August 2015
The Economic and Fiscal Effects of
The Mississippi Historic Preservation Tax Incentives Program
An Overview for Decision-Makers
Prepared at the Request of:
Philip Gunn, J.D.
Speaker of the House
Mississippi State Research Team
Judith Phillips, M.B.A., ABD, Research Analyst
Kayla Lee-Hopkins, M.P.P.A.
John Harper, M.P.P.A.
Dallas Breen, Ph.D., Associate Director
P. Edward French, Ph.D., Director
Mississippi State University Graduate Students
The Stennis Institute of Government and Community Development at Mississippi State University employs Graduate Research
Assistants enrolled at Mississippi State University to provide assistance to the Institute to conduct research and to work with Institute
staff to conduct a broad scope of work. Funding received by the Stennis Institute is used to provide graduate students with tuition and
graduate student stipends, thereby enabling them to pursue graduate level course work at Mississippi State University. These students
make a significant and important contribution to all research conducted by the Stennis Institute. John Harper is from Braxton, Mississippi and graduated from Mendenhall High School in 2007. He earned an associate’s degree in Business Administration from Copiah‐Lincoln Community College before transferring to Mississippi State University where he received a bachelor’s degree in Political Science. John began his work as a Graduate Research Assistant at the Stennis Institute upon entering the master’s degree program at Mississippi State University. He completed his master’s degree in Public Policy and Administration program in 2013. John is currently pursuing a doctorate degree in Higher Education Leadership to prepare for a career in administration at a college or university. Kayla Lee‐Hopkins is a native of Brandon, Mississippi and graduated from Northwest Rankin High school in 2007. Previously, she worked as a Program Support Clerk for the Department of Veterans Affairs in Jackson, Mississippi. Kayla received her bachelor’s degree in Political Science from Mississippi State University and graduated summa cum laude in 2011. That year, she subsequently entered graduate level study with the Department of Political Science and Public Administration at Mississippi State, and it was at this time that she began work as a Graduate Research Assistant for the Stennis Institute of Government. In 2013, Kayla earned a master’s degree in Public Policy and Administration in addition to the receiving the award for Outstanding Graduate Student. Currently, she is in the process of pursuing a doctoral degree in Community College Leadership from Mississippi State’s Department of Leadership and Foundations. Specifically, her interests in a higher educational context include research and institutional effectiveness; assessment; and data analytics, reporting, and governance. EXECUTIVE SUMMARY
Mississippi enacted a state historic tax credit in 2006; this law was intended to
promote private investment in historic properties with the goal of stimulating job
growth, increasing the tax base, and revitalizing communities. The Mississippi
Historic Preservation Tax Incentives Program provides a 25 percent tax credit for the
rehabilitation of historic structures that are used for residential or business purposes;
eligible expenditures must have been incurred after January 1, 2016 to qualify for the
tax credits. Eligibility for the Mississippi Historic Rehabilitation Tax Incentives
Program first requires that the building be listed individually in the National Register
of Historic Places or certified as contributing element to a National Register-listed
historic district, or be designated as a Mississippi Landmark. Secondly, the project
must meet a substantial rehabilitation test — rehabilitation expenditures must exceed
$5,000 or 50 percent of the total basis of the building; the basis is the purchase price
less the cost of land and prior improvements minus prior depreciation. Finally, as a
condition for receiving the credit, all work on the property must meet the U.S.
Secretary of Interior’s Standards for Rehabilitation and the completed work must be
approved by the U.S. National Park Service and the Mississippi State Historic
Preservation Office of the Mississippi Department of Archives and History.
This report is designed to provide decision-makers with information regarding the
economic impact of Mississippi’s state historic tax credit. The report begins by
providing an overview of federal historic rehabilitation tax credits, which are
commonly used in combination with state historic tax credits to leverage investments
in the rehabilitation of historic structures. To provide a contextual framework, this
report provides a synopsis of the use of historic tax credits by other states and studies
that have been conducted on the economic impact of federal and state tax credits; a
brief review of public policy issues associated with tax incentives is also included in
this report.
THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT EXECUTIVE SUMMARY
To examine the economic and fiscal effects of Mississippi’s historic tax credit
program, the Stennis Institute’s Public Policy Research Group utilized the
Preservation Economic Impact Model (PEIM), a comprehensive economic inputoutput model developed by Rutgers University for the National Park Service and used
by the National Park Service to annually evaluate the impact of historic tax credits for
the federal government. The PEIM© model is similar to the more widely known
IMPLAN© econometric modeling software, but the PEIM© model was found to
generate more conservative estimates of labor income, value-added, output, and tax
revenues. Therefore, the analysis of the economic effects of Mississippi’s historic tax
credit program that is presented in this study is considered to be relatively
conservative.
This report focuses only on projects that have been completed and received Part III
approval; it does not include an estimated 45 pending projects that are nearing
completion but have not yet received Part III approval as of August 2015. Part III
approval indicates that all construction work has been completed and approved by the
National Park Service and the Mississippi State Historic Preservation Office and that
the building is ready to be placed “in-service;” it is only after the receipt of Part III
approval that the historic tax credit may be claimed by Mississippi taxpayers.
The study area for the analysis contained in this report is the state of Mississippi; any
economic effects that may occur outside of the state are not included. The analysis
contained in this study is focused only on construction-related spending during
rehabilitation; it does not include the economic benefits of potential new business
activity that will occur after historic buildings are placed in service. Further, this study
does not measure any non-market benefits, such as the aesthetics or intrinsic value of
preserving historic buildings, the contribution of historic structures to promoting
heritage tourism, the impact that the renovation of a historic structure may have in
THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT EXECUTIVE SUMMARY
motivating investments in the surrounding area, or the contribution that historic
rehabilitation may make to community revitalization.
During the 9 years since the state of Mississippi enacted the Mississippi Historic
Preservation Tax Incentives Program, 252 historic rehabilitation projects have been
completed within the state. By allowing owners and developers to invest $59.9
million in lieu of state taxes, Mississippi’s state historic tax credit has stimulated a total
of approximately $269.1 million in local, qualified, non-acquisition related historic
rehabilitation construction expenditures between fiscal years 2007 and 2015. These
construction related expenditures have generated approximately 5,573 full-time
equivalent jobs in the state of Mississippi with income to workers of $148,478,800.
The largest employment impact of historic rehabilitation expenditures has been in the
Construction industry, although historic rehabilitation investments have positively
impacted employment in all sectors of Mississippi’s economy. For example, 2,807
full-time equivalents jobs were created in the Construction industry while there were
approximately 606 full-time equivalent jobs created in the Manufacturing sector, 928
full-time equivalent jobs were created in the Services sector, and approximately 105
jobs were created in the Transportation & Public Utilities Sector. Every dollar the
state of Mississippi has invested in historic tax credits leveraged approximately $2.48
of labor income for residents of the state of Mississippi.
Over the period from 2007 through 2015, the economic effects of construction
spending on historic rehabilitation projects that have been incentivized by
Mississippi’s historic tax credits have created $432.5 million in total economic output.
Therefore, every state dollar invested in historic tax credits has leveraged $5.71 of
economic activity in the state of Mississippi.
Historic rehabilitation projects that used Mississippi historic tax credits generated
$16,399,600 of state and local tax revenues during the construction phase prior to
THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT EXECUTIVE SUMMARY
receiving Part III approval; this indicates that the state of Mississippi recouped
approximately 27.4 percent of its investment of $59,894,173 in historic tax credits in
the form of tax revenues before these buildings were placed in service and taxpayers
were eligible to claim these credits against their state income tax.
From 2007 through 2015, historic rehabilitation investments that have been
incentivized by Mississippi’s state historic tax credit have contributed $198.9 million
to Gross State Product — a leveraging factor of $3.31 for every dollar the state of
Mississippi has invested in historic tax credits; of this amount, $2.98 has been retained
as in-state wealth.
There were an additional 45 historic rehabilitation projects that had received Part I
approval for historic preservation in the state of Mississippi that were not included in
the Stennis Institute’s economic impact analysis of Mississippi’s Historic Preservation
Tax Incentives Program. Of the 45 excluded projects, 20 projects with anticipated
qualified rehabilitation expenditures of $37,370,000 had received Part II approval and
were nearing completion. The Stennis Institute estimates that $59,894,173 of
Mississippi’s $60 million aggregate cap on historic tax credits have been exhausted and
that the 20 projects that have received Part II approval will require, at minimum,
$9.34 million in state historic tax credits.
Over the 9 year period since the enacted of the Mississippi Historic Preservation Tax
Incentives Program, 252 historic rehabilitation projects have been allocated
$59,894,173 in state tax credits; this represents an average annual allocation of $6.65
million in historic tax credits, which is equivalent to approximately 0.12 (0.12%)
percent of average General Fund revenues, one percent (1%) of state revenues from
Corporate Income and Franchise taxes, and 0.38 (0.38%) percent of state revenues
from individual income tax.
THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT EXECUTIVE SUMMARY
In return for its investment in historic tax credits, the state of Mississippi experiences
additional inflows of $45.8 million of federal historic tax credits and private
investments of $173.4 million in historic rehabilitation construction activity, which
generates approximately 5,573 full-time equivalent jobs, contributes $198.9 million to
state gross product, and provides $16.4 million in local and state tax revenues. These
economic benefits accrue to the state of Mississippi during the construction stage of
rehabilitation, before historic buildings are placed in service and taxpayers become
eligible to deduct historic tax credits from their state income taxes. These economic
effects do not include the contribution to economic activity that occurs when the
construction phase of rehabilitation is completed and buildings are placed in use for a
range of purposes to include rental housing and apartments, mixed-use retail, offices,
hotels, restaurants, and conference centers. In many cases, the economic contribution
of rehabilitated historic buildings after the buildings are placed in service may far
exceed the economic impact that occurs during the construction phase; this study
does not examine these additional benefits to the state of Mississippi. Prior research
has found that historic preservation supports community sustainability by revitalizing
communities, raises and protects property values, preserves cultural traditions, and
contributes to heritage tourism — this report did not examine these issues within the
state of Mississippi.
The Public Policy Research Group at the Stennis Institute conducts studies and provides quantitative analysis for input into the policy decision‐making process in the state of Mississippi at the request of the Mississippi Legislature and other elected leaders; the Policy Research Group does not provide policy recommendations. The information contained in this report is not intended to be a policy recommendation. THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT This page intentionally left blank for purposes of formatting. The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table of Contents
Overview of Federal Historic Preservation Tax Incentives ........................................................................ 5 Overview of State Tax Credits for Historic Preservation ..........................................................................11 The Economic Benefit of Federal Historic Tax Credits ............................................................................17 The Economic Return on Investment for State Historic Preservation Tax Credits .............................24 Historic Preservation Tax Credits in Mississippi ........................................................................................33 Historic Tax Credit Usage in the State of Mississippi ...........................................................................37 The Economic Impact of Mississippi’s Historic Rehabilitation Tax Credit Program......................45 Economic Impact of Projects using only Mississippi state historic tax credits .................................47 The Economic Impact of Historic Rehabilitation Projects that Combined Mississippi State
Historic Tax Credits with Federal Historic Tax Credits .......................................................................49 Mississippi’s Return on Investment in State Historic Tax Credits ......................................................51 Additional Benefits of Historic Preservation Tax Credits .........................................................................55 The Public Policy Issues .................................................................................................................................59 Appendix A: Overview of State Historic Tax Credit Programs ........................................................... LIX Appendix B: Detailed Economic Contribution by 2-Digit NAICS ............................................... LXXIII Index of Tables
Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties ....................... 14 Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014 ........ 22 Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax
Credits, 2007 to 2015........................................................................................................................................................ 36 Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015
.............................................................................................................................................................................................. 36 Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified
Projects, 2007 to 2015 ...................................................................................................................................................... 42 i
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of
Investment — Fiscal Years 2007 to 2015 ..................................................................................................................... 43 Table 7: The Economic and Fiscal Effects of Historic Rehabilitation Investments Using Only Mississippi
State Historic Tax Credits, 2007 to 2015 ...................................................................................................................... 46 Table 8: The Economic and Fiscal Effects of Rehabilitation Projects that used State and Federal Historic Tax
Credits, Mississippi Fiscal Years 2007 through 2015 .................................................................................................. 48 Table 9: The Combined Economic and Fiscal Impact of Mississippi's State Historic Tax Credit — Fiscal Year
2007 to Fiscal Year 2015 .................................................................................................................................................. 52 Table 10: Detailed Economic Contribution by All Mississippi Historic Tax Credit Projects by 2-digit NAICS
2007 to 2015 .............................................................................................................................................................. LXXV Index of Figures
Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State
Historic Tax Credits — 2007 to 2015 ........................................................................................................................... 38 Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for
Mississippi State Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015
.............................................................................................................................................................................................. 38 Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family, Owner-Occupied Residential
Structures — 2007 to 2015.............................................................................................................................................. 39 Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal
Historic Tax Credits — 2007 to 2015 ........................................................................................................................... 42 Figure 5: Annual Mississippi State Historic Tax Credit Allocations for Projects that Combined State and
Federal Historic Credits — 2007 to 2015 ..................................................................................................................... 44 Figure 6: Comparison of Trends in U.S. Private Construction Spending and Mississippi Historic
Rehabilitation Construction Spending — 2007 to 2014............................................................................................. 64 Index of Maps
Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving
Mississippi State Historic Tax Credits —2007 to 2015 .............................................................................................. 40 Map 2: Geographic Distribution of Historic Rehabilitation Projects Using State and Federal Tax Credits —
2007 to 2015 ...................................................................................................................................................................... 54 ii
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
This page intentionally left blank for purposes of formatting.
iii
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
This page intentionally left blank for purposes of formatting.
iv
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Overview of Federal Historic Preservation Tax Incentives
Historic preservation was codified with the passage of the National Historic
Preservation Act (NHPA) in 1966; this act created the National Register of Historic
Places and required the creation of state historic preservation offices. The
responsibility for structuring state historic preservations offices (SHPOs) was left to
the discretion of each state; as a result, the organizational structure of state historic
preservation offices differs from state to state. For example, in New York, the SHPO
is housed within the Department of Parks, Recreation, and Historic Preservation; in
Connecticut, the SHPO is housed in the Department of Economic & Community
Development in the Office of Culture and Tourism; in Louisiana, the SHPO is
located within the Office of Cultural Development. In some states, the state historic
preservation office is a free standing agency (e.g. California and Maryland). In
Mississippi, the SHPO is housed within the Mississippi Department of Archives and
History.
Congress created tax deductions for the rehabilitation of historic buildings and the
donation of easements that preserved the façades of historic buildings in the Tax
Reform Act of 1976 (Pub. L. No. 94-455); Congress enacted the federal historic tax
credit (HTC) in 1978 (Pub. L. No. 95-600).1 Current tax incentives for historic
preservation were established by the Tax Reform Act of 1986 (Pub. L. No. 99-514
and Internal Revenue Code Section 47); there are two types of Federal tax credits for
historic preservation:
 A 20 percent tax credit for the certified rehabilitation of certified historic
structures; this credit is available for the rehabilitation of commercial, industrial,
1 Author’s note: a tax credit is different from an income tax deduction; a tax credit lowers the amount of tax owed, while a
tax deduction lowers the amount of income that is subject to taxation.
5
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
agricultural, or rental residential purposes, but not for properties that that are used
exclusively as the owner’s private residence.
 A 10 percent tax credit for the rehabilitation of non-historic, non-residential
buildings built and first placed in service before 1936 and rehabilitated for nonresidential uses.
 The 20 percent historic preservation tax credit and the 10 percent historic
preservation tax credit are mutually exclusive.
The Tax Reform Act of 1986 also established a tax credit for the acquisition and
rehabilitation or new construction of low-income housing. This tax credit for lowincome housing can be combined with the tax credit for the rehabilitation of certified
historic structures, within the guidelines established by the Internal Revenue Service.
The low-income housing tax credit is approximately 4 percent per year for 10 years
for projects subsidized by tax-exempt bonds or below market Federal loans and is
approximately 9 percent per year for 10 years for projects not receiving certain
Federal subsidies.
This paper is concerned only with the 20 percent tax credit for the certified
rehabilitation of certified historic structures and uses the term HRTC to indicate the
20 percent federal credit program.
The federal historic rehabilitation tax credit (HRTC) provides an income tax credit for
qualifying expenses related to the rehabilitation of historic, income-producing
buildings that are certified historic structures as determined by the Secretary of the
Interior through the National Park Service. Federal historic rehabilitation tax credits
provide a dollar-for-dollar offset against the owner’s federal tax liability.
6
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
The HRTC program is administered by the National Park Service in tandem with the
Internal Revenue Service and local state historic preservation offices2 to ensure that
qualifying investments in historic properties are in compliance with the Secretary of
the Interior’s Standards; these standards provide separate guidelines for each of the
four approaches — preservation, rehabilitation, restoration, and reconstruction.
Rehabilitation is the most prevalent treatment for the use of Federal historic
preservation tax credits; as codified in 36 CFR 67, rehabilitation is defined as “the
process of returning a property to a state of utility, through repair or alteration, which makes possible
an efficient contemporary use while preserving those portions and features of the property which are
significant to its historic, architectural, and cultural values.” The Internal Revenue Service
administers the U.S. Department of the Treasury’s allocation of Federal historic
preservation tax credits and defines qualified expenses for which the historic
preservation tax credit may be taken. Within IRS guidelines, developers and/or
property owners may transfer historic tax credits to investors in return for equity
investment in a project. Investor equity lowers the amount of debt that is required by
the developer to finance a project, reduces the developer’s debt burden, and reduces
the risk exposure of lenders, thereby facilitating the developer’s ability to secure debt
financing for historic rehabilitation projects. In addition to offsetting the risk of
complex preservation projects and the additional costs that arise from the combined
effects of unforeseen complications that arise during construction and the added costs
of remaining in compliance with the Secretary of the Interior’s Standards for historic
preservation, the historic tax credits provide added financial security to private-sector
lenders.
2 In Mississippi, the State Historic Preservation Office (SHPO) is within the Mississippi Department of Archives and
History.
7
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
The federal HRTC program is national in scope and may be used in every state; it is
not limited by geography or by the income level of the community (or census tract).
An investment in any geographic location may qualify as long as the proper steps are
taken to qualify the building for the HRTC program. The federal HRTC program has
broad application because there are no federal ceilings on the amount of the credits
that may be used on a single project; the use of the HRTC is determined by the
eligibility of the historic structure and not by funding ceilings. If the building meets
the criteria of the National Park Service and the state historic preservation office, the
project will be eligible for federal HRTCs without a cap on the amount of tax credits.
