Economic Impact of Projects Leveraged by the Minnesota Historic Rehabilitation Tax Credit: Fiscal Year 2017
Topic: economic impact analysis
Subtopic: tax credit
In 2010, Minnesota passed legislation creating the Minnesota Historic Rehabilitation Tax Credit. In conjunction with the National Park Service, the program strives to preserve historic places that create character in America’s communities. The Minnesota State Historic Preservation Office and the Minnesota Department of Revenue administer the tax credit in Minnesota.
Each year, the Minnesota Historical Society contracts with Extension to determine the economic contribution of the state credit. The study has three components. One, it quantifies the economic impact of the tax credit in fiscal year 2017. Two, it provides a summary of three completed projects. Three, it summarizes the impact of the credit during the seven years it has been available in Minnesota.
Key conclusions from the study follow.
- Output Effects: In FY 2017, the total estimated economic impact of the Minnesota Historic Rehabilitation Tax Credit was $66.4 million. Directly, through rehabilitation, the credit created $37.4 million of construction activity. This construction activity then generated $29.0 million of output in other industries in Minnesota. Sectors most impacted include wholesale trade, real estate, and healthcare.
- Employment Effects: In FY 2017, the Minnesota Historic Rehabilitation Tax Credit supported an estimated 285 full-time equivalent (FTE) jobs in the state. This includes the 130 jobs at rehabilitation sites during the construction activity (direct effect). It also includes 155 jobs at supporting industries. Sectors most impacted include wholesale trade, real estate, and dining.
- Labor Income Effects: In FY 2017, the Minnesota Historic Rehabilitation Tax Credit generated an estimated $20.0 million in labor income. Directly, the rehabilitation activities created $10.0 million in labor income. Because of spending for rehabilitation, another $10.0 million of labor income was generated across all industries in Minnesota.
- Tax Credit: The projects, upon completion, will be eligible for $6.7 million of tax credit. Thus, for every dollar of tax credit, private developers plan to invest $6.97 of their own funds. Given a total impact of $66.4 million of activity, each dollar of the Minnesota Historic Rehabilitation Tax Credit generates $9.99 of economic activity in the state.
- Total Impact 2011-2017: Since the tax credit became available in 2011, more than 100 projects have received initial approval. Those projects have generated an estimated $2.2 billion of economic activity in the state. This includes $745.1 million in labor income (dollar figures are adjusted to 2017 dollars). The tax credit has supported 12,900 jobs.
- Highlighted Completed Projects: This study features three completed projects—the Pillsbury “A” Mill, Fergus Falls State Hospital, and the Upham Building. Combined the projects generated $342.1 million in economic activity.
Reviewed in 2018