the economy and creating real investment opportunities in core urban areas across the country.
Report on Minnesota State Historic RehabilitationTax Credit Just Released - Elizabeth Breiseth
Yesterday, the University of Minnesota Extension, with funding from the Minnesota State Historic Preservation Office, released the first ever report on the Minnesota State Historic Rehabilitation Tax Credit, which was signed into law in April 2010, making Minnesota the 30th state to enact a state historic rehabilitation tax credit.
The program mirrors the federal rehabilitation tax credit, and projects are eligible to claim the state credit if they are allowed the federal credit. The Minnesota program allows a state income tax credit equal to 20% of the cost of rehabilitating a qualifying historic property. The Minnesota credit allows a developer to choose either a certificated or refundable credit or a grant (which will stimulate nonprofit use of the incentive). Since becoming law, the credit has stimulated green job growth, increased local tax bases, and helped to revitalize urban and main street communities through reinvestment in historic properties.
The report shows a bright spot in an otherwise challenging economic landscape. During the program's first year, 14 projects received preliminary approval for the credit and had begun construction. An estimated $343 million dollars will be spent on these projects, with $250 million on local, qualifying rehabilitation expenses. These projects will also support 2,948 jobs. The total economic impact of projects currently being leveraged by the Minnesota Historic Rehabilitation Tax Credit is $451 million, including $152 million in labor income. Click here to read the report.
Our own experience at MacRostie Historic Advisors (MHA) has been a positive one, in that the new credit program has generated real rehab interest. We have seen an up-tick in the number of projects happening, particularly in urban areas such as Saint Paul and Minneapolis. The projects are taking many different forms. In Minneapolis, Dominium Development is creating affordable housing in the Buzza Company Building and artist housing in the Pillsbury A Mill. Another Minneapolis project is being undertaken by the Village Green Companies, which is creating 250 units of market rate housing with ground floor retail in the Soo Line Building. The Chittenden & Eastman Building in St. Paul is being undertaken by Ironton Asset Fund and will house 104 apartments while the Jacob Schmidt Brewery Complex has been subdivided and is being developed by Dominium Development and Fort Road Federation for commercial and residential uses. Combined, these projects represent more than $170 million in total development costs.
The success of the Minnesota historic credit as quantified in the report is just another great example of how the rehab of historic buildings continues to be one of the best economic development tools during one of the worst economic downturn. Like several other states, the Minnesota program is directly tied to the federal program, making the urgency of preserving the federal program even greater. The Minnesota report clearly shows that historic tax credits are not just about saving buildings, but about creating jobs, stimulating the economy and creating real investment opportunities in core urban areas across the country.
About the blogger: Elizabeth Breiseth is an Associate in the Midwest Office of MacRostie Historic Advisors.