. A

minimum investment of $20,000 is required, with the total credit per

project not to exceed $60,000.


LXV

Kentucky 20% income tax credit for all other properties including properties

continued owned by entities exempt from tax under section 501(c)(3) of the

Internal Revenue Code and state and local governmental

subdivisions and agencies. Minimum investment of $20,000 or

adjusted basis, whichever is greater, subject to $400,000 per

project cap.

Both credits are fully refundable or transferable. But pass through

entities which are taxed, get the credit at the entity level; pass

through entities which are not taxed can use disproportionate

allocation. $5 million annual program cap applies to the aggregate

of homeowner and commercial/nonprofit credits. All credits are

subject to proportional reduction if the value of credits claimed

exceeds the annual aggregate cap.

Louisiana 25% credit for income‐producing properties in “downtown

development districts.” $5 million cap per taxpayer for structures

within a downtown development district. No statewide cap for

commercial credits. Minimum investment: $10,000. Directly

transferable. 5 year carry‐forward for commercial credits. Sunset

date: Jan. 1, 2018.

After July 1, 2011, 25% rate for owner‐occupied residences; 50%

credit for blighted homes over fifty years old. $10 million statewide

cap for owner‐occupied residences. Minimum investment: $10,000.

Homeowner credit must be taken in five equal annual installments

and is fully refundable. Sunset date: Jan. 1, 2018.

Maine 25% credit for qualifying rehab expenses of certified historic

structure. 30% credit where at least 33% of the aggregate square

feet of the completed project creates new affordable housing.

Affordable housing credit may be increased each tax year by 1% till

reached maximum of 35% in 2013. Minimum expenditures: Same

as federal tax credit. If federal credit is not claimed, min.

expenditure is $50,000 and maximum is $250,000. Cap: $5 million

per project cap; no annual statewide cap. Credits are fully

refundable and freely transferable by disproportionate allocation.

Credit must be taken in 4 equal installments with first year being

year property is placed into service. Sunset date: Dec. 31, 2023.


LXVI

Maryland 20% credit for commercial buildings and owner‐occupied

residences; additional 5% credit for high performance commercial

buildings that achieve LEED gold rating or comparable rating from

another rating system; 10% credit for non‐historic, "qualified

rehabilitated structures," commercial properties located in Main

Street Maryland community and after 2012 in a designated

"sustainable" community. Sets aside of $4 million for small

commercial projects starts Jan. 1, 2015.

Annual appropriation required for commercial side of program;

unused amounts may be carried over to following year. Per‐project

cap: commercial ‐ $3 million; owner‐occupied ‐ $50,000.

Competitive award process for commercial properties only; owner‐

occupied need not compete. No more than 60% of funds available

for commercial projects in any year may go to any single

jurisdiction. Minimum investment: the greater of 100% of the

adjusted basis or $25,000 for commercial properties; $5,000 for

owner occupied properties. Commercial credit is transferable.

Residential credit is fully refundable. Program sunsets in 2017

Massachusetts 20% credit for eligible income‐producing properties. 25% credit for

projects with affordable housing. $50 million annual statewide cap.

Carry forward: 5 years. DOI standards apply. Permits direct transfer

of credit or transfer by disproportionate allocation. Min. investment:

25% of adjusted basis. Funded through 2017.

Minnesota Credit equal to 100% of the federal credit allowed for the

rehabilitation of a certified historic commercial property against

taxes or grant equal to 90% of federal credit allowed. No annual

program cap and no per‐project cap. Credit freely transferable

either by direct transfer or disproportionate allocation. Grants may

be issued to another individual or entity. Credit is fully refundable.

Credit may be used by insurance companies as well as other

corporations and individuals. Application must be made for the

credit before the rehabilitation begins. Sunsets in FY 2021.

Mississippi 25% credit for commercial property and for owner‐occupied

residences. Program is capped at $60 million. No project cap.