Property owners and tenants under long-term leases3 may apply to the federal HRTC
program; to qualify for the tax credit, the work must be performed on behalf of the
party applying for the tax credit and that party must claim the depreciation for that
property on its federal tax return. The benefit of the tax credit may be transferred to
a tax credit investor in exchange for an equity investment in an entity created by the
property owner or the tenant (e.g. a limited liability corporation or partnership). To
qualify for the federal HRTC, the taxpayer must complete and submit an application
to the National Park Service; this application is submitted through the state historic
preservation office (SHPO) in the state where the property is located.
The first step in the federal HRTC process is the submission of a Part 1 application to
the SHPO to determine project eligibility; for the 20 percent HRTC,4 the building
must be individually listed in the National Register of Historic Places or be certified as
contributing to a registered historic district. Upon the determination of project
Author’s note: Under current federal regulations, long-term leases are leases that have a remaining lease term of more than 27.5 years
for residential property or more than 39 years for non-residential property.
4 Author’s note: A Part 1 application must also be submitted to determine project eligibility for the 10% federal tax credit for nonsignificant buildings built before 1936 that are being rehabilitated for income-producing, non-residential purposes and in cases where
applicants are seeking a charitable donation for a historic preservation easement.
3
8
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
eligibility, owners who are seeking a 20 percent HRTC submit a Part 2 application to
the SHPO for designation as a “certified rehabilitation.” The Part 2 application
contains detailed architectural plans and drawings for the proposed work and is
reviewed by the SHPO to assure conformance with the standards; the Part 2
application is then reviewed by the National Park Service to assure that the
rehabilitation is in conformance with the Secretary of the Interior’s Standards for
Rehabilitation contained in 36 CFR 67. Certified rehabilitation projects must be
“consistent with the historic character of the property and where applicable, the district in which the
structure is located.” Part 2 applications include estimated qualified rehabilitation costs
(QREs). Normally, work conducted under a Part 2 application is completed within 24
months; projects can be phased in under a special 60-month provision. Certified
qualifying rehabilitation expenditures (e.g. construction hard costs, development fees,
architectural, engineering, and surveying fees)5 are reported on a Part 3 Project
Completion form; these are the qualifying costs of the rehabilitation and do not
include other costs that may be associated with the project such as property
acquisition, furniture, equipment, new construction, and the ancillary costs of
improvements such as parking lots, sidewalks, or landscaping. The HRTCs may be
claimed during the tax year that the project is placed in service; for phased projects,
the HRTCs may be allowed before the rehabilitation is complete as long as the project
meets specific “substantial rehabilitation” requirements. The federal HRTC has a
carry-back of one year and a carry-forward of 20 years; federal HRTCs may be subject
to recapture unless the owner or long-term lessee maintains an ownership interest in
the historic structure for five years following the completion of the project. If the
owner disposes of the building within one year after the building is placed in service,
5 Author’s note: Qualified rehabilitation expenditures are expenditures that are chargeable to the capital account for real
property, which can be depreciated under §168 of IRS §47(c)(2).
9
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
100 percent of the HRTC may be recaptured; after one year, the tax credit recapture
amount is reduced by 20 percent per year. During the five-year holding period, the
National Park Service or the state historic preservation officer may inspect the
rehabilitated structure at any time; if the work was not conducted in compliance with
that approved in the Part 2 certification or if unapproved alterations have been made
to the building, the HRTC eligibility certification may be revoked. There are multiple
provisions, including passive activity limitations and at-risk guidelines contained in the
Internal Revenue Code that govern the treatment of HRTCs — these provisions are
not described in this document.
Generally, historic preservation projects are costlier and have higher risks than new
construction, which makes these projects more difficult to finance; many projects are
located in deteriorating downtown areas, in buildings that have been vacant over a
long period of time, and/or are prohibitively expensive. Federal HRTCs provide
funding for developers that rehabilitate certified historic landmarks and other
buildings to reuse them as income generating properties that create jobs and promote
economic revitalization. The most common uses of HRTCs are:
 Commercial offices and retail properties
 Mixed-use (commercial/residential) properties
 Hotels and hospitality properties
 Entertainment and cultural facilities
 Community centers
 Educational facilities
 Factories and industrial facilities
 Agricultural facilities
10
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Historic tax credits are attractive to a range of individual and institutional investors
that have substantial federal tax liability; banks and other financial institutions are
frequent participants in HRTC projects because these investments enable banking
institutions to meet their Community Reinvestment Act requirements. HRTCs act as
incentives to enhance the ability to finance challenging projects by:
 Creating a source for lower-cost equity investment in marginal projects, enabling
equity investors to contribute capital to the project and improving investors’ rate
of return
 Reducing the developer’s project cost and improving the developer’s project cash
flow; tax credits improve the developer’s return on investment in the project
HRTC projects also create multiple opportunities within the banking and financial
sector to offer a range of products and services related to rehabilitation projects; these
include: predevelopment and acquisition loans, letters of credit, warehouse lines of
credit, mezzanine or bridge loans, construction loans, and permanent mortgage
financing.
Significant development investments that might not otherwise be feasible can be
successfully financed by coupling HRTCs with a range of federal, state, or local
incentives that may include Low-Income Housing tax credits, New Market Tax
Credits, Community Development Block Grants, Brownfield Economic
Development Initiative Grants, USDA Rural Development Loan Programs, Tax
Increment Financing, and state-level historic preservation tax credits.
Overview of State Tax Credits for Historic Preservation
There are approximately 35 states in the U.S. that provide state-level historic tax
credits to encourage the preservation and rehabilitation of historic structures.
Generally, state historic preservation tax credits mirror the characteristics of the
11
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
federal HRTCs: a criteria for establishing qualifying buildings, standards for
rehabilitation, a method for calculating the allowable tax credit based upon a
percentage of rehabilitation expenditures, and a minimum required investment;
however, these policies vary by state. Some states allow developers to use the state
tax credit on single-family owner-occupied housing; the federal HRTC may not be
used for this purpose. State policies also vary with regard to the level of the tax credit
percentage (e.g. 20 percent of the cost of qualified rehabilitation expenditures
[(QREs)] or 25 percent of QREs); for example, the state of Mississippi has a total
aggregate cap of $60 million on its state historic tax credit. In some cases, states have
placed annual caps on the total dollar amount of historic tax credits that may be
authorized (e.g. Connecticut places a $15 million annual aggregate limit on HTCs used
to convert commercial or industrial property for residential use only); other states
have set limits on the amount of tax credits that may be claimed for any single
rehabilitation (per-project caps), or requirements for the geographic dispersion of
investments using state historic tax credits. Certain states also allow a local option
historic tax credit (e.g. Maryland); other states provide a property tax abatement
through a reduction of between 10 and 50 percent to the appraised value of historic
properties that have been rehabilitated. Quite a few states have monetized historic tax
credits allowing eligible entities to opt to take the credit as a refund (in cases where
there is no state tax liability), to convert the tax credit to a mortgage credit certificate
for banks or mortgage lenders who provide financing for the rehabilitation (e.g.
Vermont), or to allow the sale or purchase of HTCs as a credit against franchise tax
liability (e.g. Texas, which does not have a state income tax).
State policies related to annual aggregate caps, individual project caps, and the
transferability of credits will determine the effectiveness of a state historic tax credit
program. States impose aggregate caps on the total dollar amount of credits that may
12
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
be awarded to rehabilitation projects for the purpose of limiting the liability exposure
of the state treasury; in addition to total aggregate caps, some states impose an annual
aggregate cap on the dollar amount of historic tax credits that may be issued. For
example, the state of Arkansas has an annual program cap of $4 million in credits, a
per-project cap of $125,000 in credits for income producing properties, and a perproject cap of $25,000 for non-income producing properties. Annual program caps
and per-project caps may negatively impact the effectiveness of a state historic tax
credit program because the amount of the credit may be inadequate to provide a
sufficient incentive for large projects and may incentivize projects that do not require
the tax credit while excluding projects that cannot be financed without the credit. To
be rational, state historic tax credits must enhance the feasibility of projects that
would not be able to be financed otherwise or with the Federal rehabilitation tax
credit alone; otherwise, there is no reason to invest taxpayer funds in these projects
except for the purpose of attracting Federal HRTC dollars into a state.
Transferability is a key component to structuring an effective state historic tax credit
policy. An important consideration in the design of state historic tax credits is
whether the state credit will leverage more investment into the state through the use
of Federal rehabilitation tax credits, thereby attracting new dollars into the state and
increasing the economic benefit of rehabilitation investments. All state historic tax
credits are theoretically designed so that projects that qualify for state historic tax
credits (with the exception of single-family, owner occupied projects) also qualify for
federal HRTCs, making it possible to leverage federal HRTCs with state credits. State
historic tax credits only have value to those who owe state income taxes (a relatively
limited universe of investors), while the Federal HRTC is of value to those who owe
13
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties
State
Alabama
Arkansas
Colorado
Connecticut
Delaware
Georgia
Illinois
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Aggregate
Per Project Cap
$20 million
$5 million
$4 million
$125,000 in credits
None
$50,000
$50 million over 3 years
$5 million per project
$5 million
None
None
$300,000
None
None
$450,000
None
$45 million
None
None
None
$5 million
None
None
$5 million per taxpayer
None
$5 million per project
Annual appropriation
$3 million per project
Massachusetts
Minnesota
Mississippi
$50 million
None
$60 million
None
None
None
Missouri
$140 million
None
Montana
Nebraska
None
$15 million
None
$1 million in credits
$25,000 outside $50,000 in Arts & Cultural District
$5 million
None
$250,000
$5 million
None
$500,000
None
New Mexico
None
New York
North Carolina
North Dakota
Ohio
Oklahoma
Pennsylvania
Rhode Island
None
None
None
$60 million
None
$3 million
$34.5 million
South Carolina
Texas
None
None
None
None
Utah
None
None
$1.5 million
None
None
None
None
None
None
None
Vermont
Virginia
West Virginia
Wisconsin
Comments
Starts May 15, 2016
For both homeowners and commercial
River Edge Redevelopment Zone only
For both homeowners and commercial
In development district
Approximately $10 million annual average appropriation
Projects with eligible costs less than $1,100,000 are not subject to cap
5% add‐on to federal
only in designated distressed areas
In a “renaissance zone” only
Started 2012
Cap currently set by legislature
10% add‐on to federal; 25% for other eligible properties
Started Jan 1, 2015
limited to owner‐occupied and residential property
10% add‐on to federal
10% add‐on to federal
20% credit
Source: National Trust for Historic Preservation
Author's Note: Appendix A provides more detailed information on state historic tax credit programs.
14
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
federal income taxes (a much larger potential universe of investors) — as a result,
state historic tax credits will have value for some potential investors, but not for
others, and the value of state and federal historic tax credits is limited by the tax
liability exposure (and other investment requirements) of each investor. Because few
project developers have sufficient tax liability to make full use of either the state or
the federal tax credits, some mechanism is required to enable the transfer of the tax
credits to those who can use the credit in exchange for money (equity investment).
For this reason, disproportionate allocation is an important consideration in the
design of state historic tax credit policies. Disproportionate allocation allows the
creation of a pass-through mechanism that enables the state historic tax credits to be
used by taxpayers with state income tax liability while also allowing the federal tax
credit for the same project to be used by out-of-state taxpayers (investors).
Mississippi and Kansas are among the states that have policies that allow for the
disproportionate allocation of state historic tax credits (see Appendix A for a
description of state historic tax credit programs). Some states allow the party who
qualified for the historic tax credit to sell the credit to a third party (e.g. Missouri).
States may also allow the historic tax credit to be structured so that it is refundable
(e.g. Maryland, Louisiana, and Mississippi); this structure is very effective because it
increases the flexibility of the credit, is beneficial for smaller projects where the
transaction cost of more sophisticated investment mechanisms are prohibitive, and
benefits those with lower incomes who may not be able to transfer the credit.
Federal HRTCs cannot be “sold” or transferred directly to a third party and must be
monetized to have value; normally, this is accomplished through a complex
partnership or syndication transaction that requires the creation of another entity that
uses a complex multi-tiered investment structure to function as a pass-through for tax
credits. These are sophisticated investments that require highly specialized legal and
15
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
tax expertise; the transaction costs associated with structuring partnership and
syndication investment mechanisms that comply with Internal Revenue Service safe
harbor guidelines can be quite high, reduce the financial value of the tax credits, and
set a floor on the cost-benefit of using federal HRTCs on specific projects (e.g.
rehabilitation projects where the investment may be less than $2 to $5 million). State
historic tax credits (HTCs) that have a high degree of transferability, have lower
transactions costs, and can be more easily combined with the federal HRTC have
greater value to the project developer and to tax credit investors; state tax credits that
are easily transferable facilitate the use of state HTCs and federal HRTCs on the same
project. This increases the amount of equity financing that is available for
rehabilitating historic buildings, increases the number of significant and capital
intensive rehabilitation projects that can be accomplished within a state, maximizes
the economic impact of historic rehabilitation projects, and may accelerate the state’s
pay-back for recouping its investment in state historic tax credits.
From the perspective of a taxpayer, state historic tax credits are worth less than
federal historic tax credits; a taxpayer who uses the state tax credit to reduce state
income tax liability can no longer deduct that amount from the amount of federal
income tax owed; therefore, the taxpayer may experience an increase in federal
income tax liability at the same time that state income tax liability is reduced —
depending upon the tax bracket of the taxpayer, the loss of deduction may reduce the
value of the state credit by up to 35 percent for a corporation and up to 39.6 percent
for individuals, depending upon the effective marginal tax rate of the taxpayer.
Generally, a state historic tax credit has an after-tax value in the range of $0.50 to
$0.60 cents on the dollar; although there are investment strategies that may be
designed to reduce these federal tax penalties, these strategies are extremely complex
and are only feasible for extremely large and sophisticated investments. In structuring
16
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
investments, the reduction in the face value of the state tax credit may be offset
through the use of the federal historic tax credit, which retains up to 100 percent of its
face value because it is not taxed by the federal government.
Research has consistently found that a state historic tax credit should be set at a rate
that is high enough to provide a meaningful incentive to offset the high cost and risk
associated with rehabilitating historic properties; studies by the National Trust for
Historic Preservation6 and others7 have recommended that state historic tax credits be
in the range of 20 to 30 percent of the qualified rehabilitation expenditures and have
no per-project cap in order to be effective. Of the 33 states that offer tax credits for
commercial historic rehabilitation, 19 states have no total aggregate program cap
(Table 1, page 14); however, even without an aggregate cap, many state historic tax
credit programs fail to effectively incentivize rehabilitation because either the
percentage rate or the per-project cap is set too low, or because there are significant
impediments to the transferability of state historic tax credits.8
The Economic Benefit of Federal Historic Tax Credits
Extensive research has documented the key role that historic tax credits have played
in the redevelopment and revitalization of communities.9, 10, 11, 12 The National Park
Service and the National Trust for Historic Preservation have identified historic tax
Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report
Produced by the National Trust for Historic Preservation’s Center for State and Local Policy.
7 Kuhlman, R. (2015). A Policy Brief on Return on State Investment. National Trust for Historic Preservation.
8 Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report
Produced by the National Trust for Historic Preservation’s Center for State and Local Policy.
9 Birch, E. L. (2009). Downtown in the “New American City.” Annals of the American Academy of Political and Social Science. 626
(November), 134 – 153. Di:10.1177/0002716209322169
10 Filion, P, Hoernig, H., Bunting, T., and Sands, G. (2004). The Successful Few: Healthy Downtowns of Small Metropolitan
Regions. Journal of the American Planning Association. 70(3), 328 – 343. Doi: 10.1080/01944360408976382.
11 Listokin, D., Lahr, M. L., and Heydt, C. (2012). Third Annual Report on the Economic Impact of the Federal Historic Tax Credit.
New Brunswick, N.J.: Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers – The
State University of New Jersey and the National Trust Community Investment Corporation.
12 Sohmer, R. R., and Lang, R. E. (2001). Downtown Rebound (Fannie Mae Foundation and Brookings Institute Center on Urban and
Metropolitan Census 03, May). Washington, DC. http://www.brookings.edu/research/reports/2001/05/downtown-sohmer.
Retrieved 8-10-2015.
6
17
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
credits as “the nation’s most effective program to promote historic preservation and community
revitalization through historic preservation.”13 Birch14 described the transformative impact
of investments in the rehabilitation of historic buildings as follows: “the occupation of
vacant, centrally located buildings, the increased presence of people on formerly empty streets, and
investment in supportive commercial activities and amenities help bring market confidence to worn-out
downtowns.”
Federal and state historic preservation tax credits are market-based incentives
designed to leverage private investment in historic properties. When the private
sector makes investments to rehabilitate buildings using historic tax credits there are
economic multiplier effects that ripple through local and state economies, bringing a
range of benefits that include the creation of jobs, labor income, and tax revenue.
The economic impact of investments in historic rehabilitation projects has been
found to be more significant than the impact associated with many alternative
investments made in other sectors of the economy.15, 16 There are two primary
reasons for the significant impact associated with historic rehabilitation investments:
1) the complexity of the design requirements and the structuring of investments that
use historic preservation tax credits require the engagement of highly skilled
professionals, to include accountants, investment and tax specialists, architects,
engineers, and preservation specialists; and 2) the unique construction requirements
and the labor intensity of historic rehabilitation projects entail more labor, require
labor that is more highly skilled, and create more jobs in the Construction Sector
National Park Service. (2012). Federal Tax Incentives for Rehabilitating Historic Buildings: Annual Report for Fiscal Year 2012.
Washington, CD: Technical Preservation Services, National Park Service, U.S. Department of the Interior.
14 Birch, E. L. (2002). Having a Longer View on Downtown Living. Journal of the American Planning Association. 68(1), 5 – 21.
Doi: 10.1080/01944360208977188 (page 2).
15 Ryberg-Webster, S. (2013). Federal Rehabilitation Tax Credits and the Transformation of U.S. Cities. Journal of the American
Planning Association. 79 (4) DOI: 10.1080/01944363.2014.903749.
16 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal
Historic Tax Credits for FY 2013, U.S. Department of the Interior, National Park Service.
13
18
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
where the pay scale is higher as compared to other industry sectors (e.g. the Retail
Sector, the Service Sector, or the Food and Accommodation Sector). Studies17
conducted by Listokin and Lahr in the states of New Jersey and Kansas found that
the rehabilitation of non-residential historic buildings generated two more jobs in
construction for each expenditure of one million dollars as compared to a one million
dollar expenditure on new construction; studies of rehabilitation programs in other
states have reached similar conclusions.18, 19, 20, 21 A 2012 study by the National Park
Service found that approximately 75 percent of the economic benefits of historic
rehabilitation investments are retained within the state and local economy where the
project is located, and because historic building rehabilitations are more labor
intensive than new construction, these projects require additional workers at higher
wages.22
The rehabilitation of historic properties creates two waves of economic impact. The
first wave of economic impact occurs during the planning and construction phase of a
historic rehabilitation; the second wave of economic impact occurs after the project is
placed in service and the ongoing operations of business activity commences.
