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Saving Mississippi’s past can brighten its economic future, Stennis report says

By TED CARTER 

Supporters of efforts to replenish Mississippi’s historic preservation tax credits will have real numbers on economic benefits to point to as they set about persuading legislators to allocate new tax credits in 2016.

They will present an economic impact report prepared by Mississippi State University’s Stennis Institute of Government and Community Development that concludes Mississippi gets huge value from the dollars it puts into preserving historic properties.

Mississippi is among the national leaders in investment in historic properties but whether it remains one will hinge on persuading legislators to replenish the state’s $60 million in tax credits. The tax credits allocated to save Mississippi’s historic properties dwindled to just a few thousand dollars at the start of 2015. Legislators declined to replenish the fund but will be asked to reconsider in the 2016 session.

Before the money ran out, developers and property owners could cover up to 25 percent of an eligible property’s rehabilitation, an attractive incentive when combined with federal tax credits of 20 percent.

With the nine years of annual tax credit awards of around $6.4 million annually, Mississippi has enhanced the aesthetics of its historic buildings, created business opportunities in and around the properties and raised its standing as a heritage tourism destination, supporters say. Some of those benefits are difficult to put a dollar figure on, but construction spending on restoration can be gauged.

The restorations brought more than a quarter billion dollars in construction spending alone, the Stennis Institute report concluded after examining fiscal aspects of the program from 2007 to the present.

The $59.9 million Mississippi allocated in historic tax credits the past nine years brought $269.1 million in building rehab expenditures and created a total economic output of $432.5 million, according to the economic impact study prepared at the request of Mississippi House Speaker Philip Gunn.

The output figures translate to $5.71 in spending for every $1 invested, said the August 2015 report titled “The Economic and Fiscal Effects of The Mississippi Historic Preservation Tax Incentives Program.”

The rewards came despite historic preservation projects being generally costlier and much riskier than new construction, the report said, and noted the projects are more difficult to finance, many are in deteriorating downtown areas and are in buildings that have been vacant over a long period of time.

Money spent on the fix-ups around the state has generated about 5,570 full-time equivalent jobs and income to workers of $148,478,800, the study estimated.

Every dollar the state has invested in historic tax credits leveraged approximately $2.48 of labor income for state residents, the study reported.

On the federal side, the National Park Service from 2001 to 2013 awarded $45.6 million in federal historic tax credits to 172 rehabilitation projects in the state. Development expenditures associated with these projects totaled $274,706,595, the Stennis report noted.

This indicates that every one dollar of federal historic tax credits leverages $6 of construction expenditures in Mississippi, the reported added, and emphasized that with no per-project cap, Mississippi’s state historic tax credit program is well designed to use both federal and state historic tax credits.

Though a large part of the impact has been in the construction industry, historic rehabilitation expenditures have “positively impacted employment in all sectors of Mississippi’s economy,” the August report said.

Construction accounted for 2,807 jobs, manufacturing about 600, the services sector and the transportation and public utilities sector 105, according to the report.

State and local governments took in $16,399,600 in tax revenues from projects before the buildings were placed in service and the owners able to claim the credits against their state income tax.

The report looked only at projects that have been completed and received Part III approval, the final approval needed before the credits are issued. The study did not count an estimated 45 pending projects nearing completion but not yet given Part III approval.

Part III approval signifies that all construction work has been completed and approved by the National Park Service and the Mississippi Department of Archives and History. With the final approval, the building is ready to be placed “in service.”

Of the 45 projects awaiting Part III approval, 20 had anticipated qualified rehab expenditures of $37.4 million and were nearing completion and eligibility for Part III approval. These 20 projects will require at least $9.34 million in state historic tax credits, the Stennis report estimated.

The Stennis Institute emphasized in its summary that the economic contribution of rehabbed historic buildings after they are placed in service may “far exceed the economic impact that occurs during the construction phase.”

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