Minimum investment of 50% of the total basis for commercial


LXVII

Mississippi properties; $5,000 for owner‐occupied residences. Carry forward:

continued 10 years. If credit exceeds $250,000, 75% can be refunded in lieu

of 10 year carry‐forward. Refunds must be taken in two equal

installments starting the year the rehabilitated property is placed in

service. Transfer permitted by disproportionate allocation but can

not be used in conjunction with refund provision. Members of a

pass through entity, not taxed at the entity level, can use

disproportionate allocation. Members of a pass through entity,

taxed as a partnership, can elect to claim a refund at the entity

level. Sunset date: 2014.

Missouri 25% credit for commercial and owner‐occupied residential

properties listed in National Register or listed as contributing to a

federally certified historic district. Rehab work must meet DOI

standards. Qualified expenditures must exceed 50% of total basis

of the property. Carry back: 3 years. Carry forward: 10 years.

Transfer permitted by direct transfer or disproportionate allocation.

Per‐project cap for owner‐occupied single‐family residences:

$250,000 in credits. Beginning July 1, 2010, the Dept. of Economic

Development can not approve more applications than would in the

aggregate result in more than $140 million in credits. Any project

receiving preliminary approval after Jan. 1, 2010, whose eligible

costs would be more than $1.1 million, is subject to the cap.

Projects with eligible costs less than $1,100,000 are not subject to

cap. Projects subject to the cap are prioritized on first‐come first

serve basis; where applications received on same day, lottery will

be held. Unfunded projects carry over into next funding round.

Requires rehab to start within 2 years of authorization. Credits must

be issued within 12 months of rehab completion.

Montana Income‐producing certified historic properties automatically receive

5% state tax credit if the property qualifies for the 20% federal

credit. Carry forward: 7 years.

Nebraska 20% credit against income, deposit or premium tax for rehabilitation

of historically significant real property except for a single‐family

residence. Annual cap: $15 million. Per‐project cap: $1 million in

credits. Minimum expenditure: $25,000 or 25% of assessed value.

DOI Standards apply. Starts: Jan. 1, 2015. Sunsets: Dec. 31, 2018.


LXVIII

New Mexico 50% of rehab costs for all properties listed in the State Register of

Cultural Properties. Also applies to stabilization and protection of

archeological sites listed in the State Register of Cultural

Properties. No annual statewide cap. Per‐project cap: $25,000

outside an Arts and Cultural District; $50,000 located within an Arts

and Cultural District. DOI standards apply. Carry forward: 4 years.

Pre‐approval required.

New York 20% credit for certified commercial properties subject to

geographical targeting. Per project cap: $5 million in credits. Must

be used in conjunction with federal credit. Credit must be taken in

the year building is placed into service. Carry forward: unlimited.

Commercial credits fully refundable starting 2015.

20% credit for certified, owner‐occupied properties. Subject to the

same census tract restrictions as commercial program. Residential

per project cap: $50,000 in credits. If taxpayer’s adjusted gross

income is under $60,000, homeowner credit is refundable; over

$60,000, unlimited carry forward. Minimum expenditure: $5,000

and 5% must be spent on exterior work.

Both programs sunset on Dec. 31, 2020 and default to 2007

features if not renewed.

25% rehab credit for historic barns. Must be income‐producing,

built or placed in agricultural service before 1936 and rehab cannot

“materially alter the historic appearance.”

North Carolina 30% credit for historic homeowners and 20% for income‐producing

properties. Minimum investment for 30% credit: $25,000. Credit

must be taken in 5 equal annual installments. Minimum investment

for commercial: Same as federal credit. Cannot be used in

conjunction with tax credit for rehabilitating mills. 30% or 40%,

depending on location, credit for rehabilitating income‐producing

and non‐income‐producing historic mill properties. Pre‐approval

required. Certified property must have been at least 80% vacant for

a period of two years immediately preceding date of eligibility

certificate. Cannot be taken in conjunction with 20% state tax

historic preservation credit for income‐producing properties.