Because historic rehabilitation projects repurpose historic structures for multiple
mixed-use purposes, to include hotels and conference centers, retail, office space,
and/or housing, as the rehabilitated buildings are occupied and business operations
commence, the economic activity associated with the ongoing operations of these
17 Listokin, D., Lahr, M. L., Daffern, M., and Stanek, D. (2009). Center for Urban Policy Research, Edward J. Bloustein School of
Planning and Public Policy, Rutgers University, New Brunswick, New Jersey.
18 Mason, R. (2005). Economics and Historic Preservation: a Guide and Review of the Literature. Discussion Paper prepared for the
Brookings Institution Metropolitan Policy Program. University of Pennsylvania.
19 Lipman, Frizzell, and Mitchell (2003). Historic Rehabilitation and Economic Revitalization Tax Credit Act: Economic and Fiscal
Impacts. Pittsburgh: Downtown Pittsburgh Partnership.
20 Rypkema, D. (1998). Economic Benefits of Historic Preservation. Forum News. 4 (5) (National Trust for Historic Preservation).
21 Leichenko, R. Coulson, E., and Listokin, D. (2001). Historic Preservation and Residential Property Values: An Analysis of Texas
Cities. Urban Studies. 38 (11): 1973 – 1987.
22 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal
Historic Tax Credits for FY 2012, U.S. Department of the Interior, National Park Service. http://www.nps.gov/tps/taxincentives/reports.htm. Accessed 8-15-2015.
19
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
activities generates a second wave of employment, purchasing, and spending. This
second wave of economic impact from the ongoing operations of occupants of
rehabilitated structures is of longer duration than that which occurs during the
construction phase because they are continuous over multiple years into the future.
For example, the rehabilitation of an historic property to create a hotel and
conference center will have economic impact during the construction phase of project
activities. During construction, the project will have three types of economic impact:
direct, indirect, and induced. The direct, indirect, and induced effects that occur
during the construction phase of the rehabilitation of an historic property may be
described as follows:
Direct effects are expenditures made by developers and/or property owners who
rehabilitate historic buildings. The design, financing, and rehabilitation of historic
property requires expenditures by developers and/or property owners on the
purchase of goods (e.g. building materials and other supplies) and services from a
number of industry sectors to include architects, lawyers, engineers, and construction
contractors and workers. This initial spending has a multiplier effect across the local
and state economy; these additional multiplier effects are called indirect and induced
impacts.
Indirect Effects are associated with the inter-industry spending that occurs through
the supply chain that provides goods and services to the developer and/or property
owner. As suppliers must make purchases of goods and services from other firms to
accommodate the new demand, the economy is further stimulated.
Induced Effects are the economic effects of spending by employees of the directly
and indirectly affected industries. As businesses in the supply chain must provide
increased goods and services to accommodate new demand, they may need to hire
20
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
additional workers or pay existing workers for working longer hours. As wages and
salaries increase, workers will have more household income to spend on goods and
services; this spending will generate additional economic effects on the local and state
economy.
The economic impact of historic rehabilitation projects during the construction phase
of the project are a function of the magnitude of expenditures and industry specific
multiplier effects. Generally, the greater the expenditure, the greater the economic
impact (e.g. jobs created and tax revenues generated). Upon completion of the
construction phase of a historic rehabilitation, the economic effects will rapidly
decrease and end as construction related expenditures cease. Once construction is
completed, the rehabilitated historic structure will be placed in service for its intended
purpose and a new wave of spending associated with the intended use of the structure
will commence — owners will occupy residential structures, tenants will occupy
apartment buildings, and businesses will occupy commercial structures — the
economic impact of these activities are identified as the “ongoing operations (of
business activity).” For example, the ongoing operations of an historic building being
rehabilitated to create a hotel and conference center will begin when the historic
building is placed into service; furniture and fixtures will be purchased, staff will be
hired, and other expenditures will occur during start-up. Then, as hotel and
conference operating activities commence, spending associated with ongoing
operations will create a new round of direct, indirect, and induced economic impact
and new visitors will be attracted into the community, generating related economic
impact from their spending on goods and services. The ongoing operations of a
hotel and conference center require purchases of goods and services from suppliers,
and these suppliers also purchase goods and services from their suppliers; this
21
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014
State
Alabama
Alaska
Arizona
Arkansas
California
Colorado
Connecticut
Delaware
D.C.
Florida
Georgia
Hawaii
Illinois
Indiana
Indiana
Iowa
Kansas
Kentucky
Louisiana
Maine
Maryland
Massachusetts
Michigan
Minnesota
Mississippi
Missouri
Montana
Nebraska
Nevada
New Hampshire
New Jersey
New Mexico
New York
North Carolina
North Dakota
Ohio
Oklahoma
Oregon
Pennsylvania
Rhode Island
South Carolina
South Dakota
Tennessee
Texas
Utah
Vermont
Virginia
Washington
West Virginia
Wisconsin
Wyoming
Total
Part 1 Approved
20
0
2
31
5
7
18
3
6
14
48
2
25
20
1
43
13
52
151
9
67
49
46
10
38
89
2
12
1
2
18
0
85
53
0
98
14
6
45
22
25
4
21
19
9
12
129
8
2
19
1
1,376
Estimated QRE at Part 2 Part 3 Estimated QRE Project Completion Approved Approved
at Part 2
(Part 3)
19
1
4
22
4
5
11
0
3
5
37
2
17
20
0
39
11
48
106
10
63
34
31
10
28
109
1
7
0
4
7
1
89
59
1
75
16
9
37
19
16
4
15
6
7
12
95
10
1
25
1
1,156
7
$82,449,803
0
$78,000
1
$57,439,618
14
$12,503,023
10
$65,600,000
2
$21,512,900
3 $103,772,877
1
$0
1 $201,100,000
12
$8,945,000
17
$72,901,000
0
$2,487,385
26 $628,706,937
6 $107,242,747
0
$0
16
$88,456,936
9
$18,379,457
20
$75,033,385
64 $164,904,530
7
$36,432,419
21 $118,686,734
48 $162,909,183
15 $212,675,447
8 $253,032,709
14
$37,340,000
60 $619,758,536
3
$75,000
8
$16,995,567
0
$0
3
$21,697,884
6 $167,187,200
1
$5,411,980
41 $468,166,306
44
$76,080,136
0
$9,000,000
52 $825,779,843
9
$82,979,149
8
$25,163,590
35 $409,026,043
12
$42,518,655
7 $101,296,190
4
$7,920,000
18
$25,375,000
9
$22,823,000
1
$8,997,000
9
$8,862,345
97 $278,310,316
3
$78,150,000
5
$3,100,000
5 $139,067,520
0
$6,000,000
762 $5,982,331,350
$11,423,841
$0
$12,014,019
$18,447,488
$204,098,492
$1,492,681
$13,513,340
$40,000
$18,500,000
$77,531,993
$30,356,140
$0
$726,641,040
$27,251,058
$0
$75,993,542
$32,340,132
$29,669,915
$228,237,249
$59,024,773
$266,317,511
$298,369,154
$72,041,995
$119,677,966
$20,117,603
$155,051,092
$2,336,631
$44,003,882
$0
$30,757,492
$28,852,602
$19,421,446
$382,737,351
$56,181,236
$0
$207,910,835
$45,094,393
$42,947,470
$430,622,509
$88,605,025
$33,689,897
$6,238,711
$30,914,517
$70,662,842
$14,692,882
$20,557,247
$208,490,454
$25,751,910
$6,265,657
$28,892,094
$0
$4,323,778,107
Source: Federal Tax Incentives for Rehabilitating Historic Buildings, Statistical Report and Analysis for Fiscal Year 2014, U.S. Department of the Interior, National Park Service
QRE = Qualified Rehabilitation Expenditures
22
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
generates additional economic impact, or “ripples” of demand for goods and services
throughout the local, state, and national economy (multiplier effects). Direct
spending on goods and services by the hotel and conference center, supplier spending
on goods and services, and purchases by labor also generate new tax revenues for
federal, state, municipal, and county governments in the form of sales and use taxes,
property taxes, income taxes, and other fees and taxes. Although these secondary
waves of economic effects from the ongoing business operations that are created
when rehabilitated properties are placed in service are longer lasting and generally
more significant than the initial economic effect during the construction phase of
historic rehabilitation, these secondary effects may be excluded from studies on the
economic impact of federal historic preservation tax credits.
A 2015 report by the Office of the Comptroller of the Currency indicates that since
the enactment of the Tax Reform Act of 1976, the federal historic tax credit has
rehabilitated more than 39,600 buildings, leveraged more than $109 billion in private
funds, and generated 2.41 million jobs with associated income of $91.5 in the United
States. Advocacy studies have found that “every $1 of federal tax credit ultimately
generates $1.25 in federal tax revenue.” 23 A 2014 study found that every one dollar
of federal historic tax credit leverages a minimum of $4 in private investment, and that
for every $1 million in historic property investment, 16 jobs are created and $2.1
million in economic activity is catalyzed. 24 In fiscal year 2014, 1,156 proposed
projects with an estimated $5.98 billion in qualified rehabilitation expenditures
received Part 2 approval for the use of federal historic tax credits (Table 2, page 22).
Approximately 762 completed projects with $4.32 billion in qualified rehabilitation
23 PlaceEconomics (2013). The Federal Historic Tax Credit: Transforming Communities. The National Trust for Historic
Preservation, Washington, DC.
24 Federal Tax Incentives for Rehabilitating Historic Buildings, Annual Report for Fiscal Year 2014, U.S. Department of the Interior,
National Park Service, Washington, D.C.
23
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
expenditures received Part 3 certification for federal historic tax credits in fiscal year
2014 (Table 2, page 22). A study by the Rutgers University Center for Policy
Research funded by the National Park Service found that completed projects certified
in fiscal year 2014 created an estimated 77,762 jobs in the United States.25 In fiscal
year 2014, over 50 percent of completed federal historic tax credit projects certified by
the National Park Service combined the use of federal and state historic tax credits.26
The Economic Return on Investment for State Historic Preservation Tax
Credits
A review of the research on state historic tax credit programs indicates these
programs have positive economic benefits and return the states’ investment within a
period of approximately seven years. Similar to federal historic rehabilitation tax
credits, state historic tax credits have economic effects that occur in two stages; the
first stage of economic impact occurs during the pre-construction and construction
phase of a historic rehabilitation, and the second stage of economic impact occurs
after the structure is placed in service, the buildings are occupied, and businesses
commence operations.
The payback period for state historic tax credits will vary depending upon the final
use of the renovated building. For buildings that are intended for commercial use or
mixed-use, the payback period for state historic tax credits and the magnitude of state
revenues related to income tax, sales tax, and other tax revenues will generally be
greater over the long-term as compared to single-family, owner-occupied residential
rehabilitation projects. For example, an historic renovated building that is used as a
hotel will have significant economic impact after the building is placed in service and
business operations commence. Employees are hired, purchasing and spending to
25
26
Ibid.
Ibid.
24
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
support on-going operations is continuous, and new visitors are attracted into the
community; this generates state tax revenues and payback occurs quickly. During the
construction phase of single-family, owner-occupied residential rehabilitation projects,
the hiring of labor and material purchasing will have positive economic effects in
terms of job creation and the generation of tax revenues (e.g. income and sales tax);
however, upon completion of the construction phase, the increased property value of
the residential structure and the stabilization of residential neighborhoods may be the
primary benefit once the building is placed in service. Because property tax revenues
accrue to the benefit of local counties and municipalities but not to the state, the state
may recognize relatively little payback on state historic tax credit investments in
single-family, owner-occupied residential structures when these investments are not
an element of a more comprehensive community revitalization strategy. For example,
in many communities, historic residential properties are an element of cultural
heritage and tourism — which attracts new visitors into the community — and new
tax revenues are derived from tourism related spending. When residential historic
rehabilitation occurs on a large scale within a community, this may contribute to the
revitalization of downtown areas, incentivize new business formation, and may also
enhance the community’s ability to attract businesses that consider the quality of life
during the site selection process. Historic rehabilitation projects that enable the
occupancy of formerly vacant or abandoned buildings can also contribute to the
reduction of crime and may incentivize new construction activity within communities.
Most states require that the rehabilitated building be placed in service before the state
historic tax credit can be claimed; this means that the rehabilitation must be
completed prior to occupancy and that all construction expenditures be completed (or
in the case of phased projects, some portion of the rehabilitation must be completed
for occupancy). Once the building is placed in service, the historic tax credit may be
25
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
claimed on the taxpayer’s tax return during the following year. Therefore, the
economic and fiscal payback of state investments in historic preservation tax credits
are front-loaded because tax revenues are generated during construction activities
prior to the time the building is placed in service and the historic tax credit may be
claimed. The state may also recognize tax revenues associated with ongoing business
operations for up to one year after the building is placed in service depending upon
the timing of the completion of construction activities, the occupancy of the building,
and the commencement of business operations. Therefore, states may start receiving
payback on the state’s investment in historic tax credits for multiple years prior to the
time the cost of these tax credits impact the state’s treasury. Depending upon the
project and the time it takes to complete construction, place the building in service,
and the time it takes to commence business operations, states may recognize tax
revenues from historic rehabilitations for multiple years prior to taxpayers claiming
the historic tax credit against their state income tax.
The majority of studies that have been conducted to examine the economic impact of
state historic tax credit programs and the return on states’ investment in historic tax
credit programs have found that states receive a significant and positive return on
their investment in historic tax credits; examples include:
Maryland. Maryland allows a 20 percent state historic tax credit for expenditures on
qualified rehabilitation projects; the state also provides a 5 percent additional credit
for high performance commercial rehabilitations that achieve LEED ratings and a 10
percent credit for non-historic, “qualified” rehabilitated structures for commercial
properties located in designated “sustainable” communities. A study by the
Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit
found that for every dollar of tax credit investment by the state, the state received an
average return of approximately $1.02 during the first year after a project’s completion
26
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
and $3.31 within five years after project completion.27 The Maryland taskforce found
that Maryland’s state historic tax credit program is “self-financing and does not require an
outside revenue source. The total fiscal benefits of the Program, taken as a whole, far exceed the cost
to the Treasury.” 28 The study found that large, commercial mixed-use historic
rehabilitation projects with multiple office and commercial tenants had the most rapid
rate of return on the state of Maryland’s investment in tax credits, and, many projects
were found to have a break-even period of one year or less. The study also found that
single use commercial rehabilitation, such as retail establishments or restaurants had a
break-even period of approximately five years.29
Wisconsin. Starting in 1989, the state of Wisconsin had provided a 5 percent HTC
on qualified rehabilitation expenditures; there is no aggregate cap on the state’s HTC
and no per-project cap. On January 1, 2014, Wisconsin increased its HTC from 5
percent to 20 percent of expenditures on qualified rehabilitation projects. Prior to
increasing its HTC, Wisconsin’s HTC program averaged 11 projects per year; in 2014,
31 projects were approved with $35.1 million in state HTCs. A study by the
University of Wisconsin-Milwaukee’s Historic Preservation Institute and Baker Tilly
Virchow Krause, LLP.30 produced the following findings on the economic impact of
25 of the 31 projects that qualified for Wisconsin’s state historic tax credit program in
2014:
 the state’s investment of $35.1 million in HTCs leveraged an additional $211
million in private investment expenditures
Final Report of the Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit, 2004.
Ibid.
29 Ibid.
30 Baker Tilly Virchow Krause, LLP. (2015). Wisconsin Historic Tax Credit: Impact Analysis.
http://milwaukeepreservationalliance.org/wp-content/uploads/2015/05/Wisconsin-Baker-TillyHTC_FullReport_Final.pdf. Accessed 7-14-2015.
27
28
27
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
 2,185 full-time equivalent jobs would be created during the construction phase
with an associated labor income of $127.4 million
 the projects would have an overall economic impact of $353.3 million throughout
the state
 the projects would generate $14 million in new tax revenues before the projects
were placed in service and any tax credits were claimed
 the investment in HTCs would be paid back within 7 years (this included the
construction phase and the impact of ongoing operations after the structures were
placed in service)
 by the 10th year of business on-going operations, an estimated $46 million in tax
revenue would be generated, indicating a 133 percent return on the state’s original
$34.9 million investment in state historic tax credits
Ohio. Ohio enacted a state historic tax credit program in 2006; the program has an
annual cap of $60 million and is jointly administered by the Ohio Historic
Preservation Office, the Ohio Department of Taxation, and the Ohio Development
Services Agency; it allows a tax credit of 25 percent of expenditures on qualified
rehabilitation projects. The tax credits are awarded during two application periods per
year. The Ohio Legislature requires a cost-benefit analysis for each HTC project
during the application process and the state determines whether awarding the credit
will result in a net revenue gain in state and local taxes once the building is placed in
service. Over the period from 2007 to 2013, the state of Ohio awarded $246,393,097
in state historic tax credits to 111 projects; the total construction costs associated with
these 111 projects was $1,411,551,249, and federal HRTCs represented $210.4 million
of construction costs while private funding accounted for $951.9 million of total
28
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
construction costs. A study conducted by Cleveland State University 31 examined the
impact of Ohio’s historic tax credit program over a period from 2007 through 2025.
This study modeled the staged construction impacts over a period from 2007 through
2015 and the economic impact of the ongoing operations of business activities upon
completion of construction activities over the period from 2010 through 2025; the
findings of this study included the following:
 every $1 of state historic tax credits generates $40.58 of impact during the
construction phase and from ongoing business operations upon completion of
construction
 every $1 of state historic tax credits leveraged $8.25 in construction spending
 for every $1 million in state historic tax credits, approximately 83 construction jobs
were created
 the state of Ohio recovered $0.31 of every dollar invested prior to the
disbursement of any tax credit funds from the Treasury
 every $1 of state historic tax credit leveraged $0.85 in federal HRTCs
 an annual average of 2,942 full-time equivalent jobs were created based upon
construction impacts that were modeled over the period from 2007 through 2013
 during the operation phase of rehabilitation investments, the study projected the
creation of 4,602 full-time equivalent jobs with wages of $4.6 billion, generating
$254.2 million in total state revenues and $92.3 million in local government
revenues
O’Brien, K. and Robey, J. (2011). Estimates of Economic Impact of the Ohio Historic Preservation Tax Credit
Program. The Great Lakes Environmental Finance Center of the Maxine Goodman Levin College of Urban Affairs of
Cleveland State University.
https://development.ohio.gov/files/redev/OHPTC%20Economic%20Impact%20Study%20-%20May%202011.pdf.
Accessed 8-14-2015.
