Historic preservation tax incentives generated millions for Maine in 2018

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. 

Maine impact

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: 

• $291.1 million spent in total rehabilitation costs from 2014-18, and $21.5 million in FY2018.
• 4,174 jobs from 2014-18; 326 in 2018.
• $171.2 million in income 2014-18; $12.7 million in 2018.
• $257.2 million in state GDP 2014-18; $19 million in 2018.
• $558.2 million in output 2014-18; $41.3 million in 2018.
• $13.2 million in local tax impact 2014-18; $1 million 2018.
• $12.3 million in state tax impact 2014-18; $900,000 2018.
• $46.1 million in federal tax impact 2014-18; $3.4 million 2018; 
• $71.8 million in overall tax impact 2014-18; $5.3 million overall in 2018.

National impact

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.