LXIX

North Dakota 25% credit for eligible historic property that is part of a renaissance

zone project. Project cap of $250,000. Carry forward: 5 years.

Ohio 25% credit for owners and long‐term qualified lessees of certified

historic building. Project cap: $5 million. Aggregate cap: $60 million

annually and any unused amount will be carried forward and added

to the next year. DOI Standards apply. Refundable amount of credit

limited to $3 million per project. Transfer by disproportionate

allocation permitted. Five year carry‐forward. Applicant must

provide evidence that the credit is a major factor in the applicant’s

decision to rehab. Applicant must have CPA certify costs if qualified

rehabilitation expenditures exceed $200,000. If the applicant does

not provide evidence of having a viable financing plan, having final

construction drawings and all necessary historical approvals within

12 months of receiving notice of approval, or if the applicant has

not closed on financing within 18 months after approval, the

director may rescind the approval and reallocate the credit amount

to another applicant. Director of Economic Development must

conduct a cost‐benefit analysis of every project that shows whether

the project will result in a net revenue gain in state and local taxes.

Director of Development and Tax Commissioner must produce an

annual report to the legislature analyzing program’s effectiveness.

Oklahoma 20% income tax credit for all eligible commercial and rental

residential properties that qualify for the federal tax credit. Minimum

investment: same as federal credit. No statewide or per‐project

caps. Carry forward: 10 years. Freely transferable for 5 years.

Credits can be claimed starting on Jan. 1, 2012.

Pennsylvania 25% credit for eligible properties that qualify for the federal tax

credit. Minimum investment same as for the federal credit. Project

cap: $500,000. Aggregate cap: $3 million annually. Projects to be

allocated equitably among state’s regions. Any unused amount

from a region will be reallocated to another region. DOI Standards

for Rehabilitation apply. Public utilities, insurance companies and

financial institutions may participate in the program. Applications

must be filed by Feb. 1, 2013, but may cover expenditures

previously made. Carry forward: 7 years. Credits are transferable

by certificate only. Sunset: 2019.


LXX

Rhode Island 20% for commercial property owners, condominiums and

nonprofits; 25% if 25% of total rentable space or entire first floor is

used in a trade or business. Owner‐occupied residences not

eligible. Per‐project cap of $5 million dollars. Maximum aggregate

credits through 2016 to be set by legislature; currently at $34.5

million. Transfer by disproportionate allocation or direct

assignment. Proceeds of sale of credit not subject to state tax.

Credits awarded to tax‐exempt entities fully refundable. Qualified

rehabilitation expenditures must exceed the adjusted basis of the

building. Applicant must enter into contract with state division of

taxation and grant state a 2‐year restrictive convenant on the

building regarding material alterations, and a 5‐year restrictive

covenant regarding use as a trade or business if 25% credit is

claimed. CPA must certify to amount of credit claimed. Projects

with hard construction costs of $10 million dollars or more must

have approved apprenticeship programs. Program sunsets July 30,

2016 or when funds exhausted.

South 10% credit for commercial properties eligible for federal credit; 25%

Carolina for other eligible properties. Minimum investment for non‐

commercial properties: $15,000. All credits must be taken in 5

equal annual installments. No statewide or per‐project dollar caps.

Pass‐through entities (other than “S” corporations) may transfer

credit by means of disproportionate allocation. Credits for owner‐

occupied residences limited to one per structure each 10 years.

Pre‐approval required.

25% tax credit against income, corporate license fees, and

insurance premium taxes, for rehabilitating abandoned textile mill

buildings that have been closed at least one year immediately

preceding the application. Credits must be taken in 5 equal

installments. Carry forward: 5 years. Credit may also be taken

against local real property taxes with percentage amount set by

municipality or county. Transfer permitted by certificate and

disproportionate allocation.