31
29
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
 during the operations phase, the redevelopment of the 111 historic buildings was
projected to leverage $32.33 in operating benefits for every $1 of state historic tax
credits and create 298 jobs for every $1 million in state historic tax credits over the
period from 2010 to 2025
 the payback for the state of Ohio’s investment of $246.4 million in historic credit
was projected to take 9 years
Georgia. The state of Georgia enacted a state income tax credit for rehabilitated
structures in 2002 (O.C.G.A. § 48-7-29.8); Georgia’s program is administered by the
Georgia Department of Natural Resources’ Historic Preservation Division and the
Georgia Department of Revenue. Georgia provides a 25 percent historic tax credit
for both owner-occupied residences and income-producing certified expenditures;
there is a $100,000 credit cap for owner-occupied residential investments and a
$300,000 tax credit cap for rehabilitation investments in income-producing buildings.
Georgia also allows an additional 5 percent historic tax credit for residential historic
rehabilitations that are located in HUD targeted areas. In 2013, the Georgia
Legislature considered increasing the per-project cap on income-producing historic
rehabilitations to improve the effectiveness of its state historic tax credit program; to
examine the impact of modifying Georgia’s tax credit program, a study was conducted
by the Georgia Tech Research Institute. 32 This study found that over a 20 year
period, Georgia’s historic tax credit program would have the following impact:
 the estimated cost of Georgia’s historic tax credit program to the state treasury is
$89.65 million; these tax credits were projected to leverage $668.07 million of
construction spending within the state
Georgia Tech Research Institute, The Projected Economic and Fiscal Impacts of Improvements to Georgia’s Historic
Rehabilitation Investment Incentive, March 2013.
32
30
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
 spending associated with the construction phase of historic rehabilitations was
projected to support 10,911 full-time equivalent employment (direct, indirect, and
induced) and create $541.66 million in associated labor income
 during the construction phase of rehabilitation, $54.37 million in tax revenue
would be returned to the state treasury; this indicates that approximately 60
percent of the state’s investment in historic tax credits would be returned prior to
the tax credits being claimed after the buildings were placed in service
 after the buildings are placed in service, the estimated annual recurring tax
revenues associated with the ongoing operations of business occupants of
rehabilitated historic structures were projected to be $19.7 million
 for every dollar the state invests in historic tax credits, it will collect $3.49 in new
tax revenues; this included the impact of the construction phase and the ongoing
operation phase of business activities
The positive economic yield on state investments in state historic tax credits has
motivated multiple states to implement historic tax credit programs or to expand their
existing tax credit programs. For example, six states including Minnesota, Illinois,
Pennsylvania, Texas, Alabama, and Nebraska have adopted state historic tax credit
programs since 2010; Texas, which does not have an income tax, allows the state
historic tax credit to be applied against franchise tax. As previously discussed, in
2014, Wisconsin increased its HTC from 5 percent to 20 percent of expenditures on
qualified rehabilitation projects; in 2014, Colorado increased its program cap to $10
million; and in 2015, and Georgia increased its state historic tax credit HTC program
by $25 million for projects with over $300,000 in qualified rehabilitation expenditures.
31
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
This page intentionally left blank for purposes of formatting.
32
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Historic Preservation Tax Credits in Mississippi
In March 2006, Governor Haley Barbour signed Senate Bill 3067 to create the
Mississippi state historic preservation tax incentives program to encourage the
rehabilitation of historic buildings; the Mississippi Department of Archives and
History is responsible for the administration of the program. The state of Mississippi
provides a 25 percent historic tax credit (Mississippi Code § 27-7-22.31) for qualifying
rehabilitation expenditures on certified historic structures. Mississippi’s guidelines for
qualified rehabilitation expenditures generally mirror the requirements for federal
historic tax credits; under Mississippi’s historic tax credit statute, properties that
qualify for the 20 percent federal preservation tax credit will also qualify for the state
tax credit. Mississippi’s historic tax credits may be carried forward for 10 years. Two
major differences exist between Mississippi’s HTCs and federal HRTCs: 1) Mississippi
does not require qualifying properties to be income-producing and allows the use of
historic tax credits on owner-occupied residential properties; and 2) when the amount
of the tax credit is greater than $250,000 and the amount of the tax credit exceeds the
total state income tax liability of the taxpayer, the taxpayer may elect to claim a refund
in the amount of seventy-five percent of the excess in lieu of the ten-year carryforward. These refunds are paid in equal installments over a two-year period and
there are specific regulations regarding the ownership structure of pass-through
entities (e.g. partnerships, limited liability corporations, multiple owner property). 33
In the state of Mississippi, the aggregate amount of state historic tax credits is limited
to $60 million. The state of Mississippi permits the transfer of state historic tax
33
On January 17, 2011, Representative Percy W. Watson introduced House Bill 1311 to allow the owners of historic property
income tax credits for rehabilitation expenses to claim a refund for seventy-five percent of the amount of the credit that exceeds a
taxpayer’s liability, rather than to carry the tax credit forward; this bill was passed unanimously by the Mississippi House of
Representatives and the Senate, and signed into law on March 30, 2011 by Mississippi Governor Haley Barbour. House Bill 1311
amended Mississippi Code § 27-7-22.31.
33
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
credits by disproportionate allocation; however, disproportionate allocation may not
be used in conjunction with the refund provision.
Mississippi’s allowance of a tax refund for historic tax credits achieves multiple
purposes:
 It maximizes the value of the historic tax credit and reduces the risk associated
with making rehabilitation investments in Mississippi’s historic structures. When
historic tax credits are not allowed to be used to receive a refund against state
income tax liability and the developer (owner) of a rehabilitated property is unable
to use the historic tax credit, a limited partnership may be created to allow thirdparty investors to use the tax credits. Under these circumstances, third-party
investors may significantly discount the monetary value of the tax credits, resulting
in a reduction in the amount of the equity investment made by the third-party
investor. For example, assume a developer or owner intends to make a
rehabilitation investment that will create a historic tax credit with a “face value” of
$500,000. A third-party investor may discount the value of the tax credit by 50
percent; hence, the developer or owner will receive an equity investment of only
$250,000 rather than the full value of $500,000 for the HTC. The difference
between the “face value” of the HTC and the discounted value of the HTC
($250,000) represents an increase in the amount of debt financing that is required,
and this changes the rate of return on the investment because the developer must
borrow more money to complete the project and increases the risk profile of the
investment.
 The refund of historic tax credits has the potential to reduce the state of
Mississippi’s liability exposure to revenue losses associated with the redemption of
historic tax credits. For example, assume a developer or owner intends to make a
34
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
rehabilitation investment that will create a historic tax credit with a “face value” of
$500,000. If the developer or owner selects to receive a refund of 75 percent of
the “face value” of the HTC, this will reduce the state treasury’s liability exposure
from $500,000 to $375,000 — a potential reduction, or “savings,” of $125,000 for
the state of Mississippi. Based on Mississippi’s current historic tax credit aggregate
limit of $60 million, the allowance of a refund might be equivalent to savings of up
to $15 million to the state treasury, assuming all holders of state historic tax credits
exercised the option of taking a refund rather than deducting the full “face value”
of the historic tax credit from their income tax liability.
 Mississippi’s allowance of a tax refund for historic tax credits may encourage
Mississippians who have an interest in the preservation of Mississippi’s historic
landmarks but who do not own historic structures to help fund preservation
projects that increase local property taxes, enhance commercial activity, and
contribute to community revitalization.
Projects that piggyback federal historic tax credits and state historic tax credits are
able to attract equity investment from outside of the state; this represents a new
source of capital investment coming into the state of Mississippi. With no per-project
cap, a relatively high aggregate program cap of $60 million, proportional allocation,
and refund provision, Mississippi’s state historic tax credit program is designed to
effectively utilize both federal and state historic tax credits.
According to the National Park Service, from 2001 to 2013, a total of $45,601,295 in
federal historic tax credits were awarded to 172 rehabilitation projects in the state of
Mississippi; the total development expenditures associated with these projects was
$274,706,595. This indicates that every one dollar of federal historic tax credits
leverages $6.00 of construction expenditures in the state of Mississippi.
35
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax Credits, 2007 to 2015
Year
Qualified Projects using Projects using Rehabilitation Only Mississippi State and Expenditures Part Historic Tax Federal Historic 3 Approval
Credits
Tax Credits
Percent of Projects using Federal and State Historic Tax Credits Combined
Total Projects
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
$1,698,016
$5,747,803
$7,711,314
$78,419,963
$46,591,248
$9,926,976
$36,758,981
$16,015,382
$36,707,007
$239,576,690
8
11
9
10
11
11
24
21
26
131
5
10
12
12
23
17
14
10
18
121
13
21
21
22
34
28
38
31
44
252
38.46%
47.62%
57.14%
54.55%
67.65%
60.71%
36.84%
32.26%
40.91%
48.02%
Annual Average
$26,619,632.25
15
13
28
48.02%
Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History
Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015
Year
Projects using Projects using Only Federal and State Mississippi Historic Historic Tax Credits Tax Credits
Combined
Total Qualified Rehabilitation Expenditures
2007
2008
2009
2010
2011
2012
2013
2014
2015
Total
$985,317
$1,491,045
$865,464
$518,242
$1,535,854
$632,050
$1,798,524
$1,223,445
$1,561,550
$10,611,490
$712,700
$4,256,757
$6,845,851
$77,901,721
$45,055,394
$9,294,926
$34,960,456
$14,791,937
$35,145,457
$228,965,200
$1,698,016
$5,747,803
$7,711,315
$78,419,963
$46,591,248
$9,926,976
$36,758,980
$16,015,382
$36,707,007
$239,576,690
Annual Average
$1,179,054
$25,440,578
$26,619,632
Source: Stennis Institute compilaton of data provided by the Mississippi Department of Archives and History
36
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Historic Tax Credit Usage in the State of Mississippi The Mississippi historic tax credit was enacted in fiscal year 2006; state fiscal year
2007 was the first year that properties became eligible to claim Mississippi’s historic
tax credit. From fiscal year 2007 through fiscal year 2015, Mississippi’s historic tax
credit has leveraged an aggregate estimated project dollar total investment34 of $279.1
million in 252 completed historic
rehabilitation projects in the state
of Mississippi (Table 3, page36).
By the end of fiscal year 2015, the total qualified
rehabilitated expenditures for projects that had
completed Part 3 certification totaled $239.6
Over the 9 years since the
million. Assuming all completed projects receive a
enactment of Mississippi’s
state historic tax credit, taxpayers are eligible for a
historic tax credit, the total
total of $59,894,173 in Mississippi state historic tax
qualified rehabilitation
credits — this indicates that Mississippi is close
expenditures (QREs) that
received Part 3 approval from the
to reaching its $60 million aggregate cap on tax
credits. At the time of this report, there were an
additional 45 projects that were completed or
Mississippi Department of
reaching completion with estimated qualified
Archives and History was $239.6
rehabilitation expenditures of $37.4 million —
million (Table 4, page 36). Of the
these projects will require an additional $9.4
252 total projects that used
million in state historic tax credits.
Mississippi historic tax credits
over the period from 2007 to 2015, 131 projects have used only state historic tax
credits and 121 projects (approximately 48 percent) have combined state historic tax
credits with federal historic tax credits (Table 3, page 36).
Author’s note: this estimated total investment includes the portion of total project costs that qualify for the state tax credit (qualified
rehabilitation expenditure) and “non-qualifying” expenses (i.e. outlays that are ineligible for the state historic tax credit), such as
landscaping, sidewalks, or parking lots. While “non-qualifying” expenses are ineligible for the state tax credit, these expenditures are
included in the economic impact analysis presented in this study.
34
37
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State Historic Tax
Credits — 2007 to 2015
Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for Mississippi State
Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015
38
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Of the 131 projects that have used only state historic tax credits, 122 projects (93
percent) were single-family, owner occupied residential structures that are not eligible
for federal historic tax credits; the qualified rehabilitation expenditures associated with
single-family, owner occupied residential structures was $10,156,002. Single-family,
owner occupied residential rehabilitation projects qualified for $2,539,000 in
Mississippi state historic tax credits over the period from 2007 to 2015; this indicates
that the average state historic tax credit received by single-family, owner-occupied
homes was $20,811 over the 9 year period.
The number of single-family,
owner-occupied residential
structures qualifying for
Mississippi state historic tax
credits has trended upward over
the period from 2007 to 2015,
increasing from eight projects in
2007 to 25 projects in 2015
(Figure 1, page 38). The
qualified rehabilitation expenditure
Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family,
Owner-Occupied Residential Structures — 2007 to 2015
(QRE) associated with singlefamily, owner-occupied residential homes ranged from a low of $5,272 to a high of
$1,100,000; approximately 42 percent of single-family, owner-occupied historic
rehabilitations had QREs of less than $25,000 and eight projects had QREs that
exceeded $250,000 (Figure 2, page 38). The total amount of Mississippi state historic
tax credits that have been approved for single-family, owner-occupied residential
projects has exhibited significant variation and a slight upward trend over the period
39
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Total Qualified Rehabilitation Expenditures for Single-Family, Owner-Occupied Buildings
2007 to 2015
Holly Springs
Senatobia
$206,832
Not in data
Friars Point
Oxford
Tupelo
$132,082
$44,067
$27,278
Aberdeen
$132,006
Cleveland
West Point
$253,613
$100,078
Greenwood
Carrollton
$591,591
Starkville
$380,000
$453,358
Canton
$1,211,989
®
Vicksburg
$8,392
Jackson
$2,173,838
$97,301
Raymond
Brandon
$484,854
Crystal Springs
$79,491
Church Hill
$173,396
Hazlehurst
$172,983
Natchez
$1,898,475
Woodville
$214,848
Tylertown
Hattiesburg
$378,487
$94,765
Total Qualified Rehabilitation
Expenditures 2007 - 2015
$10,156,002
Ocean Springs
(excludes $455,488 of QRE
$109,731
Biloxi
for additional projects using Bay St. Louis
only MS Tax Credits, but were
$95,910
$88,819Pass Christian
not used for owner-occupancy)
$551,817
Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving Mississippi State Historic Tax Credits —2007 to
2015
40
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
from 2007 to 2015 (Figure 3, page 39); state historic tax credits have ranged from a
low of $129,560 in fiscal year 2010 to a high of $429,871 in fiscal year 2013.
As shown in Map 1 on page 40, single-family, owner-occupied residential projects that
receive state historic tax credits are reasonably well-distributed throughout the state of
Mississippi, with investments tending to cluster around larger cities within the state.
Over the period from 2007 through 2015, Mississippi state historic tax credits issued
for single-family, owner-occupied residential structures represented approximately
95.7 percent of the total tax credits for projects that used only state historic tax credits.
Over this period, state historic tax credits authorized for single-family, owneroccupied residential structures represented approximately 4.24 percent of the total
$59.9 million in state historic tax credits that were issued for all historic rehabilitation
projects in the state of Mississippi (this includes projects that used state tax credits
only and projects that combined state tax credits with federal historic preservation tax
credits).
There were 9 historic rehabilitation projects that used only Mississippi state historic
tax credits that may have been eligible for federal historic tax credits (e.g. buildings
that were rehabilitated for commercial, multi-family apartments, or retail use), but did
not use federal tax credits for some reason. The qualified rehabilitation expenditures
associated with these 9 historic rehabilitations was $455,488 and these projects
received $113,873 in state historic tax credits.
Over the period from 2007 through 2015, an estimated $2,652,873 in state tax credits
were approved for 131 projects that used only state tax credits (Table 5, page 42).
41
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified Projects, 2007 to 2015
Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal Historic Tax Credits — 2007 to 2015
42
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Of the 252 projects that used Mississippi state historic tax credits over the period
from 2007 to 2015, 121 projects combined state tax credits with federal historic tax
credits. On average, across the 9 years since the state of Mississippi enacted a state
historic tax credit, 48 percent of all projects combined state and federal historic tax
credits to finance rehabilitation projects (Table 3, page36). The total qualified
rehabilitation expenditures associated with the 121 projects that combined state and
federal historic tax credits was $228,965,200 (Table 4, page 36); the state historic tax
credits associated with these projects was $57,241,300 and the federal historic tax
credit was $45,793,040 (Table 5, page 42).
In the state of Mississippi, rehabilitation projects that combined state and federal
historic tax credits were used for a range of purposes to include the renovation of
historic properties for adaptive reuse as apartments and residential rentals, commercial
offices, retail and businesses services, and for mixed-use that combined business use
with residential housing. Historic structures that were rehabilitated strictly for
business use with no residential component represented the most frequent use of
historic tax credits; over the period from 2007 to 2015, approximately 54 percent of
qualified rehabilitation expenditures in the state of Mississippi were devoted to
rehabilitating structures for business purposes (Table 6, below). The second most
common use of state and federal historic tax credits was for investments that
rehabilitated historic buildings to provide rental housing; these investments
Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of Investment — Fiscal Years 2007 to 2015
Project Type
Apartments and Residential Rental
Commericial, Retail, Business Services
Mixed‐Use with Business & Housing Components
Total
Number of Projects
QRE Part 3 Completion
Percent Percent of of QRE
Projects
Estimated Total Construction Costs
Amount of State Tax Credit
Federal Tax Credits Leveraged
$16,838,784 $98,506,885
$24,735,684 $144,703,749
45 $84,193,919
55 $123,678,418
37.2%
45.5%
36.8%
54.0%
$21,048,480
$30,919,605
21
$21,092,863
17.4%
9.2%
$5,273,216
121 $228,965,200
100.0%
100.0%
$57,241,300
$4,218,573
$24,678,650
$45,793,040 $267,889,284
Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History
43
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
represented 36.8 percent of all qualified rehabilitation expenditures that were made in
the state of Mississippi over the period from 2007 to 2015 (Table 6, page 43).
The annual allocation of
Mississippi state historic tax
credits varies significantly from
year to year; in 2010,
approximately 19.5 million in
state historic tax credits were
allocated (Figure 5, at right).
The dollar amount of state tax
credits is a direct function of
the qualified rehabilitation
Figure 5: Annual Mississippi State Historic Tax Credit Allocations for Projects that
Combined State and Federal Historic Credits — 2007 to 2015
expenditure per project and the
number of projects that are completed in a fiscal year. Over the 9-year life of
Mississippi’s state historic tax credit program, the average annual qualified
rehabilitation expenditures for all investments that used both state and federal historic
tax credits was $25.4 million (Table 4, page 36) and the average annual allocation of
state historic tax credits was $6,360,144 (Table 5, page 42). From 2007 to 2015, the
average qualified rehabilitation expenditure for projects that were developed solely for
business use (e.g. commercial buildings, offices, retail, or business services) was
$2,208,543 and the average qualified rehabilitation expenditure for projects that were
developed for mixed-use was $1,004,422. Qualified rehabilitation expenditures for
significant projects skew the annual averages for QREs and related state tax credits
upward; for example, one large project — the King Edward Hotel with a total QRE
of approximately $75.8 million and approximately $18.9 million of state historic tax
credits — accounted for approximately 97 percent of the state tax credits that were
44
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
allocated in 2010. Over the period from 2007 to 2015, there have been only 8 historic
rehabilitation projects with a qualified rehabilitation expenditure that exceeded $5
million. Although these large projects represent a significant investment of state
funds, they also have the greatest economic impact during construction and after the
buildings are placed in service.
