Preservation is a wise investment
Published 12:00 am Monday, May 19, 2014
True or false: Historic buildings are always money pits and fixing them up never does any good, except by making a dilapidated building look less ugly?
False! Historic preservation, and in particular, the rehabilitation of historic buildings, results in significant positive financial impacts to the economy at the federal, state and local levels.
In fact, in a report published by Preservation North Carolina, the state’s preservation non-profit organization, the North Carolina Historic Tax Credit program in combination with the federal rehabilitation incentives generated $1.36 billion dollars in project expenditures on just over 2,100 rehabilitation projects since 1998 across North Carolina alone.
How is this possible? According to Donovan Rypkema, a real estate and economic development consultant who specializes in the economic impact of historic preservation, new construction cost is generally half materials and half labor expenditures. However, in rehabilitation projects, 60 to 70 percent of project expenditures are labor and the rest is spent on materials.
When materials like sheetrock, shingles or HVAC equipment are purchased, the materials themselves do not generate any additional money, they simply remain and operate in their own vacuum. Yet, when we spend money to purchase services and labor, we hire our community members and neighbors — the plumbers, electricians and contractors. The laborer then spends the money paid to him or her on other goods and services needed, which continues to pump money into our economy and keeps those dollars circulating.
Furthermore, Rypkema has found that $1 million spent on new construction generates on average 30.6 jobs, whereas $1 million spent on rehabilitation creates 35.4 jobs, almost five more jobs per million invested. If a community chooses to spend $1 million dollars on rehabilitation, five to nine more jobs will be created, 4.7 jobs will be created elsewhere in the community because the newly hired or paid workers will spend money and community household incomes will rise — increasing throughout the community by over $100,000 on average.
In fiscal year 2012, the National Park Service, the national office for historic preservation, found that through the $3.15 billion spent by the federal government in tax credit incentive projects, approximately 57,783 new jobs were created in the United States. The numbers do not lie — preservation makes economic sense.
What about the impact in North Carolina? Since 1998, federal and state rehabilitation tax credits have encouraged over $1.36 billion dollars in private investment in North Carolina alone. This private investment in combination with the tax credit incentives has created more than 20,000 new full-time jobs.
Not considering the post-rehabilitation impacts, such as tourism, the income-producing rehabilitation tax credits create an estimated $12.5 million dollars in gross domestic product (GDP) per year in North Carolina, which generates about 300 new jobs each year.
Even more impressive are the Mill Rehabilitation Credits, a larger incentive package for the rehabilitation of old textile mills and factories in North Carolina. The Mill Rehabilitation Credits generate $30.4 million in GDP per year for North Carolina and generates 600 new jobs, and that’s just the beginning.
Rypkema makes a very compelling point about the economics of historic preservation by noting that historic preservation and downtown revitalization are the only forms of economic development that also develop the community at the same time.
Reinvesting in our community’s buildings and workers not only boosts the economy, but it creates jobs for our fellow community members and makes the community a more attractive and functional place.
Have you ever thought about taking on a rehabilitation project? No matter how large or small, you’ll not only be doing right by the building you save, but you’ll be doing right by your community and making a measurable difference in the economy, and that’s something worth putting your money toward!
Catherine Garner is a planner for the City of Salisbury.