THE ECONOMIC IMPACT OF
THE REHABILITATION INVESTMENT TAX CREDIT PROGRAM
FOR HISTORIC STRUCTURES IN NORTH CAROLINA
THE ECONOMIC IMPACT OF
THE REHABILITATION INVESTMENT TAX CREDIT PROGRAM
FOR HISTORIC STRUCTURES IN NORTH CAROLINA
Income tax incentives for the rehabilitation of historic structures are important tools for historic preservation and economic development in North Carolina. A federal income tax incentive for the rehabilitation of historic structures first appeared in 1976, and today consists of a 20 percent credit for the rehabilitation of income-producing historic properties. Since 1998, North Carolina also provides a 20 percent credit for those taxpayers who receive the federal credit. In addition, the State gives a 30 percent credit for the rehabilitation of nonincome-producing historic properties. Since 1976, 1,275 (903 income- producing and 372 nonincome-producing) completed "certified rehabilitation" projects have been reviewed by the North Carolina State Historic Preservation Office (HPO) involving $545.6 million dollars ($498.6 income-producing and $47.0 nonincome-producing) in construction costs. The purpose of the rehabilitation investment tax credit programs is to encourage the preservation of historic buildings by providing tax credits to taxpayers who rehabilitate "certified historic structures" in compliance with the Secretary of the Interior's Standards for Rehabilitation. The goal is not to preserve a structure as a museum, but to give old and historic buildings a place in the contemporary real estate market, guaranteeing their continued use and economic value.In the 1997 study, Profiting from the Past—The Impact of Historic Preservation on the North Carolina Economy, Donovan D. Rypkema applies three regional input-output multipliers developed by the Bureau of Economic Analysis of the U.S. Department of Commerce to measure the local impact of the economic benefits of historic preservation in North Carolina. Using those multipliers, HPO staff estimates that North Carolina's rehabilitation expenditures on income- and nonincome-producing projects have created 22,600 new full-time jobs, have added $1.2 billion dollars to the state's economy, and have added $437.0 million dollars to the household incomes of North Carolina residents.
As might be expected, most of the rehabilitation investment tax credit activity in the Tar Heel State has occurred where historic resources are concentrated: in older settlements on the coast; in Piedmont cities; and in early 20th century growth towns of the western region. Still, tax credit projects have taken place in 76 counties and in all thirteen congressional districts, spreading the benefits across the state.
Income-producing projects have involved historic downtown commercial buildings, hotels, apartment buildings, schools, industrial buildings, and residences. The average construction cost for income- producing projects is $552,200. The smallest project totaled $6,000 (several) and the largest totaled $28.9 million dollars (West Village in Durham). The most common type of project is overwhelmingly rental residential. Over 5,100 rental housing units have been created or rehabilitated—many of the units are for low- to moderate-income families. Fifty-five percent of the after-rehabilitation uses have been residential, 16 percent office, 14 percent commercial, and 15 percent mixed-use or other uses. Because owners and developers have indicated that the majority of projects completed under the tax credit program would not have been done otherwise, hundreds of National Register or Register-eligible buildings have been saved, rehabilitated, and returned to active use.
The majority of the nonincome-producing projects have involved single-family historic residences, yet there have also been a few projects involving residential condominiums in historic apartment and industrial buildings. Projects have ranged from modest dwellings to substantial residences, and rehabilitation expenditures have ranged from $25,000 to $1.4 million. The average construction cost for nonincome-producing projects is $126,300 per residential unit.
The tax incentives have encouraged the rehabilitation of historic buildings and houses in older neighborhoods and commercial districts in large and small cities and towns across North Carolina, as well as the rehabilitation of historic rural houses and buildings. The program promotes the conservation of existing resources rather than encouraging suburban sprawl.
For further information contact Tim E. Simmons, AIA, Senior Preservation Architect/Tax Credit Coordinator for income-producing projects, or David Christenbury, Preservation Architect/Tax Credit Coordinator for nonincome-producing projects:
Restoration Branch, State Historic Preservation Office
Office of Archives and History
North Carolina Department of Cultural Resources
4617 Mail Service Center
Raleigh, N.C. 27699-4617
email: tim.simmons@ncdcr.gov 919-807-6585
david.christenbury@ncdcr.gov 919-807-6574
12/31/03
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