Historic Preservation & Jobs

The Historic Terminal Tower, A Project Recently Funded by Ohio Tax Credits

Many of us are drawn to historic preservation due to its great contribution to “place-making.” Historic buildings and neighborhoods offer community character and a distinct “sense of place.” But while place-making is a big part of historic preservation, jobs and economic development are a great reason to promote historic preservation as well.

Often, historic preservation is presented as a trade-off with demolition and new construction.  Historic Preservation delivers more jobs than new construction.  Preservation, unlike new construction devotes more money to labor than materials.  The skills and care required to refinish, paint, repair, and clean historic buildings requires more labor per dollar spent than new construction.   A study by the National Trust for Historic Preservation & Donavan Rypkema revealed new construction creates 40 jobs per $1 million spent, while preservation creates between 43 and 49 jobs per $1 million spent.[1]

Tax Incentives for Preservation

While historic preservation has traditionally been presented in terms of landmarks protection, there are a number of tax incentives to promote “market-based” historic preservation.  The first is the federal rehabilitation tax credit.  The Internal Revenue Service in conjunction with the State Historic Preservation Office gives a 20% tax credit for qualified expenses incurred from a historic rehabilitation.  Requirements include review from the State Historic Preservation Office in addition with other conditions.[2] This incentive program has been available since the federal tax reforms of 1981 and 1986.

In addition to the federal tax incentives for historic preservation many states have added their own tax credits.  Ohio recently enacted a new 25% tax credit for historic rehabilitation in 2006.[3] House Bill 149, passed in 2006 with a vote in the Ohio House of 88-6 and Ohio Senate 32-0.  The first year of implementation for this program was 2008.

Results of the Program

The impact of the Ohio Historic Preservation Tax Credit program has been staggering.  A comparison of historic preservation activity within the state before and after the program illustrates the direct impact of the State Tax Credit program.[4]

The first tax year of implementation for the Historic Preservation Tax Credit was 2008.  The Ohio Department of Development approved 41 applications that year.  The chart illustrates the surge in preservation activity.  The total amount of investment grew from $145 million to more than $635 million.  This was an increase of 338%.

The Ohio Tax Credit Program has had a Dramatic Effect on Total Investment

Program Renewal and Job Stimulus

As part of the state stimulus program the Ohio Legislature renewed the Ohio Preservation Tax Credit as part of the $1.57 billion Ohio Bipartisan Job Stimulus Plan.

Did the Historic Preservation Tax Credit deliver jobs?  And if so at what cost?[5]

In addition to investment growth, the program had a measurable impact on jobs.  Before the program, in 2007, preservation rehabilitation activity created 2,411 jobs.  In 2008 preservation activity had created 10,550 jobs.  The Ohio Historic Preservation Tax Credit program added 8,139 jobs.  The cost of this state incentive per job created or retained equaled $11,829.[6]

The Program has had a Dramatic Effect on Jobs

In comparison, the State of Ohio recently awarded Eaton Corp. $53 million dollars in state tax credits.  Eaton would retain and create a total of 1,617 jobs.  This tax credit award cost Ohio $32,776 per job.  This is almost triple the cost per job as compared to the Preservation Tax Credit program.[7]

Preservation & Jobs

Historic preservation means jobs.  Preservation supporters often use many arguments to promote historic preservation.  Historic buildings are significant, historic places.  Preservation is “green” because it recycles and re-uses buildings.   But supporters often pass on economic development and job creation.  The Ohio State Historic Preservation Tax Credit is an illustration of the power of historic preservation to deliver jobs at lower cost than comparable economic development programs.  Contact your local state legislator and the governor’s office to let them know the importance of this program for both historic preservation and job creation here in Ohio.

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[1]Rypkema, D.D., 1994. The economics of historic preservation: a community leaders’ guide.

Washington, DC: National Trust for Historic Preservation.

[2] For more information visit http://www.nps.gov/history/hps/tps/tax/

[3] For more information visit http://www.development.ohio.gov/UD/OHPTC/

[4] Data taken from Ohio Historical Society Annual Reports and the Ohio Department of Development.

[5] This analysis used the Preservation Economic Impact (PEI) developed by Rutgers University for

the National Park Service.

[6] This includes both jobs at the pre-tax credit levels and new jobs added by the state credit.

[7] Kroll, Kathie.  Eaton Corp. steps closer to building new headquarters in Beachwood Plain Dealer June 23, 2009

http://www.cleveland.com/business/index.ssf/2009/06/plain_dealer_fileclevelands_sk.html

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