Although not a historic credit as such, South Carolina has a 25%

tax credit against income taxes and corporate license fees, taken in


LXXI

South five equal installments, for rehabilitating abandoned buildings

Carolina where 66% of space has been non‐income producing for a

continued minimum of 5 years. Taxpayer, if qualifying, is only permitted to one

of three credits allowed through the Abandoned Buildings Act, the

Textiles Communities Revitalization Act, or the Retail Facilities

Revitalization Act and cannot exceed 50% of tax liability.

Alternatively, credit can be taken against local real property taxes if

approved by positive majority vote of the municipality or county

after a public hearing. Credit up to 75% of real property taxes must

be taken each year for up to 8 years. Per‐project cap: $500,000.

Also capped at 50% of tax liability. Expenses that increase the

square footage in excess of 200% are disallowed. Credits are

transferable by certificate and by disproportionate allocation.

Available for projects initiated in 2012. Sunset: Dec. 31, 2019.

Texas 25% tax credit against franchise tax for certified historic structures

rehabilitated and put in service on or after Sept. 1, 2013. No annual

or per‐project cap. Carry forward: 5 years. Minimum investment:

$5,000. Credits are transferable by certificate or disproportionate

allocation. As enacted. Subject to Attorney General review and

adoption of administrative rules. Effective Jan. 1, 2015.

Utah 20% credit for residential owner‐occupied and non‐owner‐

occupied. Cap: none. Minimum investment: $10,000 over 3 years.

DOI standards apply. No fees.

Vermont All credits limited to commercial buildings located in designated

downtowns or village centers. 10% credit for projects approved for

federal credit. 25% credit for façade improvement projects, limited

to $25,000 per project. 50% credit for certain code improvement

projects, with maximum credit of $50,000. 9‐year carry‐forward.

Credits may be transferred to bank in exchange for cash or interest

rate reduction. Annual total program cap: $1.5 million. The state

board may allocate the credit upon completion of distinct phases of

a qualified project and any recaptured or rescinded credits can be

awarded to other applicants in subsequent years.

Virginia 25% for commercial and owner‐occupied residential properties.


LXXII

Virginia Reconstruction and improvements must amount to at least 25% of

continued the assessed value for owner‐occupied buildings and at least 50%

for non‐owner‐occupied buildings. Carry forward: 10 years.

National and state register properties eligible. DOI standards apply.

No caps. Transfer by disproportionate allocation permitted.

West Virginia 10% credit for buildings eligible for federal credit; 20% credit for

eligible owner‐occupied residences. Commercial buildings entitled

to same carry‐back and carry‐forward provisions as are available

for federal credit. Owner‐occupied residences entitled to 5‐year

carry forward. Both commercial credits and homeowner credits

may be directly transferred or transferred by disproportionate

allocation. Minimum investment in homeownership projects: 20% of

assessed value. No statewide or per project dollar caps.

Wisconsin 20% for certified income‐producing properties. Applicant may also

claim federal credit. No statewide or per‐project caps. Credit may

transferred directly or by disproportionate allocation. Minimum

investment $50,000. Tax credit must be approved by Wisconsin

Economic Development Corporation. Program to be reviewed in

2017 for economic development effectiveness. 25% for eligible

owner‐occupied residences. No statewide cap. Per project cap:

$10,000. Minimum investment of $10,000 over 2 years, extendable

to 5 years. Cannot be used to offset state Alternative Minimum Tax.

Source: National Trust for Historic Preservation


LXXIII

Appendix B: Detailed Economic Contribution by 2-Digit NAICS


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LXXV

Table 10: Detailed Economic Contribution by All Mississippi Historic Tax Credit Projects by 2-digit NAICS 2007 to 2015

