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Economic Impacts of the Kansas State Rehabilitation Tax
Credit Program
by Dale Nimz
In the final hours of the 2009 Kansas Legislative
Session on May 9, legislators amended the provisions of
the Kansas State Rehabilitation Tax Credit Program by
adding the following sentence: “In no event shall the
total amount of credits allowed under this section
exceed $3,750,000 for fiscal years 2010 and 2011.” With
this amendment, legislators placed an unprecedented cap
on the allowance of state historic rehabilitation tax
credits for the next two years. Many supporters of
historic preservation in Kansas believe that this new
restriction is counter-productive because it discourages
the financing of worthwhile rehabilitation projects in
the state.
All around Kansas, neighboring states have studied the
economic benefits of historic preservation (Colorado,
2002, updated 2005, Missouri, 2002, Nebraska, 2007, and
Oklahoma, 2008). To assess the jobs created, tax
revenues increased, and property values increased
through historic preservation projects, an economic
impacts study is needed. As the state-wide advocacy
organization, the Board of Directors of the Kansas
Preservation Alliance allied with the Kansas Historic
Preservation Office and the Mountain-Plains office of
the National Trust for Historic Preservation to
commission a study that demonstrated the economic
benefits of the Kansas State Rehabilitation Tax Credit
Program.
The Alliance applied for a Historic Preservation Fund
grant, advertised a Request for Proposals, and selected
a reputable economics consultant to carry out the
study. When the contract is signed, the consultant will
be announced and begin collecting data for the economic
analysis of the impacts of the tax credit program.
Information on all completed Kansas Rehabilitation Tax
Credit projects has been recorded in a database
maintained by the Kansas Historic Preservation Office.
Because the partners implemented this project primarily
to educate legislators, they asked the consultants to
carry out the work very quickly. It is critical to
complete the draft study report by November 1, 2009.
Then the partners will comment on the draft and the
final draft study report is due on December 1 so it can
be presented to legislators in committee hearings and to
the public in press conferences and meetings.
The Request for Proposals called for the consultant to
produce a full-color illustrated executive summary for a
popular audience which outlines the study objectives,
organization, and conclusions. The audience will be
elected officials, policymakers, and the broader
public. The consultant also will prepare a full
narrative and technical report with information
documenting the national economic and tax impacts of
cumulative Kansas Rehabilitation Tax Credit-supported
rehabilitation (Employment, Income, GDP) and the total
effects, distribution of effects, and composition of
Gross State Product, Effects per million dollars of
initial expenditure as well as other categories of
economic information. The report also will include five
one-page profiles/case studies of completed projects
including photographs, financial information, incentives
used, and anecdotal summaries.
Obviously, this specialized economic input-output
analysis yields complex statistical and technical
conclusions, but concrete data is exactly what is needed
to document and explain the multiplying effects of
individual historic preservation projects in particular
communities. According to Donovan D. Rypkema, The
Economics of Historic Preservation (2nd
ed., 2005), “dollar for dollar, historic preservation is
one of the highest job-generating economic development
options available.” For example, historic preservation
creates more jobs than new construction. Moreover,
historic preservation has ongoing economic impact beyond
the project itself, such as increased property tax and
sales tax revenue and increased property values. To
achieve these economic benefits, public incentives (like
the Kansas Rehabilitation Tax Credit), are often a
necessary catalyst but these incentives consistently are
cost-effective. We expect to find that the Kansas
Rehabilitation Tax Credit Program is a worthwhile
investment, not an expense, but tracking the dollars and
cents will provide the objective answer. Read all about
the results and conclusions of the Economic Impact Study
in the next issue of Preservation News. |