A look at the statistics over more than a decade demonstrates the impact of the historic rehabilitation tax credit in Massachusetts.
There have been 358 historic rehabilitation projects totalling $3.5BN in Massachusetts between 2001-2014. These projects have generated a combined $584mm in historic tax credits and generated 40,115 jobs (22,211 of which are permanent jobs). These projects and their ancillary benefits have generated $3.4BN in total income, and have resulted in total tax revenue of $705mm (of which $536mm are federal taxes).
Historic tax creditsare earned by performing a qualified rehabilitation on a historic property. The tax credits may be used by the owners of the entity performing the qualified rehabilitation, which usually consists of a developer/manager and an investor. In essence the federal (and state) governments are forgoing taxes in the form of the tax credits to serve a public function, that being the restoration, maintenance and management of structures that are important to our history. Although this sounds like a truly altruistic pursuit being funded by taxpayer money, it is actually a savvy and profitable investment by the state and federal governments.
It is interesting to note that the federal government recovered 92% of the taxes it gave up as tax credits over that period of time while creating $169mm in additional state and local taxes as well as causing almost $7BN in additional spending in the economy at large (in costruction costs and income generated from the properties). Factoring in the job generation and that the ultimate goal of the project is to protect our history by encouraging the rehabilitation of historic properties rather than tearing them down to build new contruction, it is hard to not acknowledge the success and importance of this program.
We would be hard pressed to find another federal program that achieves its goal at an effective net zero cost while stimulating local taxes, creating jobs, and expanding private investment and spending in the private sector.
The properties that have saved from destruction include none other than the Old Post Office in Washington, DC, the Flatiron Building in NY, the Wrigley Building in Chicago, and the LA Conservancy, to name a few. The importance of the program, both in historic value, as well as economic value both for the public and private sectors is significant, and we are dedicated practitioners in this field and supporters of this credit.