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State’s construction industry gets a little lift from 14 projects

Minnesota’s Historic Rehabilitation Tax Credit appears to be producing construction jobs.

14 projects had preliminary approval to take advantage of the tax credit, according to a report released Monday. Developers expect the projects to create 1,808 construction jobs — and a total of 2,948 jobs when indirect and induced jobs are counted.

That’s in line with the 1,500 to 3,000 construction jobs a year that the Minnesota Historical Society and the Preservation Alliance of Minnesota predicted would be created when former Gov. Tim Pawlenty signed the tax credit into law in 2010.

The tax credit is creating construction jobs at the same time that the industry appears to be improving after years of decline. Last month, Minnesota posted its first 12-month gain in construction jobs since April 2006.

The credit covers up to 20% of qualifying rehabilitation expenses; that’s on top of a federal tax credit that can cover another 20%. Supporters say job creation is reason enough for the state Legislature to keep the state tax credit going.

Minnesota’s construction industry remains in a state of “depression,” with more than 50,000 jobs lost between 2006 and 2011, so every bit helps.

Developers plan to spend an estimated $343 million on the 14 projects, with $250 million going toward rehabilitation expenses that qualify for the tax credit. Total economic impact is expected to be $451 million — about $9.20 for every dollar of the $49.1 million of tax credits going toward the 14 projects.

Besides the 14 projects mentioned, there are an additional 14 that have since applied and another handful of developments are considering it, the Minnesota Historical Society. Contrast that with 2009, when only two Minnesota developments were seeking the federal tax credit.

Steve Elliott, the Historical Society’s director and chief executive officer, described the state historic rehabilitation tax credit program as a “resounding success” during a Monday morning news conference.

Original article Finance & Commerce

…by Warren Kirshenbaum

The Louisiana Main Street program resides in the Louisiana Division of Historic Preservation. Louisiana has 34 designated local Main Street communities. Main Streets apply a four-point approach to the revitalization of their historic commercial districts: organizational development, design and preservation, economic development and promotion.

In order to facilitate preservation, federal and state tax credits exist for commercial historic rehabilitation.
The purpose of tax credits is to encourage the preservation of historic buildings through incentives to support rehabilitation of historic and older buildings.

What is a tax credit?
A tax credit is a direct, dollar for dollar, reduction in the amount of money a taxpayer must pay in taxes for a given year. For example, if a taxpayer owes $5,000 in taxes to the Internal Revenue Service, but has a $3,000 credit, he only pays $2,000. A credit is much better than a deduction which merely reduces a taxpayer’s income and puts him in a lower tax bracket.

Federal Historic Rehabilitation Tax Credit

• The Federal Rehabilitation Tax Credit is for 20 percent of the costs of rehabilitation expenses for an income producing building.
• The credit is available for income-producing properties that are contributing elements to a National Register Historic District, or individually listed on the National Historic Register. All properties must be certified by the National Park Service.
• To qualify, the rehabilitation work must exceed the adjusted basis for the building (either the purchase price minus the value of the land, or the current depreciated value).

• The building must be a contributing element to a Downtown Development District (DDD) or a Cultural District.
• The building must be used for an income-producing purpose.
• Eligible expenses must exceed $10,000.
• This credit may be used in addition to the Federal Historic Rehabilitation tax credits, provided that the most stringent program requirements are met. It may also be combined with the State Residential Tax Credit Program if the building is mixed-use.

...by Warren Kirshenbaum

Just a few years after eliminating a state historic preservation tax credit, Rhode Island lawmakers are considering reviving it as an economic development tool.

Reinstituting the incentive to rehabilitate abandoned mills and empty warehouses would create work for construction companies and trade workers while protecting the state's historic character.

"It will mean jobs for architects, engineers, craftsmen," said Martha Werenfels, a Providence architect who has worked on several historic preservation projects. "Right now projects are not moving forward. They're going to Connecticut and they're going to Massachusetts because there are tax credits available."

The proposal would award tax credits equaling up to 25 percent of the cost of rehabilitating historic buildings for commercial use.

Lawmakers voted to stop giving new credits to commercial preservation projects in 2008. The program cost taxpayers $300 million since it was enacted a decade ago, but supported 237 projects worth more than $1.2 billion, according to the state's Historical Preservation & Heritage Commission.

Local government officials support the tax credit as a way to spur redevelopment in the state's many old mills and commercial buildings. Supporters noted that several companies have turned vacant warehouses and mills into modern corporate headquarters. East Providence Planning Director Jeanne Boyle cited the multimillion-dollar redevelopment of a former industrial site in her city as proof the tax credit works.

"Without the historic tax credit that project never would have happened," she said.

Original article by By David Klepper – Boston.com