Preservation and Public Policy
URGENT: Take action NOW to keep the Minnesota Historic Tax Credit afloat!
As you may know, we’re in the waning hours of the 2018 Legislative session and the House, Senate, and Governor are all aligned in their position that Minnesota’s historic tax credit should conform with the new five-year credit plan at the Federal level. While this is not ideal, our main concern is that the sunset date for Minnesota’s credit falls right in the middle of that 5-year period, and may severely hamper the use of the credit.
Please take a few minutes (literally, it’ll only take a minute or two) to call the House and Senate taxes committee chairs, Sen. Roger Chamberlain (R – Lino Lakes and North Oaks) and Rep. Greg Davids (R – Preston area, southeast MN) and let them know that we’re concerned about this issue. You can call the Governor’s office, too.
- Identify yourself, state your professional affiliation (especially if you are in a field that is impacted by this work), and then state that you are a member of the Preservation Alliance of Minnesota.
- Then, you can essentially read this message:
Thank you for your leadership on the Federal Conformity Tax bill.
There are technical problems with the Historic Tax Credit Conformity Language.
Conforming to the Federal Credit now spreads the credit out over 5 years but, under current state statute, the State Historic Tax Credit is due to sunset in just 3 years, in 2021.
As a result, conforming to the Federal credit without extending the sunset date will effectively kill the use of the State Historic Tax Credit.
Please eliminate the Historic Tax Credit sunset date.
Thank you for your attention to this issue.
(That’s it! Easy peasy, right? Let’s hope so!)
Here are the numbers to use:
Sen. Roger Chamberlain ‘s office: 651-296-1253
Rep. Greg Davids’ office: 651-296-9278 or 1-800-551-9145
Governor Dayton’s office: 651-201-3400
Read more about PAM’s policy work below.
PAM is actively engaged in promoting preservation as a matter of sound public policy, at all levels of government. We work with local elected officials to support the work of citizen groups and Heritage Preservation Commissions, at the Minnesota Legislature to promote statewide policies and incentives for preservation, and at the Federal level, in support of the extensive system for preservation administered through the U.S. Department of the Interior.
Here are a number of current public policy issues of which you should be aware. Be a preservation advocate by contacting your elected officials! They want to hear from you and to learn about the places and issues that matter to you and your community.
(Not sure who represents you? You can look it up here!)
Minnesota Historic Tax Credit
The Minnesota Historic Structure Rehabilitation Tax Credit (MN Statute 290.0681), passed into law in 2010, has been a successful economic development tool for revitalizing distressed, vacant, and underutilized historic properties throughout the state.
Economic Impact Analysis Reports, like this one that summarizes FY2017 activity, have consistently shown that the MN Historic Tax Credit more than pays for itself. The credit generates approximately $9 in economic activity for every $1 allowed in the credit. From 2011-2017, the credit resulted in an estimated $2.2 billion of economic activity, including $745.1 million in labor income and 12,900 FTE jobs.
The MN Rehabilitation Tax Credit is tied to the Federal Historic Tax Credit in statute. Projects must qualify for – and claim – the Federal credit in order to receive the state credit.
The Tax Cuts and Jobs Act, passed in December 2017, restructured the terms by which the Federal credits are claimed. Project developers must now claim the Federal Historic Tax Credit ratably over a period of five years, beginning with the tax year in which the rehabilitated building is placed in service.
Changes to the Federal rules have significantly reduced the value of the Federal Historic Tax Credits. Typically, project developers sell the credits to investors (including banks and insurance companies) to earn capital to invest in the project. The Federal changes have reduced the price paid for these credits by as much as 10-15%.
This session, PAM has been active at the state Capitol, seeking to keep the MN Historic Tax Credit as a one-time refundable credit, as it was initially set up. While we were successful in getting bills introduced with bipartisan support in both the House (HF4413) and Senate (SF3990), the provisions of our bills have not made it into any of the tax conformity bills. The House tax conformity bill passed on April 30; the Senate bill was passed on May 3. We will continue to work through the conference committee process to advocate for a strong and flexible state historic tax credit so Minnesota communities can retain and revitalize their significant historic buildings.
Read our testimony before the House and Senate Taxes Committees, and view and download copies of our info sheets on this issue:
Preservation in the Bonding Bill
PAM supports annual bonding bills, as do our partners at the League of Minnesota Cities, the Building Jobs Coalition, and AIA-MN. Passage of a robust bill that funds a mix of state-owned and select local projects should prioritize reinvestment in heritage assets that are important to a large number of Minnesotans. PAM opposes the use of state funds for the intended destruction (through demolition or deconstruction) of buildings and structures that are listed in the National Register of Historic Places.