Industry Sector Ouput Employment Income Gross State ProductEstimate Per

Cap Income

Agriculture $324,100 2 $27,000 $89,800 $13,500

Meat Animals $188,900 0 $8,800 $23,500 N/A

Cotton $2,400 0 $200 $700 N/A

Grains & Misc. Crops $26,300 0 $600 $9,600 N/A

Feed Crops $6,500 0 $100 $2,700 N/A

Vegetables $1,000 1 $100 $300 $100

Greenhouse & Nursery Products $90,200 0 $16,800 $49,800 N/A

Flaxseed, Peanuts, Soybean, Sunflower $8,800 0 $400 $3,000 N/A

Agri. Serv., Forestry, & Fish $1,899,300 59 $862,800 $830,100 $14,624

Agri. Services (07) $1,555,700 56 $831,000 $706,200 $14,839

Forestry (08) $336,400 2 $29,800 $120,600 $14,900

Fishing, Hunting, & Trapping (09) $7,300 0 $1,900 $3,200 N/A

Mining $3,069,700 30 $900,400 $919,700 $30,013

Coal Mining (12) $900 0 $300 $200 N/A

Oil & Gas Extraction (13) $875,100 3 $117,300 $218,800 $39,100

Nonmetal Min.‐Ex. Fuels (14) $2,193,600 27 $782,800 $700,700 $28,993

Construction $124,875,400 2,808 $75,075,800 $98,174,200 $26,736

General Bldg. Contractors (15) $84,198,700 1,720 $48,263,100 $64,071,900 $28,060

Heavy Const. Contractors (16) $28,513,600 798 $19,287,900 $24,372,300 $24,170

Special Trade Contractors (17) $12,162,900 290 $7,524,800 $9,730,100 $25,948

Manufacturing $81,981,500 606 $19,733,400 $32,117,100 $32,563

Food & Kindred Prod. (20) $1,684,100 7 $221,100 $544,500 $31,586

Textile Mill Prod. (22) $6,294,500 37 $940,700 $2,206,600 $25,424

Apparel & Other Prod. (23) $1,133,000 16 $323,100 $336,300 $20,194

Limber & Wood Prod. (24) $15,912,500 124 $3,739,800 $5,192,400 $30,160

Furniture & Fixtures (25) $801,500 9 $253,700 $344,300 $28,189

Paper & Allied Prod. (26) $634,900 3 $139,900 $261,300 $46,633

Chemicals & Allied Prod. (28) $4,077,700 16 $797,600 $1,553,900 $49,850

Petroleum & Coal Prod. (29) $16,419,300 54 $2,894,100 $5,592,500 $53,594

Rubber & Misc. Plastics (30) $1,423,200 12 $388,300 $595,600 $32,358

Leather & Leather Prod. (31) $22,600 0 $6,800 $7,100 N/A

Stone, Clay, & Glass (32) $8,427,800 79 $2,701,200 $3,621,000 $34,192

Primary Metal Prod. (33) $1,032,800 5 $208,400 $292,100 $41,680

Fabricated Metal Prod. (34) $14,194,100 166 $4,211,400 $7,418,100 $25,370

Machinery, Except Elec. (35) $3,988,100 34 $1,203,600 $1,487,200 $35,400

Electric & Elec. Equip. (36) $3,668,400 27 $1,077,900 $1,527,400 $39,922

Transportation Equipment (37) $260,000 2 $78,100 $186,600 $39,050

Instruments & Rel. Prod. (38) $111,100 1 $33,000 $29,100 $33,000

Misc. Manufacturing Ind's. (39) $1,249,800 6 $291,600 $544,900 $48,600

Printing & Publishing (27) $646,200 7 $223,200 $376,100 $31,886

Transportation & Public Utilities $14,524,900 105 $3,562,700 $9,029,500 $33,930

Railroad Transportation (40) $269,300 6 $116,200 $219,100 $19,367

Trucking & Warehousing (42) $3,755,800 56 $1,638,300 $3,180,200 $29,255

Water Transportation (44) $437,000 4 $114,000 $261,100 $28,500

Transportation by Air (45) $555,100 5 $193,200 $266,000 $38,640

