What are Historic Tax Credits?
Missouri is recognized nationally for its Historic Tax Credit program, which, since its inception in 1998, has spurred $4 billion in private investment (Missouri Preservation) and created 40,000 jobs, according to a 2008 analysis by top economic, Donovan Rypkema. The Historic Tax Credit program allows a tax credit equal to 25% of qualified expenditures associate with a historic redevelopment project. The Historic Tax Credits are available to a project of any size, and can be used for both commercial and residential purposes.
In St. Louis alone, Historic Tax Credits have been responsible for the dramatic redevelopment of the downtown center, as well as the restoration of significant historic properties such as the Chase Park Plaza, the Moolah, and the old Post Office Building. These Tax Credits have also contributed to the revitalization of historic neighborhoods across the city. The Historic Tax Credit program has had similar effects in other Missouri cities, including Springfield, Columbia, and Cape Girardeau, as well as smaller communities statewide.
The Fight over Historic Tax Credits
Missouri’s Historic Tax Credit is currently under fire in the State senate. Headed by Senator Brad Lager, a group of Republican senators is seeking to set a 2 year sunset and a cap (between $50-100 million) on the state’s Historic Tax Credit program. To put this figure in perspective, two years ago the state awarded more than $171 million in Historic Tax Credits, while last year the amount was $162 million (sbj.net). Several of these so-called “reformers” would also like to subject the Historic Tax Credit to annual appropriations.
With only four weeks remaining in the current legislative session, the debate over Historic Tax Credits is expected to resurface on the Senate floor. St. Louis senator, Jeff Smith, for one, is committed to fighting against the proposed cap. It is his belief that no bill at all would be better than seeing one pass which includes the current proposed “reforms” to the Historic Tax Credit program.
Some Initial Talking Points
Historic Tax Credits create jobs and result in additional income for Missourians. In fiscal year 2007 alone, the historic preservation credit put over 4,900 Missourians to work. And, according to the foremost preservation economist in the United States, Historic Tax Credits have resulted in a total of 40,000 jobs since 1998. With a return to the state of over one dollar for each credit dollar issued, the Historic Tax Credit has resulted in $673 million direct and $700 million indirect additional income for Missouri taxpayers (Rypkema 2008).
Historic Tax Credits result in increased investment. More than $4 billion of investment has been leveraged throughout the state by the historic preservation tax credit. In FY2007 alone, amount leveraged totaled $729,637,669.
Historic tax credits affect the entire state of Missouri. According to the Missouri Coalition for Historic Preservation and Economic Development, between 1998 and 2006, more than 900 historic renovation projects were completed across the state of Missouri in 37 counties and 55 communities.
The vast majority of historic tax credits benefit small homeowners and developers. Since 2000, over 85% of projects have used under $1 million of tax credits, and 92.5% have been issued less than $2 million.
In addition, redevelopment projects that receive Historic Tax Credits employ many laborers from small communities across Missouri.
Historic preservation preserves the historic character of both residential and commercial communities. The biggest beneficiaries of historic preservation are local citizens, who work and live in distinctive, attractive places imbued with a sense of place.Historic preservation is about stewardship and sustainability. Without the Historic Tax Credit program, buildings in many communities lie in a state disuse, which renders them economically obsolete without an available incentive. Historic preservation utilizes existing structures, and prevents the waste and expenditure that comes with demolition and new construction.
As a result of the Historic Tax Credit, Missouri leads the nation in historic preservation. The Historic Tax Credit has been so successful that several states, including Iowa, Massachusetts, Tennessee, North Carolina, Wisconsin and Maryland have made efforts to imitate the credit.
Capping the Historic Tax Credit will halt redevelopment and destroy the program. Renovated buildings must be completed and certified prior to the tax credit being issued. If developers/owners are not certain that a credit will be available, they will not make the initial investment. The credit is essential to making the project work.
Capping the Historic Tax Credit will benefit big developers and limit the availability of tax credits in small communities across Missouri. “If the credit is capped, and the credit run through an appropriations process, issuance of the credit will become a political process… A cap and appropriation will benefit the big developers who can afford to gain influence and work at getting credits full time (ecoabsence.blogspot.com).”