Rehabilitation projects that do not use federal historic tax credits leverage $4.33 in
total construction investment for every $1.00 of state tax credit. For projects that
combine state and federal historic tax credits, every $1 of investment in state tax
credits made by the state of Mississippi leveraged $0.80 in federal historic tax credits
and $4.68 of total construction spending.
The Economic Impact of Mississippi’s Historic Rehabilitation Tax Credit Program State historic tax credits are designed to encourage rehabilitation investment activity
to create jobs and stimulate economic activity that generates revenues for state
coffers.
The U.S. Department of the Interior and the National Park Service’s
National Center for Preservation Technology contracted with the Edward J. Bloustein
Center for Urban Policy Research at Rutgers State University of New Jersey to
develop an econometric input-output model to analyze the economic effects of
historic preservation; this model is known as the Preservation Economic Impact
Model (PEIM). The PEIM model has been utilized by the U.S. Department of
Interior, the National Park Service, the Internal Revenue Service, the National Trust
for Historic Preservation, and by numerous state historic preservation offices over the
last 10 years to quantify the economic impact of federal and state historic tax credits.
The PEIM model was used by the Stennis Institute to examine the economic impact
of state historic tax credits in the state of Mississippi over the period from Fiscal Year
2007 through Fiscal Year 2015 using data provided to the Institute by the Mississippi
45
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 7: The Economic and Fiscal Effects of Historic Rehabilitation Investments Using Only Mississippi State Historic Tax Credits, 2007 to 2015
The Economic and Fiscal Effects of Investments using Only Mississippi State Historic Preservation Credits Fiscal Year 2007 through Fiscal Year 2015
I. TOTAL EFFECTS (Direct and Indirect/Induced)*
Output Employment (FTE) Income
Gross State Product
Private
1. Agriculture
$15,300
0
$1,500
$4,800
2. Agricultural Services, Forestry, & Fishing
$146,300
5
$66,800
$64,000
3. Mining
$148,400
1
$45,100
$45,000
4. Construction
$4,865,300
101 $2,815,400
$3,724,700
5. Manufacturing
$3,065,700
24
$739,000
$1,184,700
6. Transportation & Public Utilities
$742,400
6
$192,700
$494,900
7. Wholesale
$617,200
7
$251,000
$333,100
8. Retail Trade
$949,800
26
$350,600
$619,900
9. Finance, Insurance, & Real Estate
$713,600
8
$236,800
$492,500
10. Services
$2,264,600
36 $1,069,800
$823,900
Private Subtotal
$13,528,500
214 $5,768,700
$7,787,400
Public
11. Government
$61,800
1
$18,600
$28,800
Total Effects (Private and Public)
$13,590,200
215 $5,787,300
$7,816,200
II. DISTRIBUTION OF EFFECTS/MULTIPLIER
1. Direct Effects
$9,111,600
149 $4,329,400
$5,400,600
2. Indirect and Induced Effects
$4,478,700
66 $1,457,900
$2,415,600
3. Total Effects
$13,590,200
215 $5,787,300
$7,816,200
4. Multipliers (3/1)
1.49
1.45
1.34
1.45
III. COMPOSITION OF GROSS STATE PRODUCT
1. Wages‐‐Net of Taxes
$4,966,200
2. Taxes
$1,260,200
a. Local
$229,700
b. State
$226,800
c. Federal
$803,700
General
$183,200
Social Security
$620,500
3. Profits, dividends, rents, and other
$1,589,800
$7,816,200
4. Total Gross State Product (1+2+3)
IV. TAX ACCOUNTS
Business
Household
Total
1. Income ‐‐Net of Taxes
$4,966,200
$5,787,300
$10,753,500
2. Taxes
$1,260,200
$1,092,700
$2,352,900
a. Local
$229,700
$97,300
$327,000
b. State
$226,800
$103,400
$330,200
c. Federal
$803,700
$892,000
$1,695,700
General
$183,200
$892,000
$1,075,200
Social Security
$620,500
$0
$620,500
INITIAL EXPENDITURE IN DOLLARS
$11,196,724
Note: Detail may not sum to totals due to rounding.
*Terms:
Direct Effects --the proportion of direct spending on goods and services produced in the specified region.
Indirect Effects--the value of goods and services needed to support the provision of those direct economic effects.
Induced Effects--the value of goods and sevices needed by households that provide the direct and indirect labor.
Source: Stennis Institute compilation of data using Rutgers University, PEIM (Preservation Economic Impact Model)
46
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Department of Archives and History. Projects that received Mississippi state historic
tax credits but not federal historic tax credits were disaggregated and examined
separately from projects that combined Mississippi state historic tax credits with
federal historic tax credits. The findings of these analyses are as follows:
Economic Impact of Projects using only Mississippi state historic tax credits From fiscal year 2007 through fiscal year 2015, the qualified rehabilitation
expenditures for projects in the state of Mississippi that used only state historic tax
credits was $10,611,490; approximately 93 percent of these projects were singlefamily, owner-occupied homes. The qualified rehabilitation expenditures do not
represent the total cost of rehabilitating historic structures; additional costs that do
not qualify as a qualified rehabilitation expenditure may include: some acquisition
costs and realtor’s fees, site work or landscaping costs, the cost of enlargements, sales
or marketing costs, and other soft costs. To develop a conservative estimate of the
total construction expenditures associated with projects that used state tax credits
only, the Stennis Institute assumed that qualified rehabilitation expenditures
represented 95 percent of the total actual expenditures construction expenditures for
these projects; therefore, the total construction investment associated with
$10,611,490 of QREs was assumed to be $11,196,724 over the period from 2007 to
2015. The state of Mississippi’s investment in historic tax credits for the 131 projects
that used only state tax credits was $2,652,873 (assuming a 25 percent state historic
tax credit). Historic rehabilitation spending that was incentivized by Mississippi’s state
historic tax credits (fiscal years 2007 through 2015) on projects that used only the
state historic tax credit created 215 full-time equivalent jobs within the state of
Mississippi generating $13.6 million of output of which $5,787,300 is labor income
(Table 7, page 46). These projects contributed $7.82 million to Gross State Product
47
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 8: The Economic and Fiscal Effects of Rehabilitation Projects that used State and Federal Historic Tax Credits, Mississippi Fiscal Years 2007
through 2015
The Economic and Fiscal Effects of Investments using Mississippi State and Federal Historic Preservation Credits Fiscal Year 2007 through Fiscal Year 2015
I. TOTAL EFFECTS (Direct and Indirect/Induced)*
Output
Employment (FTE)
Income
Gross State Product
Private
1. Agriculture
$308,800
2
$25,500
$84,900
2. Agricultural Services, Forestry, & Fishing
$1,752,300
54
$795,600
$765,700
3. Mining
$2,920,600
29
$855,100
$874,500
4. Construction
$119,986,200
2,706
$72,246,600
$94,431,200
5. Manufacturing
$78,900,800
582
$18,990,800
$30,926,600
6. Transportation & Public Utilities
$13,778,900
99
$3,369,000
$8,532,100
7. Wholesale
$13,266,800
147
$5,395,000
$7,159,100
8. Retail Trade
$23,243,700
639
$8,576,200
$15,159,000
9. Finance, Insurance, & Real Estate
$17,657,000
191
$5,859,500
$12,174,500
10. Services
$55,529,200
892
$26,116,300
$20,288,400
Private Subtotal
$327,344,300
5,342
$142,229,700
$190,396,100
Public
11. Government
$1,532,100
16
$461,700
$713,100
Total Effects (Private and Public)
$328,876,400
5,358
$142,691,500
$191,109,200
II. DISTRIBUTION OF EFFECTS/MULTIPLIER
1. Direct Effects
$218,506,100
3,727
$106,703,300
$131,630,500
2. Indirect and Induced Effects
$110,370,300
1,631
$35,988,200
$59,478,700
3. Total Effects
$328,876,400
5,358
$142,691,500
$191,109,200
4. Multipliers (3/1)
1.51
1.44
1.34
1.45
III. COMPOSITION OF GROSS STATE PRODUCT
1. Wages‐‐Net of Taxes
$119,391,900
2. Taxes
$30,458,100
a. Local
$5,390,700
b. State
$5,403,000
c. Federal
$19,664,400
General
$4,365,600
Social Security
$15,298,800
3. Profits, dividends, rents, and other
$41,259,300
4. Total Gross State Product (1+2+3)
$191,109,200
IV. TAX ACCOUNTS
Business
Household
Total
1. Income ‐‐Net of Taxes
$119,391,900
$142,691,500
$262,083,400
2. Taxes
$30,458,100
$26,941,600
$57,399,700
a. Local
$5,390,700
$2,399,000
$7,789,700
b. State
$5,403,000
$2,549,700
$7,952,700
c. Federal
$19,664,400
$21,992,900
$41,657,300
General
$4,365,600
$21,992,900
$26,358,500
Social Security
$15,298,800
$0
$15,298,800
INITIAL EXPENDITURE IN DOLLARS
$267,889,284
Note: Detail may not sum to totals due to rounding.
*Terms:
Direct Effects --the proportion of direct spending on goods and services produced in the specified region.
Indirect Effects--the value of goods and services needed to support the provision of those direct economic effects.
Induced Effects--the value of goods and sevices needed by households that provide the direct and indirect labor.
Source: Stennis Institute compilation of data using Rutgers University, PEIM (Preservation Economic Impact Model)
48
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
and contributed and generated $7,012,500 of in-state wealth (GSP minus federal
taxes). Historic rehabilitation projects that used only state historic tax credits
generated $657,200 in state and local tax revenues during the construction phase of
project activities; this indicates that 24.8 percent of the state’s investment in historic
tax credits is returned in the form of tax revenues. The fiscal benefits accruing to the
state (e.g. income tax and the state’s share of sales tax35) were estimated to be
$330,200 and fiscal benefits accruing to local governments (e.g. property taxes and
municipal shares of sales tax) were estimated to be $327,000 (Table 7, page 46); this
indicates that 12.5 percent of the state’s investment in historic tax credits is returned
to the state treasury prior to the time when buildings are placed in service and
taxpayers are eligible to claim the state historic tax credit.
The Economic Impact of Historic Rehabilitation Projects that Combined Mississippi State Historic Tax Credits with Federal Historic Tax Credits Over the period from 2007 through 2015, there were 121 projects in the state of
Mississippi that were completed and eligible to receive Mississippi state historic tax
credits and which also used federal historic tax credits; the qualified rehabilitation
expenditures associated with these projects was $228,965,200 and the value of
associated state historic tax credits was $57,241,300. The Stennis Institute’s
econometric input-output model assumes that qualified rehabilitation expenditures
represent 83 percent of the total cost of actual project related expenditures during the
construction phase; additional costs that may not be included in qualified
rehabilitation expenditures may include acquisition interest and fees, realtor’s fees, site
work or landscaping costs, the cost of enlargements, and sales or marketing costs. The
econometric input-output analysis that follows is based upon the assumption that
35 Author’s note: To model the economic impact of construction investments, the Stennis Institute assumed all projects are located
within municipal boundaries and all sales taxes are generated within municipal boundaries, with cities receiving 18.5 percent of sales
tax revenue.
49
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
total actual construction expenditures were $267,889,284. The econometric model is
constrained to capture only the economic and fiscal effects within the state of
Mississippi, it does not capture additional economic activity and spending outside of
the state.
From Fiscal Years 2007 through 2015, the state of Mississippi authorized $57,241,300
for 121 rehabilitation projects that also used federal historic rehabilitation tax credits;
these state tax credits leveraged an additional $45,793,040 in federal historic tax
credits and $164,854,944 of private investment in historic rehabilitation projects over
the 9-year period. Historic rehabilitation spending that was incentivized by
Mississippi’s state historic tax credits (fiscal years 2007 through 2015) for projects that
combined the use of state and federal tax credits created 5,358 full-time equivalent
jobs and generated $327,344,300 of economic output and $142,691,500 of labor
income within the state of Mississippi during the construction phase of project
activities (Table 8, page 48). These projects contributed approximately $191.1 million
to Gross State Product and increased the state’s total wealth (GSP minus federal
taxes) by approximately $171.4 million. Rehabilitation expenditures that were
incentivized by Mississippi’s state historic tax credit generated $15,742,400 in state
and local tax revenues during the construction phase; this indicates that approximately
27.5 percent of the state’s investment in historic tax credits is returned during the
construction phase of historic rehabilitation projects. Fiscal benefits accruing directly
to the state (e.g. income tax and the state’s share of sales tax36) were estimated to be
$7,789,700 and fiscal benefits accruing to local governments (e.g. property taxes and
municipal shares of sales tax) were estimated to be $7,952,700 (Table 8, page 48); this
Author’s note: To model the economic impact of construction investments, the Stennis Institute assumed all projects
are located within municipal boundaries and all sales taxes are generated within municipal boundaries, with cities
receiving 18.5 percent of sales tax revenue.
36
50
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
indicates that approximately 13.6 percent of the state’s investment in historic tax
credits is returned to the state treasury prior to taxpayers claiming the historic tax
credits associated with their investments in historic rehabilitation projects.
Mississippi’s Return on Investment in State Historic Tax Credits From Fiscal Year 2007 through Fiscal Year 2015, there have been 252 completed
projects in the state of Mississippi that were qualified to receive state historic tax
credits; the total qualified rehabilitation expenditures associated with these 252
projects was $239,576,690 — historic rehabilitation tax credits authorized by the state
of Mississippi have totaled $59,894,173 over the 9 years since the Mississippi
Legislature approved the issuance of historic tax credits. Mississippi’s investment of
$59.9 million in state historic tax credits has incentivized an additional $45,793,040 in
federal historic tax credits and $173.4 million in direct private investment to
rehabilitate historic buildings in the state — every one dollar ($1.00) of investment
that the state of Mississippi has made in historic tax credits has leveraged $4.66 of
rehabilitation construction investment in the state.
Since the Mississippi Legislature authorized the state historic tax credit in 2006,
spending during the construction phase of projects that were incentivized by the tax
credits has generated $342,466,600 in economic output (Table 9, page 52) — this
indicates an output leveraging equivalence of $5.71 in economic output for every
dollar ($1.00) of state tax credit authorized for projects that have been completed.
Over the 9 years since the Mississippi Legislature authorized state historic tax credits,
5,573 full-time equivalent jobs have been created in the state of Mississippi, and the
labor income associated with these jobs is $148,478,800 (Table 9, page 52) — every
one dollar ($1.00) of investment in state historic tax credits has leveraged $2.48 of
labor income in the state of Mississippi.
51
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 9: The Combined Economic and Fiscal Impact of Mississippi's State Historic Tax Credit — Fiscal Year 2007 to Fiscal Year 2015
The Combined Impact of Mississippi State Historic Tax Credit Projects — Fiscal Years 2007 to 2015
I. TOTAL EFFECTS (Direct and Indirect/Induced)*
Output
Employment (FTE)
Income
Gross State Product
Private
1. Agriculture
$324,100
2
$27,000
$89,700
2. Agricultural Services, Forestry, & Fishing
$1,898,600
59
$862,400
$829,700
3. Mining
$3,069,000
30
$900,200
$919,500
4. Construction
$124,851,500
2,807
$75,062,000
$98,155,900
5. Manufacturing
$81,966,500
606
$19,729,800
$32,111,300
6. Transportation & Public Utilities
$14,521,300
105
$3,561,700
$9,027,000
7. Wholesale
$13,884,000
154
$5,646,000
$7,492,200
8. Retail Trade
$24,193,500
665
$8,926,800
$15,778,900
9. Finance, Insurance, & Real Estate
$18,370,600
199
$6,096,300
$12,667,000
10. Services
$57,793,800
928
$27,186,100
$21,112,300
Private Subtotal
$340,872,800
5,556
$147,998,400
$198,183,500
Public
11. Government
$1,593,900
17
$480,300
$741,900
Total Effects (Private and Public)
$342,466,600
5,573
$148,478,800
$198,925,400
II. DISTRIBUTION OF EFFECTS/MULTIPLIER
1. Direct Effects
$227,617,700
3,876
$111,032,700
$137,031,100
2. Indirect and Induced Effects
$114,849,000
1,697
$37,446,100
$61,894,300
3. Total Effects
$342,466,600
5,573
$148,478,800
$198,925,400
4. Multipliers (3/1)
1.50
1.44
1.34
1.45
III. COMPOSITION OF GROSS STATE PRODUCT
1. Wages‐‐Net of Taxes
$124,358,100
2. Taxes
$31,718,300
a. Local
$5,620,400
b. State
$5,629,800
c. Federal
$20,468,100
General
$4,548,800
Social Security
$15,919,300
3. Profits, dividends, rents, and other
$42,849,100
$198,925,400
4. Total Gross State Product (1+2+3)
IV. TAX ACCOUNTS
Business
1. Income ‐‐Net of Taxes
2. Taxes
a. Local
b. State
c. Federal
General
Social Security
INITIAL EXPENDITURE IN DOLLARS
$124,358,100
$31,718,300
$5,620,400
$5,629,800
$20,468,100
$4,548,800
$15,919,300
Household
Total
$148,478,800
$28,034,300
$2,496,300
$2,653,100
$22,884,900
$22,884,900
$0
$272,836,900
$59,752,600
$8,116,700
$8,282,900
$43,353,000
$27,433,700
$15,919,300
$279,086,008
Note: Detail may not sum to totals due to rounding.
*Terms:
Direct Effects --the proportion of direct spending on goods and services produced in the specified region.
Indirect Effects--the value of goods and services needed to support the provision of those direct economic effects.
Induced Effects--the value of goods and sevices needed by households that provide the direct and indirect labor.
Source: Stennis Institute compilation of data using Rutgers University, PEIM (Preservation Economic Impact Model)
Note: This table represents the sum of Table 7 on page 46 and Table 8 on page 48.
52
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
During the construction phase of rehabilitation projects that have used Mississippi
state historic tax credits (including projects that have also used federal historic tax
credits), $16,399,600 of state and local tax revenues have been generated within the
state of Mississippi — this indicates that the state has recouped approximately 27.4
percent of its investment of $59,894,173 in historic tax credits in the form of direct
tax revenues (Table 9, page 52). Of the $16.4 million in state local tax revenues,
approximately $8,282,900 in tax revenue accrues directly to the benefit of the state
treasury (e.g. in the form of income or sales tax) during the construction phase of
historic rehabilitation projects — this indicates that the state of Mississippi recoups
13.8 percent of its investment in historic tax credits prior to the time when historic
rehabilitation projects are placed in service and taxpayers become eligible to claim the
state historic tax credit.