Pipe Lines‐Ex. Nat. Gas (46) $73,900 0 $8,000 $66,500 N/A

Transportation Services (47) $153,000 2 $57,100 $126,100 $28,550

Communication (48) $3,711,400 16 $750,100 $1,654,100 $46,881

Elec., Gas, & Sanitary Serv. (49) $5,569,400 16 $685,800 $3,256,400 $42,863


LXXVI

Table 10 Continued

Industry SectorOuput Employment Income Gross State Product

Estimate Per

Cap Income

Wholesale $13,887,000 154 $5,647,200 $7,493,800 $36,670

Whlsale‐Nondurable Goods (51) $5,322,200 60 $2,164,200 $2,872,000 $36,070

Whlsale‐Durable Goods (50) $8,564,900 94 $3,483,000 $4,621,800 $37,053

Retail Trade $24,198,200 665 $8,928,500 $15,781,900 $13,426

Bldg. Mat.‐Garden Supply (52) $1,449,800 31 $629,700 $1,035,700 $20,313

General Merch. Stores (53) $2,927,000 86 $1,055,400 $2,091,000 $12,272

Food Stores (54) $2,491,500 84 $971,300 $1,779,900 $11,563

Auto. Dealers‐Serv. Stat. (55) $4,083,500 51 $1,077,300 $2,917,200 $21,124

Apparel & Access. Stores (56) $1,372,200 55 $644,500 $980,200 $11,718

Furniture & Home Furnish. (57) $683,700 16 $319,300 $488,400 $19,956

Eating & Drinking Places (58) $7,549,200 234 $2,566,200 $3,888,300 $10,967

Miscellaneous Retail (59) $3,641,300 107 $1,664,600 $2,601,300 $15,557

Finance, Insurance, & Real Estate $18,374,100 199 $6,097,400 $12,669,400 $30,640

Banking (60) $3,306,100 27 $872,600 $1,955,400 $32,319

Nondep. Credit Institut. (61) $4,933,500 80 $2,584,100 $2,463,300 $32,301

Security, Comm. Brokers (62) $599,800 4 $294,800 $282,500 $73,700

Insurance Carriers (63) $2,765,500 24 $1,112,800 $2,377,500 $46,367

Ins. Agents, Brokers (64) $1,371,900 20 $528,300 $602,400 $26,415

Real Estate (65) $4,981,900 39 $487,300 $4,732,800 $12,495

Holding and Invest. Off. (67) $415,500 6 $217,600 $255,600 $36,267

Services $57,804,900 929 $27,191,300 $21,116,300 $29,269

Hotels & Other Lodging (70) $522,800 8 $191,400 $264,700 $23,925

Personal Services (72) $2,162,700 57 $763,300 $843,200 $13,391

Business Services (73) $5,026,400 96 $1,973,200 $2,897,000 $20,554

Auto Repair, Serv., Garages (75) $1,808,400 19 $470,600 $803,400 $24,768

Misc. Repair Services (76) $1,029,300 17 $393,400 $516,300 $23,141

Motion Pictures (78) $433,900 9 $96,100 $157,100 $10,678

Amusement & Recreation (79) $387,000 8 $149,000 $318,800 $18,625

Health Services (80) $2,719,000 43 $1,483,600 $1,571,000 $34,502

Legal Services (81) $7,561,800 59 $3,497,200 $3,520,200 $59,275

Educational Services (82) $963,200 32 $514,200 $590,900 $16,069

Social Services (83) $630,600 19 $304,500 $299,800 $16,026

Museums, Gardens & Mem. Orgs. (84, 86) $2,017,300 65 $1,144,600 $1,145,900 $17,609

Engineer. & Manage. Serv. (87) $30,637,600 460 $15,369,900 $7,661,100 $33,413

Private Households (88) $105,700 9 $105,700 $105,700 $11,744

Micscellaneous Services (89) $1,799,400 27 $734,500 $421,300 $27,204

Government $1,594,200 17 $480,400 $742,000 $28,259

Total $342,533,300 5,574 $148,507,200 $198,963,800 $26,643


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