CARW, through WRA, has been involved with a coalition made up of advocacy organizations, individuals and companies advocating for the continuation of the Historic Tax Credit program in its current form – without program or project caps. This was a top priority during our legislative visits and continues to be a vital economic development tool for many in our industry. Below is a summary of a recent study that Baker Tilly performed which outlines some of the programs’ successes.
In the next week, you will be receiving a CALL TO ACTION asking for you to compete a form letter to send to your legislators, asking them to preserve the credit in its current form. Please watch for it and be sure to complete it when it comes through.
See the Business Journal piece here.
Between 2014 to 2016, 118 historic projects received approval for state historic tax credits, totaling $171,095,000.
A recent analysis by Baker Tilly of the impact of those projects has highlighted the following key conclusions:
Powerful economic engine:
a. Economic output: $683 million dollars in direct economic output during the construction period alone. This illustrates how public investment successfully leverages private investment.
b. Tax revenues:
State — $92.4 million dollars in additional state taxes in the same period including the ripple effect caused by the investment throughout the local economy. Owners pay sales tax on materials, income tax, payroll tax and others that immediately begin to pay back the state investment.
Local — 637% increase in cumulative property tax. Projects buildings are generally underutilized and contribute little property tax under after their rehabilitation work.
c. Job creation: 10,950 new jobs were created in the three-year period, including 9,882 construction jobs.
Smaller communities benefit too — 69% of projects in 2016 were in communities of less than 100,000 population, attracting $167,400,629 dollars of total investment to those communities.
Blight elimination and urban renewal — 60% of all projects in 2014 were vacant more than 20 years. These projects will not occur without the historic tax credits and the buildings will continue to blight their communities.
Repayment is immediate and quick — The credit is fully repaid by increased state taxes at the end of the 5th year after completion and over a ten year period the state gets an $8 to $1 return on investment. Because the tax credit is fully repaid in 5 years, it generates new state tax revenue that makes other economic development programs possible.
The historic tax credit is low and risk–high return — The credit may not be claimed until the project is complete. If the project fails, the state does not pay out its credit. No project, no credit. The credit is used as collateral for bridge financing that pays for construction, so the credit is invested in bricks and mortar and does not go to the owner as profit.
For more information on the formal executive summary or report, please let us know.