ACTION ALERT–State Historic Rehabilitation Tax Credit

March 9, 2010

Palace Hotel

The Palace Hotel in Crookston could benefit from the creation of a State Historic Rehabilitation Tax Credit. Photo by Doug Ohman, Pioneer Photography.

Take action today to pass the Minnesota Historic Rehabilitation Tax Credit.    It’s up to you!!!

Legislators asking to hear from constituents interested in historic preservation incentive

The sense of optimism for the 2010-2011 Legislative Session is growing within the preservation community with the inclusion of a proposed state historic rehabilitation tax credit in both the House and Senate. Representative Ann Lenczewski, Chair of the House Taxes Committee, included a 20% historic rehabilitation tax credit as part of her comprehensive jobs bill (HF2695). Senate Taxes Chair Senator Tom Bakk also included the provision in his proposed jobs bill (SF2568).  Both have recognized the green job creation benefits of an historic rehabilitation incentive.  This is the first time the tax credit has been included on both the House and Senate sides.   With your help, this could be the year we pass a tax incentive found in 30 others states to facilitate the sustainable reuse of our existing building stock.

Your help is needed now!! Hearings on the rehabilitation tax credit have been scheduled in the House Taxes Committee for Monday, March 15, and Tuesday, March 16.  Legislators need to hear from you right now that you support this state tax credit to facilitate historic preservation projects.  Visit, call, or e-mail your legislator that you want him/her to include the state historic rehabilitation tax credit as part of this year’s omnibus tax bill.  Click here to view a fact sheet on the bill.

Your legislator is just a few clicks away. It’s easy to contact your legislator through the Minnesota Historical Society’s Cap Wiz web site; access your legislator’s contact information -or- click on the “Take Action Now” button for the Historic Preservation Tax Credit, complete your message, fill in your address and Cap Wiz will send it to your representatives.  Please remember: An in-person visit or phone call to your legislator will have the most impact.

If your legislator sits on the House or Senate Taxes Committees it is even more urgent that you contact him/her as the Taxes Committees will hold important hearings on the bill.

House Tax Committee Members:

Chair: Representative Ann Lenczewski (DFL-Bloomington), 651-296-4218

Vice Chair: Roger Reinert (DFL-Duluth), 651-296-4246

Lead GOP: Laura Brod (R-New Prague), 651-296-4229

Sarah Anderson (R-Plymouth), 651-296-5511

Lyndon Carlson (D-Crystal), 651-296-4255

Greg Davids (R-Preston), 651-296-9278

Jim Davnie (D-Minneapolis), 651-296-0173

Randy Demmer (R-Hayfield), 651-296-9236

David Dill (D-Crane Lake), 651-296-2190

Denise Dittrich (DFL-Champlin), 651-296-5513

Keith Downey (R-Edina), 651-296-4363

Rob Eastlund (R-Isanti), 651-296-5364

Paul Gardner (DFL-Shoreview), 651-296-2907

Pat Garofalo (R-Farmington), 651-296-1069

Debra Hilstrom (D-Brooklyn Center), 651-296-3709

Lyle Koenen (D-Clara City), 651-296-4346

Paul Kohls (R-Victoria), 651-296-4282

Morrie Lanning (R-Moorhead), 651-296-5515

John Lesch (D-Saint Paul), 651-296-4224

Tina Liebling (D-Rochester), 651-296-0573

Diane Loeffler (DFL-Minneapolis), 651-296-4219

Jenifer Loon (R-Eden Prairie), 651-296-7449

Paul Marquart (D-Dilworth), 651-296-6829

Erin Murphy (DFL-St. Paul), 651-296-8799

Tom Rukavina (D-Virginia), 651-296-0170

Maria Ruud (DFL-Minnetonka), 651-296-3964

Loren Solberg (D-Grand Rapids), 651-296-2365

Tom Tillberry (D-Fridley), 651-296-5510

Kurt Zellers (R-Maple Grove), 651-296-5502

Senate Tax Committee Members:

Chair: Thomas Bakk (DFL-Cook), 651.296.8881

Vice Chair: Rod Skoe (DFL-Clearbrook), 651.296.4196

Lead GOP: Julianne E. Ortman (R-Chanhassen), 651.296.4196

D. Scott Dibble (DFL-Minneapolis), 651.296.4191

Debbie Johnson (R-Ham Lake), 651.296.4191

Keith Langseth (DFL-Glyndon), 651.296.3205

Warren Limmer (R-Maple Grove), 651.296.2159

John Marty (DFL-Roseville), 651.296.5645

Mee Moua (DFL-Saint Paul), 651.296.5285

Lawrence J. Pogemiller (DFL-Minneapolis), 651.296.7809

Ann H. Rest (DFL-New Hope), 651.296.2889

Linda Scheid (DFL-Brooklyn Park), 651.296.8869

David Senjem (R-Rochester), 651.296.3903

What Can You Do To Help?

  • Contact your state Senator and Representative AS SOON AS POSSIBLE and tell them that you support job creation in your community through a state historic rehabilitation tax credit.  Ask them to contact Representative Ann Lenczewski and Senator Tom Bakk to urge their Taxes Committees to pass  the tax credit  (HF2695/SF2568)—see their contact information above.  Use real examples in your community of historic preservation projects that could benefit from the tax credit.
  • Attend the Building Jobs Coalition Rally on Wednesday, March 10, at 1:00 p.m. on the steps of the State Capitol.  The Building Jobs bill includes the state historic rehabilitation tax credit.  Your legislators need to hear from you–join the rally and call for passage of this vital incentive to facilitate reuse of our historic buildings.
  • Attend the House Taxes Committee hearing on Monday, March 15, at 2:45 p.m. in Room 10 of the State Office Building, St. Paul. Check-in with Bonnie McDonald, Preservation Alliance of Minnesota executive director, to pick up your “Preservation Equals Jobs” sticker to show your support.  (Check on the MN House website for schedule updates: http://www.house.mn/)
  • Submit letters of support to the editorial pages of your local newspapers, and forward this message to other interested parties.  Please Act Now!!

Background Information
The Minnesota State Historic Preservation Tax Credit was first introduced at the Legislature in 1998, once year after the successful passage of Missouri’s 25% state rehabilitation credit. Since then, Missouri’s credit has generated $1.37 billion in public and private investment. Almost 7,000 jobs were created in the first four years alone of their incentive.

The Minnesota Historic Structure and Community Reinvestment Tax Credit has been reintroduced yearly since 1998 garnering more and more bipartisan support from rural, suburban, and urban legislators. In 2009, the rehabilitation tax credit was included in a comprehensive jobs bill promoted by the Building Jobs Coalition representing the labor, contracting, design, and real estate industries.  The job creation aspects of historic preservation further strengthened interest in the provision and this year, for the first time, the rehabilitation tax credit has been included in both the House and Senate Omnibus Tax Bills.

How Does It Work?

  • Allows credit on state income taxes equal to 20% of the qualified cost of a historic rehabilitation.
  • Parallels federal historic preservation 20% tax credit for National Register listed properties, creating more development opportunities in Minnesota and leveraging millions of dollars in federal monies not currently flowing into our state.
  • Depending on the final legislation, it could be used for both commercial and residential property, developers and homeowners. Federal credit is for income‐producing properties only.

How Does Historic Preservation Create More Jobs?

  • Historic rehab is more labor intensive than new construction with 60‐70% of the investment in labor rather than materials, thereby creating more jobs per dollar output.
  • Increased labor costs create more jobs than new construction resulting in greater income and sales tax revenue. In Missouri, the cost of the credit was recouped in additional payroll taxes alone.
  • In Minnesota, historic rehabilitation projects would create 5.7 more jobs per $1 million in output than manufacturing, 4 more than infrastructure projects, and 2 more jobs per $ 1 million than new construction.  An estimated 1,500 jobs would be created per year by tax credit activity.  A new report by Rutgers found that the federal rehabilitation tax credit has created 1.8 million new jobs since it was enacted by Congress in 1981.

Why is the tax credit so important?