Here are some of the projects that we support and hope will be included in this year’s bonding bill:
- $30 million for Historic Fort Snelling
- $4 million for Glensheen Mansion in Duluth
- $13 million for the Stone Arch Bridge in Minneapolis
Contact your legislators using the link above to express your support for these projects!
UPDATE: The House of Representatives unveiled its proposed bonding bill for this session, which includes appropriations for Historic Fort Snelling, Glensheen, and Pillsbury Hall on the University of Minnesota-Twin Cities campus and passed on Read more about the bill here. The Senate bonding bill, which included a lesser amount for Historic Fort Snelling and no funding for Glensheen, did not pass on Wednesday, May 16. This will be a further point of negotiation between the Governor and the Legislature before the session wraps at midnight on Monday, May 21.
Contact Senate leadership and ask them to include full funding for Glensheen, Historic Fort Snelling, and the Stone Arch Bridge in the bonding bill:
Sen. Paul Gazelka (R – Nisswa) – 651-296-4875 or 218-821-9287
Sen. David Senjem (R – Rochester) – 651-296-3903 or 507-319-7627
Sen. Tom Bakk (DFL – Cook) – 651-296-8881
Federal Rehabilitation Tax Credits
The future of the Federal program that offers incentives for historic building rehabilitation, in place since the 1980s, was in doubt as the US House of Representatives and Senate moved forward with tax reform. During the week of December 10, 2017 both houses of Congress agreed on a bill to dramatically rework our nation’s tax code. Thanks to the work of thousands of advocates – hopefully including YOU! – the HistoricTax Credits made it back into the final bill. The bill was passed in the Senate and House and then signed into law by President Trump on Dec. 22, 2017.
Why was retaining the Federal Rehabilitation Tax Credit so important?
The projects made possible by the Rehabilitation Tax Credit have been vital economic growth engines in Minnesota. Since 2010, when a state tax credit was passed with bipartisan support and signed into law by Gov. Tim Pawlenty, over $2 billion of economic activity has been generated by private-sector rehabilitation of historic buildings in Minnesota. Directly, the tax credits have leveraged over $1.1 billion in construction activity over the past seven years, almost $400 million of which has been paid in middle-class construction wages. Professionals who specialize in this work, including contractors, suppliers, architects, interior designers, consulting historians, and CPAs, would also have their wages cut if the Rehabilitation Tax Credit was eliminated. Since 2002, at least 110 historic buildings have been rehabilitated in Minnesota using the Historic Tax Credit, creating more than 18,000 jobs.
The positive ripple effects of rehabilitation investment are evident in communities all across Minnesota. In Minneapolis’ North Loop neighborhood alone, over a dozen historic buildings have been successfully rehabbed using this tax credit, totaling more than $142 million in construction expenditures. The vitality of this reclaimed historic district has prompted new development, spurring small business growth through new restaurants, bars, breweries, and retail stores, and attracting corporate expansion with tenants such as Amazon, global software company Calabrio, and Arctic Cat.
Duluth and St. Paul have seen similar rates of economic investment in historic buildings, with over $27 million and $200 million of rehabilitation construction expenditures respectively since 2006. Cities outside of the metro benefit from this tax credit, too. Notable projects include:
- The Faribault Woolen Mill in Faribault, which was in operation from 1865 until 2009 and was brought back to life in 2011 thanks to approximately $1 million in Historic Tax Credits and over $5 million in investment by the new owners, Chuck and Paul Mooty
- The Second Street Professional Building in downtown Chaska, rehabilitated in 2006
- Conley-Maass-Downs Building, downtown Rochester, rehabilitated by first-time, local developers to house a restaurant on the ground level and a co-working space on the upper story
More places in Minnesota await the opportunities that home-grown economic development like this would create: the vacant former state hospital complex in Fergus Falls, the Duluth Armory (one of young Bob Dylan’s favorite venues), and the Fort Snelling Upper Post, which has stood idle and deteriorating for over 40 years despite its status as a National Historic Landmark. All of these places – and the people in these communities – would lose out if the Rehabilitation Tax Credit was repealed and the critical economic tools for reclaiming these places eliminated.
The Rehabilitation Tax Credit is a worthwhile investment that grows our economy, brings jobs back to our local communities, and increases paychecks for our workers. We are relieved that the Federal Rehabilitation Tax Credit was retained in the 2017 tax reform process.