From 2007 through 2015, rehabilitation investments that have been incentivized by
Mississippi’s state historic tax credit have contributed $198.9 million to Gross State
Product — a leveraging factor of $3.31 for every one dollar ($1.00) the state of
Mississippi has invested in historic tax credits. These investments have contributed
$178,457,300 to the state’s total wealth (in-state wealth encompasses Gross State
Product minus federal taxes) — for every one dollar ($1.00) the state of Mississippi
has invested in state historic tax credits, in-state wealth has been augmented by $2.98
over the period from 2007 through 2015.
The economic and fiscal impacts discussed in the previous paragraphs do not include
the economic activity that occurs after historic buildings have been rehabilitated and
placed in service for a range of uses that create new employment, labor income, tax
revenues for local and state governments, and a range of benefits that are associated
with the rehabilitation of vacant, abandoned, or deteriorating historic buildings.
53
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Total Qualified Rehabilitation Expenditures
for Projects using Federal and State Historic Tax Credits 2007 to 2015
Corinth
$41,564
Holly Springs
$681,000
Baldwyn
$340,000
Oxford
$2,004,018
Clarksdale
Tupelo
$2,700,000
$487,549
Water Valley
$200,000
Aberdeen
Cleveland
$235,000
$39,524
West Point
Greenwood
$512,649
$3,077,061
Carrollton
Starkville
$686,107
Lexington
$48,409
$158,000
Columbus
$1,530,515
Louisville
Kosciusko
$467,929
$287,922
Canton
$401,863
®
Meridian
Vicksburg
Jackson
$30,495,231
$118,918,033
$178,489
Stonewall
$95,144
Port Gibson
$448,699
Church Hill
$854,882
$4,668,586
Laurel
$4,081,349
Natchez
Brookhaven
$3,405,858
Columbia
McComb
Woodville
$1,242,430
$459,254
Hattiesburg
$14,289,959
$1,621,394
Total Qualified Rehabilitation
Expenditures 2007 to 2015
Gulfport
$228,965,200
$9,335,403
Bay St. Louis
$2,013,611
Biloxi
Pass Christian
Pascagoula
$18,660,423
$2,225,128
$1,530,000
Map 2: Geographic Distribution of Historic Rehabilitation Projects Using State and Federal Tax Credits —2007 to 2015
54
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Additional Benefits of Historic Preservation Tax Credits
There is array of benefits associated with the use of historic preservation tax credits to
incentivize investments that rehabilitate blighted buildings; these benefits extend
beyond the quantitative economic and fiscal effects that occur during the construction
phase of historic rehabilitation, as discussed in the previous section of this report.
Additional benefits that transpire as a result of the rehabilitation of deteriorating or
vacant historic buildings include: downtown revitalization, the reduction of
investment risk in blighted areas that encourages additional investments, the
promotion of heritage tourism, new business creation, and increased property values.
 Downtown Revitalization. Market forces and economic trends have resulted in
the loss of industrial and commercial activity in downtown areas, leaving many
downtown buildings underused or vacant; these same forces have resulted in the
out-migration of downtown populations. The widespread decline of downtown
areas led to the creation of The Main Street Program. The Main Street Four Point
Approach© is arguably the most widespread and effective tool for downtown
revitalization; the Main Street Four Point Approach© was inaugurated in 1977
when the National Trust for Historic Preservation started a three-year
demonstration project designed to save threatened commercial buildings in
downtown areas. The success of this demonstration program led to its adoption
as a model for economic development during the Carter Administration with
funding provided by multiple federal agencies, including the Department of
Commerce, the Small Business Administration, the National Endowment of the
Arts, and the U.S. Department of Housing and Urban Development; 37, 38, 39 over
Skelcher, B. (1992). What are the Lessons Learned from the Main Street Pilot Project, 1977 – 1980? Small Town. 23(4): 15 – 19.
Keister, K. (1990). Main Street Makes Good. Historic Preservation. 41(5): 38 – 45.
39 Kelly, S. (1996). The Main Street Program in Mississippi. Economic Development Review. 14(2): 56 – 59.
37
38
55
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
the last 35 years, the Main Street Program has become a nationwide program with
Coordinating, Accredited, and Designated Main Street Programs at the national,
regional, state, county, and municipal level. Three elements of the Main Street Four
Point Approach© to economic development and community revitalization include:
creating a positive image that will renew community pride including promoting
cultural traditions, architecture, and history (Promotion); preserving the historic
character of the physical and visual elements of the commercial environment
(Design); and strengthening the existing economic assets of a community while
diversifying its economic base by attracting new businesses with an emphasis on
the creative reuse of historic properties (Economic Restructuring). Historic
rehabilitation tax credits are a significant and critical tool for promoting the
adaptive use of vacant, underused, and deteriorating buildings that can promote
revitalization and bring new life to downtown areas. Historic rehabilitation
investment presents opportunities to convert vacant and underutilized properties
to productive use and are closely aligned with the Main Street Approach© to
revitalization.
 Heritage Tourism. Heritage development is a local economic development
strategy that engages residents, businesses, and local and state leaders in the
preservation and promotion of an area’s heritage, culture, and natural resources.
Historic preservation has been found to promote the creation of small businesses.
40, 41, 42
Heritage tourism attracts visitors and tourists to heritage sites, facilities, and
other attractions. Heritage tourists have a significant impact on local economies
because they spend money at hotels, restaurants, gift shops, and gas stations, and
Brown, N. (2014). Small-Town Renaissance. Preservation. 66(2): 24 – 31.
Karaim, R. (1991). Thinking Small. Preservation. 49: 68 – 73.
42 Moor, B., Tyler, P., and Elliot, D. (1991). The Influence of Regional Development Incentives and Infrastructure on the Location
of Small and Medium Sized Companies. Urban Studies. 28(6): 1001 – 1026.
40
41
56
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
on recreational activities; 43 they have been found to stay longer and to spend more
money per trip when compared to other tourists. A 2015 report44 by the
Mississippi Development Authority’s (MDA) Tourism Division found that travel
and tourism was the fourth largest private sector employer in the state of
Mississippi in Fiscal Year 2014. Mississippi tourism generated $2.77 billion in
direct, indirect, and induced payroll income and supported 114,167 jobs (direct,
indirect, and induced). MDA’s report found that Mississippi’s tourism industry
generated $438 million in state and local tax revenues and that capital investment
in tourism infrastructure was $305 million in Fiscal Year 2014. Malcolm White,
the Tourism Division Director for MDA, has stated that cultural heritage (musical
legacy, culinary heritage, literary and artistic traditions) is a key driver of
Mississippi’s creative economy that makes Mississippi’s tourism industry one of its
greatest assets.45 Mississippi’s creative economy has been identified as an
important milepost for economic development and workforce development in
Blueprint Mississippi: Pathway to Progress, a publication from the Mississippi Economic
Council. There is a direct linkage between heritage tourism, Mississippi’s
economic development strategies targeted toward the augmentation of its creative
economy, and the preservation and rehabilitation of historic structures in the state
of Mississippi. A key requirement of heritage tourism is the physical development
of a tourism infrastructure to include the expansion of retailing, entertainment
venues, accommodations, and other services. Investment in the physical
infrastructure creates employment and increases the capacity of local and regional
43 Federal Tax Incentives for Rehabilitating Historic Buildings: 35th Anniversary Report, National Park Service, U.S. Department of
the Interior Technical Preservation Services, Washington, DC. March 2013.
http://www.novoco.com/historic/resource_files/research/htc_statistical_report_and_analysis_2012.pdf. Accessed 8-19-2015.
44 Van Hyning, T. (2015). Visit Mississippi, Travel and Tourism Economic Contribution Report 2014, Mississippi Development
Authority, Tourism Division. http://www.visitmississippi.org/app/webroot/files/ECR%202014.pdf. Retrieved 8-1-2015.
45 Officials Report on Economic Impact of Tourism. Mississippi Business Journal, March 6, 2014.
http://msbusiness.com/2014/03/officials-report-economic-impact-tourism/. Retrieved 8-25-2015.
57
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
economies to attract investment. Vibrant and restored historic sites throughout
the state are an essential component for a healthy heritage tourism industry. For a
heritage tourism area to develop, sources of capital investment are required to
maintain and restore historic structures. Historic preservation tax credits can play
a critical role in attracting the capital investment that is required to fund and
preserve the historic physical infrastructure of communities.
 Property Values. A number of studies have concluded that investments in the
preservation of historic structures have a positive impact on property values, 46, 47
including strong positive “neighborhood” price effects for both new and historic
properties. 48, 49, 50, 51 Studies have found that the rehabilitation of “vacant,
deteriorating white elephant buildings” 52 reduces the risk of private investment
throughout communities by demonstrating the capacity of older buildings to
“undergo rebirth through adaptive use, open the eyes of other property owners to the possibilities
for their own buildings as well.” 53 Historic rehabilitation investments that are
incentivized by tax credits act as a catalyst for additional investments.
Historic preservation tax credits incentivize rehabilitation investments in historic
buildings by improving the economic and financial feasibility of preserving historic
structures and the adaptive reuse of historic buildings for a range of purposes that
include: the creation of mixed-use retail with a blend of affordable and luxury
Leichenko, R. Coulson, E., and Listokin, D. (2001). Historic Preservation and Residential Property Values: an Analysis of Texas
Cities. Urban Studies. 38 (11): 1973 – 1987.
47 Zahirovic-Herbert, V. and Chatterjee, S. (2012). Historic Preservation and Residential Property Values: Evidence from Quantile
Regression. Urban Studies. 49(2): 369 – 382.
48 Coulson, N. S., and Leichenko, R. (2004). Historic Preservation and Neighborhood Change. Urban Studies. 41 (8): 1587 – 1600.
49 Schaeffer, P. V., and Millerick, C. A. (1991). The Impact of Historic District Designation on Property Values: an Empirical Study.
Economic Development Quarterly. 5:301 – 331.
50 Coulson, N. E., and Lahr, M. L. (2005). Gracing the Land of Elvis and Beale Street: Historic Designation of Property Values in
Memphis. Real Estate Economics. 33(3): 487 – 507.
51 Clark, D. E. and Herrin, W. E. (1997). Historical Preservation and Home Sale Prices: Evidence from the Sacramento Housing
Market. Rev Reg Stud 27: 29 – 48.
52 Rypkema, D. and Cheong, C. (2011). Measuring Economic Impacts of Historic Preservation: A Report to the Advisory Council on
Historic Preservation, PlaceEconomics and the University of Pennsylvania.
46
53
Ibid.
58
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
housing; the use of historic homes for owner occupancy, residential rental, and for
lodging (e.g. bed and breakfast facilities); and the use of historic structures for
commercial purposes that may include offices, hotels, conference centers, retail stores,
or restaurants. Investments in the rehabilitation of historic buildings that are
incentivized by state historic tax credits make a significant contribution to the
economic vitality of communities by promoting neighborhood stabilization, creating
educational opportunities, attracting heritage tourism, and encouraging downtown
commercial revitalization while preserving Mississippi’s legacy for future generations.
The Public Policy Issues
Many historic buildings are located in downtown areas where disinvestment occurred
many years ago as new construction and business investment out-migrated to office
parks and large shopping centers where branded ubiquitous retail franchises
aggregated in close proximity to concentrations of higher income suburban consumer
markets. Property owners, investors, and developers all seek an economic return on
the investment of their own money or borrowed capital. The unique characteristics
and location of historic properties do not provide the marketability, higher return on
capital, and predictable costs that are provided by new construction and locations
where market demand is more reliable. Historic rehabilitation projects face significant
challenges in overcoming the need for investors to receive an economic return on
their investment. Historic buildings are difficult and costly to rehabilitate, the
configuration of historic structures may be costly to modify for adaptive reuse, and
unanticipated costs may drive up the final cost of rehabilitation. Most historic
buildings are located in downtown areas with inadequate parking and are frequently
located in dying downtown areas. States provide historic preservation tax credits for
the purpose of overcoming these investment obstacles and to promote private sector
investment in rehabilitation. Because many historic buildings are located in areas
59
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
where disinvestment is widespread and are generally in lower-income areas, historic
tax credit programs provide public value to poor communities with little access to
traditional financing, such as downtown areas or rural communities. Historic tax
credits attract new private capital investment in the rehabilitation of historic buildings,
bringing needed economic stimulus into declining neighborhoods.
The public policy benefits of historic preservation include the economic benefits of
job creation and revenue growth that occurs during the construction phase of
rehabilitation and the economic benefits that take place after the historic buildings are
placed in service. Economic theory provides a strong justification for government
support and incentives for business investment. Without such government support,
businesses are likely to underinvest because the outcomes of specific investments
cannot be fully appropriated by investors and it is difficult for private investors to
justify such investments. Business investment has become increasingly globalized and
investment decisions are driven by multiple factors, including market growth, lower
costs, and the tax and other incentives offered by cities, counties, states, and
governmental entities. In response to increased competition to attract investments,
government incentives and subsidies to encourage investment have grown
exponentially. Government incentives to attract business investment may take a
variety of forms. It is common for governmental entities to use the tax code to
provide incentives, subsidies, exemptions, abatements, and other forms of preferential
tax treatment to attract business investments. Many of these preferential tax
treatments are industry specific or narrowly defined and may be undiscerning with
regard to the geographic distribution of value added (e.g. sales factor apportionments
that benefit firms that sell goods out of state) and the cost/benefit of these incentives.
Governmental entities may also provide preferential access to low-cost capital or land,
loans or grants, industrial development bonds, and specific incentives for “targeted”
60
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
industries that have been selected by some governmental entity. In a world of capital
mobility, the growing generosity of tax incentives throughout the United States and
the world reflects the intense competition for business investment and economic
growth.
State policies regarding tax incentives have significant liability implications for state
treasuries because they represent foregone tax revenues. To evaluate policies and the
merit of tax incentives it is useful to examine these incentives within the framework of
the purpose of taxation — which is to raise revenue to fund government functions
and to enhance social welfare. The tax base is state gross product, or value-added by
all types of economic activities including expenditures associated with investment,
labor income, and investment returns. The provision of tax incentives for selected
economic activities is a purposeful reduction of the tax base over a limited timeframe
with the anticipation of future growth in gross state product that ultimately leads to
the expansion of the tax base. From this perspective, a tax incentive program is
worthwhile only if it results in future economic growth and a related increase in the
overall tax base. During a time when many state budgets are struggling to recover
from the Great Recession and continued slow economic recovery has strained state
coffers, policy makers are increasingly examining the cost-effectiveness of state
investments in tax incentive programs. From 2012 to 2014, 10 states and the District
of Columbia passed laws requiring the regular evaluation of tax incentives; states that
have policies in place to evaluate the effectiveness of their tax incentive programs use
economic impact analyses combined with qualitative evaluations to determine
whether tax incentive programs are meeting their goals cost-effectively. It is also
useful to evaluate tax incentives within a framework of the opportunity cost of tax
incentives. A thorough assessment of the cost-benefit of any tax incentive might
include exploring alternative measures, such as across-the-board reductions in
61
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
taxation, low-cost loans, or direct spending to improve infrastructure that may be
more cost-effective for achieving the same goals as tax incentives. Of particular
concern for decision-makers is the mobility or permanency of the investment that is
receiving a tax incentive; in some cases, the economic benefits of business
investments may be transitory in nature. A firm may locate in a state for a temporary
period and then move out of the state when tax incentives are exhausted or other
market forces lead to workforce downsizing or exodus from the state. All states have
experienced the euphoria of successfully recruiting large industries, only to have these
industries shutdown or substantially reduce their workforce within a few years due to
macro-economic events or global competitive pressures. Investments in the
rehabilitation of historic buildings exhibit less mobility when compared to alternative
investments that receive tax incentives because they are place-based; historic
renovation increases the value of the structure upon completion of construction and
makes an ongoing contribution to the historic aesthetic of the community regardless
of its use upon being placed in service.
From a policy perspective, tax incentives can be justified if they address some form of
market failure, motivate investments that would not be possible in the absence of the
incentive, and produce positive externalities beyond the specific beneficiary of the tax
incentive by generating social returns well in excess of private returns. Positive
externalities include infrastructure projects that encourage business growth and
anchor investments that provide multiplier effects through signaling and by creating
backward linkages into the local economy — rehabilitation investments in historic
buildings that will be adapted for commercial business purposes when the structures
are placed in service meet these requirements prima facie.
The efficacy of tax incentives may also be measured in terms of their wage effect and
their investment leveraging capacity. There have been multiple studies of the efficacy
62
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
of federal and state historic tax credits. The Stennis Institute’s review of a large body
of research on the economic impact of federal and state historic tax credits found that
the credit is effective in the sense that each dollar of foregone tax revenue causes an
investment of at least one additional dollar in historic renovation. Put another way,
the historic tax credit stimulates at least as much investment in historic rehabilitation
as the state’s investment in the historic tax credit. The Stennis Institute’s examination
of the Mississippi’s historic tax credits found that the state’s investment of
$59,894,173 in credits incentivized a total investment of $299,086,077 in historic
rehabilitations; every dollar of state investment in historic tax credits leveraged an
additional $2.90 of private investment in rehabilitation, $2.48 in labor income,
contributed $3.31 to gross state product, and enhanced in-state wealth by $2.98 over
the period from 2007 through 2015. In addition to private investments in the
rehabilitation of historic buildings, an additional $45,793,039 in federal historic tax
credits where attracted into the state; this indicates that every one dollar of state
investment in historic tax credits leveraged an addition $0.80 cents of investment
related to federal historic tax credits. These metrics demonstrate the economic
efficacy of Mississippi’s state historic tax credit; it is not possible to determine the
level of federal tax credit investment that would have occurred absent the state
historic tax credit and an examination of the opportunity cost of Mississippi’s
investment in state historic tax credits is beyond the scope of this study. Although it
is not possible to determine, with any high degree of accuracy, the magnitude of
investment in historic rehabilitation that would have occurred in the state of
Mississippi absent the state’s historic tax credits, a comparison of trends in annual
U.S. private construction spending and historic rehabilitation spending in the state of
Mississippi over the period from 2007 through 2014,54 when construction spending in
54
Author’s note: Annual U.S. private construction spending has not been reported for 2015 at the writing of this report.