  • The state historic preservation tax credit will more than pay its own way. A 2009 report by the Abell Foundation found that Maryland’s state historic tax credit has returned $8.53 in revenue for each dollar of the state’s tax credit investment and has generated $1.74 billion in total economic activity. Between one-third and one-half of that revenue was returned to the state in payroll and sales taxes prior to the state’s release of funds. A cumulative impact study of the federal rehabilitation tax credit released by Rutgers in 2010 found that there has been a 5:1 return on investment for the American taxpayer.
  • This credit would keep preservation development dollars in Minnesota. Thirty other states–including Wisconsin, Iowa, North Dakota, Missouri, and Kansas—have already enacted similar programs and are now reaping the economic and community benefits, which go far beyond the immediate cost to the state.  Minnesota is the only state in the Upper Midwest with an income tax that does not have a state historic preservation tax credit, effectively sending preservation development dollars to our neighbors.
  • State tax credits leverage other federal funds. The state credit, which in many cases can be paired with the 20 percent federal rehab or low-income housing tax credits, encourages private investment in underutilized historic properties in both urban and rural Minnesota, generating jobs and stimulating local and state economic development.  The Rutgers study found that about 75% of the tax credit’s economic effects are retained in the localities and states where the project is located.

We appreciate your support for this important piece of legislation.  Let’s work together to make 2010 the year Minnesota passes the state historic preservation tax credit!

The Preservation Alliance of Minnesota would like to thank the many members of our coalition supporting passage of the state historic preservation tax credit:

1000 Friends of Minnesota
Adolfson & Peterson Construction
Aeon
American Institute of Architects MN
American Institute of Architects Northern Minnesota Chapter
Anchor Bank of St. Paul
Associated General Contractors of Minnesota
Association of Women Contractors
Armlin, Damon & Associates
Artspace
Bentz-Thompson-Rietow
BKV Group Architects
BOR-SON Construction
Builders Association of Minnesota
City of Brooklyn Park
City of Chaska
City of Hastings
City of Minneapolis
City of Oakdale
City of St. Paul
Danny’s Construction Company
Duluth Affordable Housing Coalition
Duluth LISC
Duluth Mayor Don Ness
Duluth Preservation Alliance
Ellerbe Becket
Faegre & Benson
Fifth Quarter Enterprise/ Emerging Markets
Graham Construction Services
Hammel Green and Abrahamson
Historic Saint Paul
International Brotherhood of Electrical Workers- Minnesota State Council
International Brotherhood of Teamsters
JE Dunn Construction North Central
Johnson-Wilson Constructors
KKE Architects
Knutson Construction Services
Kraus-Anderson Construction
Laborers District Council of Minnesota and North Dakota
Lakehead Constructors
Larkin Hoffman
M&I Bank
McGladrey & Pullen
McGough Construction
McGrann Shea Anderson Carnival Straughn & Lamb
MetroPlains Development
Minneapolis Building Trades
Minneapolis Department of Community Planning and Economic Development (CPED)
Minneapolis Heritage Preservation Commission
Minnesota Historical Society
Minnesota Landmarks
Minnesota Mechanical Contractors Association
Minnesota Pipe Trades
Mortenson Construction
National Association of Minority
Contractors-Upper Midwest
National Electrical Contractors Association-Minnesota & Dakotas
National Trust for Historic Preservation
North Central States Regional Council of Carpenters
Northland Securities
North State
Operating Engineers Local #49
Opus Northwest Construction
PCL Construction Services
Platinum Bank
Plumb/FNR Builders, Inc.
Port Authority
Preservation Alliance of Minnesota
Ryan Companies US
Schafer Richardson
Shaw-Lundquist Associates
Sheet Metal Workers
Sondreal Law Firm
Stark Preservation Planning
St. Paul Building Trades
The Hathor Group
Thor Construction
Urban Works Architecture
U.S. Bank
Woody’s Rebar Company

This Old House proposed for a comeback!

Homeowners looking to reinvest in their historic property will be pleased to hear that there is movement at the Capitol this Session to revive Minnesota’s This Old House provision.  This Old House, which sunset in 2003, allowed for the increase in property tax assessments due to improvements made to an homesteaded property to be abated.  Assessment increases were completely abated the first 10 years and then added back in increments over the next 10 years.

Senator Terri Bonoff (DFL-Minnetonka) has introduced SF2426 to reestablish the program.  In the House, Representative John Benson (DFL-Minnetonka) has authored a companion version (HF2842).  Both bills have been referred to their respective Taxes Committees.