Thursday, April 1, 2010

Historic State Tax Credit Signed into Law!

This week the state legislature passed, and today Governor Pawlenty signed into law, a new state historic tax credit. After years of work by preservation groups, community advocates, and others, Minnesota has become the 31st state in the nation with such a provision.

The bill is exciting on a number of levels. For individual property owners, it offers a significant tax credit for renovation and rehabilitation. Piggybacking on the federal tax credit, it allows a state income tax credit of 20% when rehabbing a qualified property. The property must be on the National Register of Historic Places (so all properties in the Summit Avenue West Historic District would potentially qualify), and must be income-producing (homesteaded residential properties are not eligible). In an innovative new approach, non-profits such as churches can take advantage of the credit, which they can choose to receive as a grant or against the insurance premium tax.

However, perhaps the deeper impact of the bill is that it is included in the Minnesota Jobs Stimulus Bill, directly recognizing the significant economic impact of preservation. Rehabilitation work employs more people, in better-paying jobs, than either manufacturing or new construction. Other states have seen this impact; in Rhode Island, a recent credit has created 5,334 direct construction jobs in just two years, and in Missouri, the cost of the tax credit has been recouped in payroll taxes alone. If Minnesota follows national models, preservation-related projects would create more jobs than other similarly-sized "shovel ready" projects, including road construction, manufacturing, or new construction.

If projects further leverage their resources, by using green construction techniques, or by purchasing materials at local independent establishments that keep the money in the community, the economic impact increases proportionally. The tax credit is poised to have an important effect not just on Summit Avenue and in Saint Paul, but all over Minnesota.

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