63
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
the U.S. was negatively impacted by the Great Recession and the subsequent slow
economic recovery that followed, provides some insight into this question. Over the
period from 2007 to 2014, U.S. average annual private construction spending declined
from $842 billion to $684; over the period from 2007 through 2014, total qualified
historic rehabilitation construction spending in Mississippi increased from $1.7 million
to $16 million, with
average annual spending
of $28.7 million over the
period. The growth of
U.S. annual private
construction over the
period from 2007
through 2014 exhibits a
downward sloping
trendline when compared
Figure 6: Comparison of Trends in U.S. Private Construction Spending and Mississippi Historic
Rehabilitation Construction Spending — 2007 to 2014
to Mississippi’s upward
sloping trendline for
investments in historic rehabilitation projects (Figure 6, above). Construction
investments in historic rehabilitation projects in the state of Mississippi created 2,807
full-time equivalent jobs in the Construction industry from 2007 through 2015 during
a period when the state of Mississippi lost 11,400 jobs in the Construction industry
statewide; these findings indicate that Mississippi’s state historic tax credit provided a
level of stimulus to construction spending and job creation in the state.
The need to maintain historic properties that may endanger the structural integrity of
neighboring properties or threaten the public health and safety if these historic
properties are left abandoned or deteriorating may provide additional justification for
64
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
the use of public funds to rehabilitate historic buildings. Some argue55 that subsidies
for historic renovation should be derived from local property and sales tax revenues
and remain within the domain of local governmental jurisdictions because the
potential benefits of historic renovation projects accrue primarily to the benefit of the
community within which the building is located. 56 However, locally adopted
subsidies or incentives might prove to be cumbersome and unpredictable, thus failing
to meet the distinct needs of investors and/or developers. For example, local
government budgets might place strict limitations on the amount of the subsidy or
incentive that local governments are able to afford and fail to provide sufficient
incentives for major projects that have significant economic impact (e.g. the King
Edward Hotel). Locally authorized subsidies would also fail to provide the elements
of transferability that are required by equity investors, and local governments do not
have the authority to allow taxpayers to make a deduction against their state income
taxes. The transference of responsibility for incentivizing the rehabilitation of historic
buildings from the state government to local governments would introduce
uncertainty regarding the amount of per-project funding that would be available,
introduce an additional level of uncertainty into the decision-making process by
developers and investors, and would most likely act as a significant deterrent to the
redevelopment of historic buildings. Public policy experts 57, 58, 59 have recommended
that eligibility for tax incentives should be based on a clear criteria that is provided by
Curry, S. (2015). Historic Preservation Tax Credits: Government Should not Intervene in the Historic Property Business on
Economic Grounds. John Locke Foundation, Spotlight No. 462.
56 Author’s note: The assumption that the economic benefit of historic rehabilitation is predominantly constrained to the local level is
flawed. As demonstrated by a large body of research that is cited in this paper and the analysis of the economic impact of
Mississippi’s state historic tax credits that is presented in this paper, the economic benefits of investments in historic rehabilitation
accrue to the benefit of both the state and local governments.
57 James, Sebastian (2013). Tax and Non-Tax Incentives and Investments: Evidence and Policy Implications. Investment Climate
Advisory Services of the World Bank Group, International Finance Corporation and the World Bank Group.
58 Klemm, Alexander (2010). Causes, Benefits, and Risks of Business Tax Incentives. International Tax Public Finance. 17: 315-336.
COI 10.1007/s10797-010-9135-y.
59 Tanzi, V. (1998). Corruption Around the World: Causes, Consequences, Scope, and Cures. Staff Papers International Monetary
Fund. 45 (4), 559 – 594.
55
65
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
law and not granted through special permission or individual authorizations to assure
transparency and consistency in administration and control.
The economic benefits of historic preservation are not the sole public policy
justification for providing incentives for investments to preserve historic structures.60
There are additional positive societal externalities derived from the renovation of
historic buildings, these include: promoting the state’s economy through tourism,
preserving a community’s aesthetics, and providing cultural educational opportunities.
Aesthetic justifications include the need to protect historic buildings for their beauty
and harmony with their surroundings. The cultural and educational benefits of
preservation presume that historic buildings have an inherent value beyond their
beauty and the tourists they attract; historic landmarks remind the public of the
“conditions, lessons, successes and failures of earlier eras;” 61 and notable historic buildings can
increase the cohesion of a community by reminding residents of their shared past.62
It is worth noting that public policy decisions that impact historic rehabilitation tax
credits can create significant risk for investors and developers. In addition to the
inherent risk associated with the rehabilitation of historic buildings, investments that
use historic rehabilitation tax credits are not without risk to investors. Including the
risk of recapture, decisions by the Internal Revenue Service and other governmental
entities can abruptly change the investment environment. One example is the 2012
Historic Boardwalk Hall, L.L.C., New Jersey Sports and Exposition Authority, Tax
Matters Partner versus Commission of Internal Revenue (694 F.3d 425 U.S. Third
Circuit Court of Appeals 2012) court ruling which created chaos in the historic tax
60 See Randall Mason, Economics and Historic Preservation: A Guide and Review of the Literature 8 – 9 (September 2005) available
at http://www.brookings.edu/research/reports/2005/09/metropolitanpolicy-mason. Retrieved 8-28-2015.
61 Klamer, A. and Zuidhof, P. (1999). The Values of Cultural Heritage: Merging Economic and Cultural Appraisals. In Randall
Mason, ed., Economics and Heritage Conservation. Los Angeles: Getty Conservation Institute.
62 Serageldin, I., Shluger, E., and Martin-Brown, J. (2001). Historic Cities and Sacred Sites: Cultural Roots for Urban Futures.
Washington: World Bank.
66
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
credit industry when the IRS challenged whether a tax credit investor (Pitney Bowes)
in the Historic Boardwalk Hall was a true partner in the entity that owned the
building. The IRS won its appeal, thus disallowing the allocation of approximately
$22 million in historic tax credits to the tax credit investor. Subsequent to the Circuit
Court’s ruling in the Historic Boardwalk Hall case, numerous traditional tax-credit
investors refused to close transactions until the IRS provided further guidance on safe
harbor provisions related to the required partnership structure of historic tax credit
investors; the IRS delayed the issuance of safe harbor provisions for approximately 10
months prior to issuing Revenue Procedure 2014-12 at the end of December 2013.
The uncertainty created in the historic tax credit market was further compounded
when the IRS began to conduct large scale audits of the investment portfolios of
major tax credit investors. Although the issuance of IRS Revenue Procedure 2014-12
has provided relatively clear safe harbor guidance to tax credit investors, these new
requirements have placed new restrictions on the structure of tax credit investments,
increased the transaction costs associated with historic rehabilitation tax credit
investments, and have introduced an additional dimension of risk into the historic
rehabilitation tax credit investment environment.
Another risk for developers of historic rehabilitation properties is the imposition of
caps on state historic tax credits. Because historic preservation projects may take
multiple years to complete, it is essential for developers to know that upon
completion of a rehabilitation project, they will receive the tax credit — without this
certainty, an additional dimension of risk is introduced into the economic and
financial feasibility of making investments in the rehabilitation of historic buildings;
this may have long-term consequences that may detrimentally impact future
investments in historic rehabilitation projects. For example, the state of Mississippi
has placed a $60 million total aggregate cap on its state historic tax credit program; as
67
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
of August 30, 2015, approximately $59,894,172 in state historic tax credits had been
allocated for specific projects and there were an additional 45 pending historic
rehabilitation projects in the state of Mississippi. Of the 45 pending projects, there
were 20 historic rehabilitation projects with qualified rehabilitation expenditures
estimated to be $37.4 million nearing completion — these projects will require
approximately $9,342,550 in state historic tax credits; this will exceed the state’s $60
million total aggregate spending cap on the Mississippi Historic Preservation Tax
Incentives Program.
68
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Appendix A: Overview of State Historic Tax Credit Programs
LIX
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
This page intentionally left blank for purposes of formatting.
LX
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Alabama Arkansas Colorado 25% credit for owners and long‐term qualified lessees of certified structures (including owner‐occupied residential) and 10% for qualified pre‐1936 non‐historic structures. Annual program cap of $20 million for historic properties with a $5 million per‐project cap for commercial properties and a $50,000 per‐project cap for residential structures. Nonprofits eligible. Projects reserved first‐ come, first‐served with lottery for applications received on same day. Project expenses must be certified by a CPA and projects with expenses exceeding $200,000 must be audited by a CPA. Applicants must submit an appraisal by a licensed real estate appraiser. Minimum investment: 50% of owner’s original purchase price or $25,000, whichever is greater. Carry forward: 10 years. Transfer permitted by disproportionate allocation. Credits can be claimed starting on May 15, 2016. 25% credit for certified rehabilitation of eligible income and non‐ income producing properties. Annual program cap of $4 million in credits; per‐project caps of $125,000 in credits for income‐ producing properties and $25,000 in credits for non‐income producing properties. Min. expenditures: $25,000. Carry forward: 5 years. Freely transferable by either direct sale or disproportionate allocation among partners of a syndication partnership. Applications will be ranked in accordance with the following criteria: Creation of new business, expansion of existing business, tourism, business revitalization, and neighborhood revitalization, in that order. Sunset date: 2021. 25% credit against individual and corporate taxes for first $2 million in Qualified Rehabilitation Expenses (QREs) and 20% on the remaining QREs for commercial properties. Credit goes to 30% in designated disaster area. Aggregate cap for FY2015 is $5 million, and $10 million thereafter. Per‐project cap of $1 million in credits annually. 50% of credits to be awarded to projects with QREs less than $2 million; 50% of credits to go to projects with QREs of $2 million and above. Projects awarded on first‐come, first‐serve basis. Freely transferable by either direct sale or disproportionate allocation among partners of a syndication partnership. Nonprofits LXI
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Colorado continued Connecticut can use the credits. Program starts July 1, 2015 and sunsets 2019. 20% credit for homeowner properties. No aggregate statewide dollar cap, but per project cap of $50,000 per year. Minimum investment: $5,000. Carry forward: 10 years. DOI standards apply and work must be completed within 2 years of inception date of project. 25% credit for converting historic commercial, industrial, former government property, cultural building, institutional, or mixed residential and non‐residential property to mixed residential and non‐residential uses or non‐residential use (including commercial, institutional, governmental or manufacturing use). Credit is increased to 30% if (a) at least 20% of units created are affordable rental units, or (b) at least 10% of units created are affordable homeownership units. Caps: $50 million over 3 years and $5 million per project. Carry forward: 5 years. Property must be listed individually on the national register or located in a district listed on the national or state register and certified as contributing. Freely transferable either by direct sale or disproportionate allocation among partners of a syndication partnership. (Section 10‐416‐b C.G.S.) 25% credit for converting commercial or industrial property for residential use only. Caps: $2.7 million per project and $15 million annual aggregate. Carry forward: 5 years. Freely transferable either by direct sale or disproportionate allocation among partners of a syndication partnership. Property must be listed individually on the national or state register or located in a district listed on the national or state register and certified as contributing. Minimum expenditure: 25% of assessed building value. Credit can offset income tax liability as well as taxes owed by insurance companies and utilities. Section 10‐416a. 30% credit for eligible rehab of owner‐occupied residence, including apartments up to 4 units. Eligible properties: National and/or State Register of Historic Places, must be located in distressed areas. Cap: $30,000 per dwelling, $3 million annual aggregate. Recapture period: 5 years. Carry forward: 4 years. Minimum expenditure: $25,000. Credit can be used only to offset LXII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Connecticut continued Delaware Georgia Illinois ** ** NOT a statewide program Indiana corporate taxes. Corporations may qualify either by purchasing tax credits or loan principal reduction. Effective July 2015, the minimum expenditure will be $15,000, projects will not be limited geographically while the cap will be $50,000 per dwelling for nonprofits. (Sec. 10‐416 C.G.S.) 20% credit for income‐producing properties and a 30% homeowner credit. A 10% bonus credit applies for both rental and owner‐ occupied projects that qualify as low‐income housing. Carry forward: 10 years. Homeowner credit cannot exceed $20,000. Credits are freely transferable either by direct transfer or disproportionate allocation. Credits claimed in annual progress‐ based installments with phased projects. The maximum amount of credits in any fiscal year is $5 million of which $2 million is set aside for projects receiving under $300,000 in tax credits and $100,000 set aside for qualified resident curators. Sunset: 2020. 25% credit for certified historic properties, both owner‐occupied residences and income‐producing. Additional 5% credit for residence located in a HUD target area. Credit cap: $100,000 for an owner‐occupied historic home, and $300,000 for income‐ producing buildings, including residential rentals. Carry forward: 10 years. Transfer permitted by disproportionate allocation, or if property is sold and no part of credit taken. 25% credit for eligible expenditures on rehabilitation of properties eligible for the federal Historic Rehabilitation Tax Credit located in designated River Edge Redevelopment Zones approved by the state in portions of Aurora, East St. Louis, Elgin, Peoria and Rockford. Minimum investment: greater of $5,000 or 50% of the purchase price. DOI standards apply. Credits are transferrable by disproportionate allocation. No per project cap and no aggregate annual cap on dollar value of credits issuable. 20% of rehab costs up to $100,000 for qualifying commercial, rental housing, barns and farm buildings. Minimum investment $10,000. Per‐project cap: $100,000. $450,000 annual statewide cap for commercial credits and $250,000 for owner‐occupied residences. State register properties qualify. Carry forward: 15 LXIII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Indiana continued Iowa Kansas Kentucky years. Preapproval of work required. No fees. DOI standards apply. Owner‐occupied residential: 20% of rehab costs. Costs must exceed $10,000. http://www.in.gov/legislative/ic/code/title6/ar3.1/ch16.pdf 25% credit of qualified rehabilitation costs for eligible commercial properties, owner‐occupied residential properties and barns. Annual cap: $45 million. Allocation of credits: 10% of credits for small projects under $750,000; 30% for projects located in Cultural and Entertainment Districts or the Great Places programs; 20% for disaster recovery projects; 20% for projects that create more than 500 permanent new jobs, and 20% for projects. No project cap. Fully refundable with interest, if appropriate, or any excess credit can be carried forward as an estimated payment to the next year. Minimum expenditure for commercial property: 50% of the assessed value of the commercial property, excluding the land or $50,000 whichever is less. Minimum expenditure for non‐ commercial properties: the lesser of $25,000 or 25% of the assessed value, excluding the land. The project shall begin before the end of the fiscal year in which the Part 2 application was approved. The project must be placed in service within 60 months of the Part 2 approval or within 72 months if more than 50% of the qualified rehabilitation costs are incurred within 60 months of the approval date. Credits in excess of min. established by Dept. of Revenue are fully transferable and all tax credits reserved for a fiscal year on and after July 1, 2012 may be transferred by disproportionate allocation. 25% income tax credit for commercial and owner‐occupied residential properties. 30% income tax credit for nonprofits. Annual cap of $3.75 million in credits claimed for FY2010. No per‐project cap. Carry forward: 10 years. $5,000 minimum on qualified expenditures necessary. Credit freely transferable either by direct transfer or disproportionate allocation. 30% income tax credit for owner‐occupied residential properties. A minimum investment of $20,000 is required, with the total credit per project not to exceed $60,000. LXIV
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Kentucky
continued Louisiana Maine 20% income tax credit for all other properties including properties owned by entities exempt from tax under section 501(c)(3) of the Internal Revenue Code and state and local governmental subdivisions and agencies. Minimum investment of $20,000 or adjusted basis, whichever is greater, subject to $400,000 per project cap. Both credits are fully refundable or transferable. But pass through entities which are taxed, get the credit at the entity level; pass through entities which are not taxed can use disproportionate allocation. $5 million annual program cap applies to the aggregate of homeowner and commercial/nonprofit credits. All credits are subject to proportional reduction if the value of credits claimed exceeds the annual aggregate cap. 25% credit for income‐producing properties in “downtown development districts.” $5 million cap per taxpayer for structures within a downtown development district. No statewide cap for commercial credits. Minimum investment: $10,000. Directly transferable. 5 year carry‐forward for commercial credits. Sunset date: Jan. 1, 2018. After July 1, 2011, 25% rate for owner‐occupied residences; 50% credit for blighted homes over fifty years old. $10 million statewide cap for owner‐occupied residences. Minimum investment: $10,000. Homeowner credit must be taken in five equal annual installments and is fully refundable. Sunset date: Jan. 1, 2018. 25% credit for qualifying rehab expenses of certified historic structure. 30% credit where at least 33% of the aggregate square feet of the completed project creates new affordable housing. Affordable housing credit may be increased each tax year by 1% till reached maximum of 35% in 2013. Minimum expenditures: Same as federal tax credit. If federal credit is not claimed, min. expenditure is $50,000 and maximum is $250,000. Cap: $5 million per project cap; no annual statewide cap. Credits are fully refundable and freely transferable by disproportionate allocation. Credit must be taken in 4 equal installments with first year being year property is placed into service. Sunset date: Dec. 31, 2023. LXV
