During fiscal year 2020, the Minnesota Historic Rehabilitation Tax Credit had the following impacts:
- Direct effect: Eleven properties were approved for the historic tax credit between July 1, 2019 and June 30, 2020.
- Five projects were located in Greater Minnesota (Duluth, Fergus Falls, Mankato, Owatonna, and Winona); the other six were in the Twin Cities.
- Economic impact: Projects planned with support from the Minnesota Historic Rehabilitation Tax Credit will generate an estimated $176.5 million of economic activity in FY2020.
- This includes $49.8 million in labor income. It will also support 720 jobs.
- Tax receipts: The projects completed in FY2020 will generate an estimated $5.5 million in state and local tax receipts.
- Tax credit: For every dollar of Minnesota Historic Rehabilitation Tax Credit projects awarded ($18.5 million when completed), there will be $9.52 in economic activity created in Minnesota.
- Developer insight into the credit: A survey of project developers had 18 responses, representing 22 percent of developers. Eighty-nine percent of developers indicated they would not have developed the project in the absence of the credit.
About this report
Established in 2010, the Minnesota Historic Rehabilitation Tax Credit encourages investment in historic preservation in the state. Historic preservation offers a multitude of potential benefits, including providing a sense of place and continuity, efficiently using resources, preserving craftsmanship, attracting private investment, improving aging neighborhoods and assets, and encouraging creative new uses of existing spaces. The state credit works in concert with the Federal Historic Preservation Tax Incentives Program.
The Minnesota Historic Rehabilitation Tax Credit provides either a state income tax credit or a grant in lieu of the credit. The income tax credit allows a credit of up to 20 percent of qualifying expenses if a property meets eligibility requirements. A grant in lieu of a credit (equal to 90 percent of allowable credit) is available to property owners as an alternative option. Unless reauthorized, the credit will sunset at the end of fiscal year 2021.
To qualify for and receive the historic tax credit, property developers must meet several federal and state guidelines and obtain the appropriate approvals. In Minnesota, the State Historic Preservation Office and the Department of Revenue administer the credit. Property owners only receive the state tax credit by applying for the federal tax credit. This report focuses on the state credit.
University of Minnesota Extension has evaluated the economic impact of the tax credit each year since its beginning. The reports have covered the impact of the credit during the most recent fiscal year and its cumulative effect. Reports in recent years have also included case studies of completed projects. Since this is the 10th year of the report, Extension included two additional items — an exploration of the impact of the credit on property tax values of the case studies and a survey of project developers to gather insight on their experiences with the credit.
Summary of findings since 2011
Reviewed in 2021