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A tax incentive program to preserve historic buildings added $19 million to Maine's gross domestic product in 2018, and $41.3 million in goods and services, according to the Rutgers University Center for Urban Policy Research.
The study, which Rutgers conducts annually in partnership with the National Park Service, found that that, overall, the Federal Historic Preservation Tax Incentives Program contributed $7.4 billion in GDP and 129,000 jobs in 2018, and has generated $176.2 billion in GDP since 1978.
The program is administered by the National Park Service, which determines if a building is historic, and the Internal Revenue Service, which oversees the tax aspect of the project. State historic preservation offices locally administer the program, which provides a 20% federal tax credit to property owners who substantially rehabilitate a historic building for a commercial or other income-producing use, while maintaining its historic character.
"Historic preservation tax incentives continue to drive investments in historic preservation and revitalize communities across the country," said National Park Service Deputy Director David Vela in a news release from the park service. "For more than 41 years, this successful federal/state partnership has enabled the preservation and rehabilitation of more than 44,000 historic properties."
The release noted that the tax incentives program has "helped to revive abandoned or underutilized schools, warehouses, factories, churches, retail stores, apartments, hotels, houses, agricultural buildings, office, and other buildings across the country, and in turn, has helped support the redevelopment of entire downtowns and neighborhoods.
The incentives also support community revitalization, job creation, affordable housing, small businesses, farms, and main street development, among other economic benefits, according to the park service.
The program is "a godsend" in Maine said developer Ethan Boxer-Macomber, of Anew Development, in Portland.
"They're not only creating jobs, but the projects are generally in the best locations," he told Mainebiz Thursday — in walkable cores of towns and cities.
The incentives help fund preservation efforts that generate and solidify communities, said Boxer-Macomber, who is president of the board of directors of GrowSmart Maine, and was recently name to the board of the Maine Real Estate and Development Association.
According to the report, which features a Biddeford property on its cover, 51% of the certified rehabilitation projects were in low and moderate income areas and more than 75% were in economically distressed areas. Almost half of all projects were less than $1 million in rehabilitation costs and 18% were less than $250,000.
A quarter of all certified rehabilitation projects were in communities with a population of less than 50,000 people and 15% in communities with a population of less than 25,000 people.
In Maine, the program has generated millions since 2014:
In 2018, the total estimated rehabilitation investment — known as qualified rehabilitation expenditures — was $6.9 billion. There were 1,805 projects certified under the program.
Nationally in 2018, program-related investments created approximately 129,000 jobs, including 46,500 in construction and 28,800 in manufacturing, generating $2 billion, and $1.3 billion in income. Sectors not associated with historic preservation, including agriculture, mining, transportation and public utilities, also benefited.
Output was $14.4 billion, GDP nationally was $7.4 billion and income created was $5.4 billion. Some 19,521 housing units across the country were rehabilitated or created, with 6,152 of them low or moderate-income housing.
The rehabiliation of 17 Alfred St. in Biddeford as a retail, office and residential project was used as one of the case studies in the Rutgers project.
The building has been fully occupied since completion of both the residential and commercial spaces, according to the study.
"The entire block is now filled with businesses that complement each other and are starting to bring more people into downtown Biddeford," it says. "The rehabilitation of 17 Alfred Street is helping fuel Biddeford’s resurgence and is encouraging other downtown building owners to explore historic rehabilitation solutions."
The building was built in 1860 and was renovated in 2017. The total project cost was $1,012,000, and the Federal Historic Tax Credits amount was $160,000; State Historic Tax Credits, at 25% of the cost, were $200,000.
The three-story building as six market-rate apartments on the upper two floors and two commercial businesses on the first floor.
The project is owned and developed by Seth Harkness, who said in the study that he would not have been able to do it without the historic tax credits, which offset federal and state tax liability and created a stronger annual cash flow for the property.
"The credits allowed for a more extensive rehabilitation and the use of high-quality building materials, which has in turn brought new life to a downtown building long associated with Biddeford’s historic economic boom," the case study said.
For the full case study of the Biddeford project, click here.
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