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Maryland Massachusetts Minnesota Mississippi 20% credit for commercial buildings and owner‐occupied residences; additional 5% credit for high performance commercial buildings that achieve LEED gold rating or comparable rating from another rating system; 10% credit for non‐historic, "qualified rehabilitated structures," commercial properties located in Main Street Maryland community and after 2012 in a designated "sustainable" community. Sets aside of $4 million for small commercial projects starts Jan. 1, 2015. Annual appropriation required for commercial side of program; unused amounts may be carried over to following year. Per‐project cap: commercial ‐ $3 million; owner‐occupied ‐ $50,000. Competitive award process for commercial properties only; owner‐ occupied need not compete. No more than 60% of funds available for commercial projects in any year may go to any single jurisdiction. Minimum investment: the greater of 100% of the adjusted basis or $25,000 for commercial properties; $5,000 for owner occupied properties. Commercial credit is transferable. Residential credit is fully refundable. Program sunsets in 2017 20% credit for eligible income‐producing properties. 25% credit for projects with affordable housing. $50 million annual statewide cap. Carry forward: 5 years. DOI standards apply. Permits direct transfer of credit or transfer by disproportionate allocation. Min. investment: 25% of adjusted basis. Funded through 2017. Credit equal to 100% of the federal credit allowed for the rehabilitation of a certified historic commercial property against taxes or grant equal to 90% of federal credit allowed. No annual program cap and no per‐project cap. Credit freely transferable either by direct transfer or disproportionate allocation. Grants may be issued to another individual or entity. Credit is fully refundable. Credit may be used by insurance companies as well as other corporations and individuals. Application must be made for the credit before the rehabilitation begins. Sunsets in FY 2021. 25% credit for commercial property and for owner‐occupied residences. Program is capped at $60 million. No project cap. Minimum investment of 50% of the total basis for commercial LXVI
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Mississippi continued Missouri properties; $5,000 for owner‐occupied residences. Carry forward: 10 years. If credit exceeds $250,000, 75% can be refunded in lieu of 10 year carry‐forward. Refunds must be taken in two equal installments starting the year the rehabilitated property is placed in service. Transfer permitted by disproportionate allocation but can not be used in conjunction with refund provision. Members of a pass through entity, not taxed at the entity level, can use disproportionate allocation. Members of a pass through entity, taxed as a partnership, can elect to claim a refund at the entity level. Sunset date: 2014. 25% credit for commercial and owner‐occupied residential Montana Nebraska properties listed in National Register or listed as contributing to a federally certified historic district. Rehab work must meet DOI standards. Qualified expenditures must exceed 50% of total basis of the property. Carry back: 3 years. Carry forward: 10 years. Transfer permitted by direct transfer or disproportionate allocation. Per‐project cap for owner‐occupied single‐family residences: $250,000 in credits. Beginning July 1, 2010, the Dept. of Economic Development can not approve more applications than would in the aggregate result in more than $140 million in credits. Any project receiving preliminary approval after Jan. 1, 2010, whose eligible costs would be more than $1.1 million, is subject to the cap. Projects with eligible costs less than $1,100,000 are not subject to cap. Projects subject to the cap are prioritized on first‐come first serve basis; where applications received on same day, lottery will be held. Unfunded projects carry over into next funding round. Requires rehab to start within 2 years of authorization. Credits must be issued within 12 months of rehab completion. Income‐producing certified historic properties automatically receive 5% state tax credit if the property qualifies for the 20% federal credit. Carry forward: 7 years. 20% credit against income, deposit or premium tax for rehabilitation of historically significant real property except for a single‐family residence. Annual cap: $15 million. Per‐project cap: $1 million in credits. Minimum expenditure: $25,000 or 25% of assessed value. DOI Standards apply. Starts: Jan. 1, 2015. Sunsets: Dec. 31, 2018. LXVII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
New Mexico New York 50% of rehab costs for all properties listed in the State Register of Cultural Properties. Also applies to stabilization and protection of archeological sites listed in the State Register of Cultural Properties. No annual statewide cap. Per‐project cap: $25,000 outside an Arts and Cultural District; $50,000 located within an Arts and Cultural District. DOI standards apply. Carry forward: 4 years. Pre‐approval required. 20% credit for certified commercial properties subject to geographical targeting. Per project cap: $5 million in credits. Must be used in conjunction with federal credit. Credit must be taken in the year building is placed into service. Carry forward: unlimited. Commercial credits fully refundable starting 2015. 20% credit for certified, owner‐occupied properties. Subject to the same census tract restrictions as commercial program. Residential per project cap: $50,000 in credits. If taxpayer’s adjusted gross income is under $60,000, homeowner credit is refundable; over $60,000, unlimited carry forward. Minimum expenditure: $5,000 and 5% must be spent on exterior work. Both programs sunset on Dec. 31, 2020 and default to 2007 features if not renewed. 25% rehab credit for historic barns. Must be income‐producing, built or placed in agricultural service before 1936 and rehab cannot “materially alter the historic appearance.” North Carolina 30% credit for historic homeowners and 20% for income‐producing properties. Minimum investment for 30% credit: $25,000. Credit must be taken in 5 equal annual installments. Minimum investment for commercial: Same as federal credit. Cannot be used in conjunction with tax credit for rehabilitating mills. 30% or 40%, depending on location, credit for rehabilitating income‐producing and non‐income‐producing historic mill properties. Pre‐approval required. Certified property must have been at least 80% vacant for a period of two years immediately preceding date of eligibility certificate. Cannot be taken in conjunction with 20% state tax historic preservation credit for income‐producing properties. LXVIII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
North Dakota Ohio Oklahoma Pennsylvania 25% credit for eligible historic property that is part of a renaissance zone project. Project cap of $250,000. Carry forward: 5 years. 25% credit for owners and long‐term qualified lessees of certified historic building. Project cap: $5 million. Aggregate cap: $60 million annually and any unused amount will be carried forward and added to the next year. DOI Standards apply. Refundable amount of credit limited to $3 million per project. Transfer by disproportionate allocation permitted. Five year carry‐forward. Applicant must provide evidence that the credit is a major factor in the applicant’s decision to rehab. Applicant must have CPA certify costs if qualified rehabilitation expenditures exceed $200,000. If the applicant does not provide evidence of having a viable financing plan, having final construction drawings and all necessary historical approvals within 12 months of receiving notice of approval, or if the applicant has not closed on financing within 18 months after approval, the director may rescind the approval and reallocate the credit amount to another applicant. Director of Economic Development must conduct a cost‐benefit analysis of every project that shows whether the project will result in a net revenue gain in state and local taxes. Director of Development and Tax Commissioner must produce an annual report to the legislature analyzing program’s effectiveness. 20% income tax credit for all eligible commercial and rental residential properties that qualify for the federal tax credit. Minimum investment: same as federal credit. No statewide or per‐project caps. Carry forward: 10 years. Freely transferable for 5 years. Credits can be claimed starting on Jan. 1, 2012. 25% credit for eligible properties that qualify for the federal tax credit. Minimum investment same as for the federal credit. Project cap: $500,000. Aggregate cap: $3 million annually. Projects to be allocated equitably among state’s regions. Any unused amount from a region will be reallocated to another region. DOI Standards for Rehabilitation apply. Public utilities, insurance companies and financial institutions may participate in the program. Applications must be filed by Feb. 1, 2013, but may cover expenditures previously made. Carry forward: 7 years. Credits are transferable by certificate only. Sunset: 2019. LXIX
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Rhode Island South Carolina 20% for commercial property owners, condominiums and nonprofits; 25% if 25% of total rentable space or entire first floor is used in a trade or business. Owner‐occupied residences not eligible. Per‐project cap of $5 million dollars. Maximum aggregate credits through 2016 to be set by legislature; currently at $34.5 million. Transfer by disproportionate allocation or direct assignment. Proceeds of sale of credit not subject to state tax. Credits awarded to tax‐exempt entities fully refundable. Qualified rehabilitation expenditures must exceed the adjusted basis of the building. Applicant must enter into contract with state division of taxation and grant state a 2‐year restrictive convenant on the building regarding material alterations, and a 5‐year restrictive covenant regarding use as a trade or business if 25% credit is claimed. CPA must certify to amount of credit claimed. Projects with hard construction costs of $10 million dollars or more must have approved apprenticeship programs. Program sunsets July 30, 2016 or when funds exhausted. 10% credit for commercial properties eligible for federal credit; 25% for other eligible properties. Minimum investment for non‐ commercial properties: $15,000. All credits must be taken in 5 equal annual installments. No statewide or per‐project dollar caps. Pass‐through entities (other than “S” corporations) may transfer credit by means of disproportionate allocation. Credits for owner‐ occupied residences limited to one per structure each 10 years. Pre‐approval required. 25% tax credit against income, corporate license fees, and insurance premium taxes, for rehabilitating abandoned textile mill buildings that have been closed at least one year immediately preceding the application. Credits must be taken in 5 equal installments. Carry forward: 5 years. Credit may also be taken against local real property taxes with percentage amount set by municipality or county. Transfer permitted by certificate and disproportionate allocation. Although not a historic credit as such, South Carolina has a 25% tax credit against income taxes and corporate license fees, taken in LXX
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
South Carolina continued Texas Utah Vermont Virginia five equal installments, for rehabilitating abandoned buildings where 66% of space has been non‐income producing for a minimum of 5 years. Taxpayer, if qualifying, is only permitted to one of three credits allowed through the Abandoned Buildings Act, the Textiles Communities Revitalization Act, or the Retail Facilities Revitalization Act and cannot exceed 50% of tax liability. Alternatively, credit can be taken against local real property taxes if approved by positive majority vote of the municipality or county after a public hearing. Credit up to 75% of real property taxes must be taken each year for up to 8 years. Per‐project cap: $500,000. Also capped at 50% of tax liability. Expenses that increase the square footage in excess of 200% are disallowed. Credits are transferable by certificate and by disproportionate allocation. Available for projects initiated in 2012. Sunset: Dec. 31, 2019. 25% tax credit against franchise tax for certified historic structures rehabilitated and put in service on or after Sept. 1, 2013. No annual or per‐project cap. Carry forward: 5 years. Minimum investment: $5,000. Credits are transferable by certificate or disproportionate allocation. As enacted. Subject to Attorney General review and adoption of administrative rules. Effective Jan. 1, 2015. 20% credit for residential owner‐occupied and non‐owner‐ occupied. Cap: none. Minimum investment: $10,000 over 3 years. DOI standards apply. No fees. All credits limited to commercial buildings located in designated downtowns or village centers. 10% credit for projects approved for federal credit. 25% credit for façade improvement projects, limited to $25,000 per project. 50% credit for certain code improvement projects, with maximum credit of $50,000. 9‐year carry‐forward. Credits may be transferred to bank in exchange for cash or interest rate reduction. Annual total program cap: $1.5 million. The state board may allocate the credit upon completion of distinct phases of a qualified project and any recaptured or rescinded credits can be awarded to other applicants in subsequent years. 25% for commercial and owner‐occupied residential properties. LXXI
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Virginia continued West Virginia Wisconsin Reconstruction and improvements must amount to at least 25% of the assessed value for owner‐occupied buildings and at least 50% for non‐owner‐occupied buildings. Carry forward: 10 years. National and state register properties eligible. DOI standards apply. No caps. Transfer by disproportionate allocation permitted. 10% credit for buildings eligible for federal credit; 20% credit for eligible owner‐occupied residences. Commercial buildings entitled to same carry‐back and carry‐forward provisions as are available for federal credit. Owner‐occupied residences entitled to 5‐year carry forward. Both commercial credits and homeowner credits may be directly transferred or transferred by disproportionate allocation. Minimum investment in homeownership projects: 20% of assessed value. No statewide or per project dollar caps. 20% for certified income‐producing properties. Applicant may also claim federal credit. No statewide or per‐project caps. Credit may transferred directly or by disproportionate allocation. Minimum investment $50,000. Tax credit must be approved by Wisconsin Economic Development Corporation. Program to be reviewed in 2017 for economic development effectiveness. 25% for eligible owner‐occupied residences. No statewide cap. Per project cap: $10,000. Minimum investment of $10,000 over 2 years, extendable to 5 years. Cannot be used to offset state Alternative Minimum Tax. Source: National Trust for Historic Preservation
LXXII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Appendix B: Detailed Economic Contribution by 2-Digit NAICS
LXXIII
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
This page intentionally left blank for purposes of formatting.
LXXIV
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 10: Detailed Economic Contribution by All Mississippi Historic Tax Credit Projects by 2-digit NAICS 2007 to 2015
Industry Sector
Ouput
Agriculture
Meat Animals
Cotton
Grains & Misc. Crops
Feed Crops
Vegetables
Greenhouse & Nursery Products
Flaxseed, Peanuts, Soybean, Sunflower
Agri. Serv., Forestry, & Fish
Agri. Services (07)
Forestry (08)
Fishing, Hunting, & Trapping (09)
Mining
Coal Mining (12)
Oil & Gas Extraction (13)
Nonmetal Min.‐Ex. Fuels (14)
Construction
General Bldg. Contractors (15)
Heavy Const. Contractors (16)
Special Trade Contractors (17)
Manufacturing
Food & Kindred Prod. (20)
Textile Mill Prod. (22)
Apparel & Other Prod. (23)
Limber & Wood Prod. (24)
Furniture & Fixtures (25)
Paper & Allied Prod. (26)
Chemicals & Allied Prod. (28)
Petroleum & Coal Prod. (29)
Rubber & Misc. Plastics (30)
Leather & Leather Prod. (31)
Stone, Clay, & Glass (32)
Primary Metal Prod. (33)
Fabricated Metal Prod. (34)
Machinery, Except Elec. (35)
Electric & Elec. Equip. (36)
Transportation Equipment (37)
Instruments & Rel. Prod. (38)
Misc. Manufacturing Ind's. (39)
Printing & Publishing (27)
Transportation & Public Utilities
Railroad Transportation (40)
Trucking & Warehousing (42)
Water Transportation (44)
Transportation by Air (45)
Pipe Lines‐Ex. Nat. Gas (46)
Transportation Services (47)
Communication (48)
Elec., Gas, & Sanitary Serv. (49)
$324,100
$188,900
$2,400
$26,300
$6,500
$1,000
$90,200
$8,800
$1,899,300
$1,555,700
$336,400
$7,300
$3,069,700
$900
$875,100
$2,193,600
$124,875,400
$84,198,700
$28,513,600
$12,162,900
$81,981,500
$1,684,100
$6,294,500
$1,133,000
$15,912,500
$801,500
$634,900
$4,077,700
$16,419,300
$1,423,200
$22,600
$8,427,800
$1,032,800
$14,194,100
$3,988,100
$3,668,400
$260,000
$111,100
$1,249,800
$646,200
$14,524,900
$269,300
$3,755,800
$437,000
$555,100
$73,900
$153,000
$3,711,400
$5,569,400
Employment
2
0
0
0
0
1
0
0
59
56
2
0
30
0
3
27
2,808
1,720
798
290
606
7
37
16
124
9
3
16
54
12
0
79
5
166
34
27
2
1
6
7
105
6
56
4
5
0
2
16
16
Income
$27,000
$8,800
$200
$600
$100
$100
$16,800
$400
$862,800
$831,000
$29,800
$1,900
$900,400
$300
$117,300
$782,800
$75,075,800
$48,263,100
$19,287,900
$7,524,800
$19,733,400
$221,100
$940,700
$323,100
$3,739,800
$253,700
$139,900
$797,600
$2,894,100
$388,300
$6,800
$2,701,200
$208,400
$4,211,400
$1,203,600
$1,077,900
$78,100
$33,000
$291,600
$223,200
$3,562,700
$116,200
$1,638,300
$114,000
$193,200
$8,000
$57,100
$750,100
$685,800
Gross State Product
$89,800
$23,500
$700
$9,600
$2,700
$300
$49,800
$3,000
$830,100
$706,200
$120,600
$3,200
$919,700
$200
$218,800
$700,700
$98,174,200
$64,071,900
$24,372,300
$9,730,100
$32,117,100
$544,500
$2,206,600
$336,300
$5,192,400
$344,300
$261,300
$1,553,900
$5,592,500
$595,600
$7,100
$3,621,000
$292,100
$7,418,100
$1,487,200
$1,527,400
$186,600
$29,100
$544,900
$376,100
$9,029,500
$219,100
$3,180,200
$261,100
$266,000
$66,500
$126,100
$1,654,100
$3,256,400
Estimate Per Cap Income
$13,500
N/A
N/A
N/A
N/A
$100
N/A
N/A
$14,624
$14,839
$14,900
N/A
$30,013
N/A
$39,100
$28,993
$26,736
$28,060
$24,170
$25,948
$32,563
$31,586
$25,424
$20,194
$30,160
$28,189
$46,633
$49,850
$53,594
$32,358
N/A
$34,192
$41,680
$25,370
$35,400
$39,922
$39,050
$33,000
$48,600
$31,886
$33,930
$19,367
$29,255
$28,500
$38,640
N/A
$28,550
$46,881
$42,863
LXXV
The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
Table 10 Continued Estimate Per Ouput
Employment Income
Gross State Product
Industry Sector
Cap Income
Wholesale
$13,887,000
154 $5,647,200
$7,493,800
$36,670
Whlsale‐Nondurable Goods (51)
$5,322,200
60 $2,164,200
$2,872,000
$36,070
Whlsale‐Durable Goods (50)
$8,564,900
94 $3,483,000
$4,621,800
$37,053
Retail Trade
$24,198,200
665 $8,928,500
$15,781,900
$13,426
Bldg. Mat.‐Garden Supply (52)
$1,449,800
31
$629,700
$1,035,700
$20,313
General Merch. Stores (53)
$2,927,000
86 $1,055,400
$2,091,000
$12,272
Food Stores (54)
$2,491,500
84
$971,300
$1,779,900
$11,563
Auto. Dealers‐Serv. Stat. (55)
$4,083,500
51 $1,077,300
$2,917,200
$21,124
Apparel & Access. Stores (56)
$1,372,200
55
$644,500
$980,200
$11,718
Furniture & Home Furnish. (57)
$683,700
16
$319,300
$488,400
$19,956
Eating & Drinking Places (58)
$7,549,200
234 $2,566,200
$3,888,300
$10,967
Miscellaneous Retail (59)
$3,641,300
107 $1,664,600
$2,601,300
$15,557
Finance, Insurance, & Real Estate
$18,374,100
199 $6,097,400
$12,669,400
$30,640
Banking (60)
$3,306,100
27
$872,600
$1,955,400
$32,319
Nondep. Credit Institut. (61)
$4,933,500
80 $2,584,100
$2,463,300
$32,301
Security, Comm. Brokers (62)
$599,800
4
$294,800
$282,500
$73,700
Insurance Carriers (63)
$2,765,500
24 $1,112,800
$2,377,500
$46,367
Ins. Agents, Brokers (64)
$1,371,900
20
$528,300
$602,400
$26,415
Real Estate (65)
$4,981,900
39
$487,300
$4,732,800
$12,495
Holding and Invest. Off. (67)
$415,500
6
$217,600
$255,600
$36,267
Services
$57,804,900
929 $27,191,300
$21,116,300
$29,269
Hotels & Other Lodging (70)
$522,800
8
$191,400
$264,700
$23,925
Personal Services (72)
$2,162,700
57
$763,300
$843,200
$13,391
Business Services (73)
$5,026,400
96 $1,973,200
$2,897,000
$20,554
Auto Repair, Serv., Garages (75)
$1,808,400
19
$470,600
$803,400
$24,768
Misc. Repair Services (76)
$1,029,300
17
$393,400
$516,300
$23,141
Motion Pictures (78)
$433,900
9
$96,100
$157,100
$10,678
Amusement & Recreation (79)
$387,000
8
$149,000
$318,800
$18,625
$2,719,000
43 $1,483,600
$1,571,000
$34,502
Health Services (80)
Legal Services (81)
$7,561,800
59 $3,497,200
$3,520,200
$59,275
Educational Services (82)
$963,200
32
$514,200
$590,900
$16,069
Social Services (83)
$630,600
19
$304,500
$299,800
$16,026
Museums, Gardens & Mem. Orgs. (84, 86) $2,017,300
65 $1,144,600
$1,145,900
$17,609
Engineer. & Manage. Serv. (87)
$30,637,600
460 $15,369,900
$7,661,100
$33,413
Private Households (88)
$105,700
9
$105,700
$105,700
$11,744
Micscellaneous Services (89)
$1,799,400
27
$734,500
$421,300
$27,204
Government
$1,594,200
17
$480,400
$742,000
$28,259
Total
$342,533,300
5,574 $148,507,200
$198,963,800
$26,643
LXXVI
This page intentionally left blank for purposes of formatting. E-Mail: jgp1@sig.msstate.edu
Website: http://www.sig.msstate.edu
Mississippi State University does not discriminate on the basis of race, color, religion,
national origin, sex, age, disability, sexual orientation, group affiliation, or veteran status.