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Economic Benefits of HP in Pennsylvania

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Economic Benefits of HP in Pennsylvania Economic Benefits of Historic Preservation Activities in Pennsylvania December 2011 The Economic Benefits of Historic Preservation Activities in Pennsylvania Final Report Submitted By: Pennsylvania Historical and Museum Commission Preservation Pennsylvania 300 North Street 257 North Street Harrisburg, PA 17120 Harrisburg, PA 17120 Final Report Submitted By: Econsult Corporation Urban Partners 3600 Market Street 6th Floor 829 Spruce Street Philadelphia PA 19104 Philadelphia PA 19107 ACKNOWLEDGEMENTS This project is supported by a Preserve America grant from the National Park Service and administered by the Pennsylvania Historical and Museum Commission (PHMC), in cooperation with Preservation Pennsylvania.1 Econsult Corporation was engaged as a Research Partner to produce this report. The Econsult team also consists of Urban Partners, Studio for Spatial Practice, and J. Randall Cotton, former associate director of the Preservation Alliance for Greater Philadelphia. 1 The activity that is the subject of this report has been financed in part with federal funds from the National Park Service of the US Department of the Interior. However, the contents and opinions do not necessarily reflect the views or policies of the US Department of the Interior, nor does mention of trade names or commercial products constitute endorsement or recommendation by the US Department of the Interior. This program receives federal financial assistance for identification and protection of historic properties. Under Title VI of the Civil Rights Act of 1974, Section 504 of the Rehabilitation Act of 1973, and the Age Discrimination Act of 1975, as amended, the US Department of the Interior prohibits discrimination on the basis of race, color, national origin, disability, or age in its federally assisted programs. If you believe you have been discriminated against in any program, activity, or facility as described above, or if you desire further information, please write to: Office of Equal Opportunity, National Park Service, 1849 C Street NW, Washington DC 20240. Cover Photograph © 2011 by Studio for Spatial Practice TABLE OF CONTENTS 0.0 Executive Summary...................................................................................................... 4 1.0 Introduction................................................................................................................. 9 2.0 Impact of State Participants in the Federal Historic Rehabilitation Tax Credit Program 11 3.0 Projected Impact of a State-Level Historic Rehabilitation Tax Credit Program............ 15 4.0 Property Value Impact................................................................................................. 22 5.0 Impact on Heritage Tourism........................................................................................ 26 6.0 Impact of Main Street, Elm Street, Traditional Downtowns and Heritage Areas Programs..................................................................................................................... 30 7.0 Qualitative Impacts..................................................................................................... 36 8.0 Conclusion................................................................................................................... 38 Appendix A Bibliography................................................................................................................. 40 Appendix B Federal Historic Rehabilitation Tax Credit Project Activity by State, 2007 and 2009.. 45 Appendix C Additional Detail on Federal Historic Rehabilitation Tax Credit Project Activity in Pennsylvania................................................................................................................ 47 Appendix D Pennsylvania Counties by Region................................................................................ 51 Appendix E Economic and Fiscal Impact Model Methodology....................................................... 52 Appendix F Additional Detail on the Economic and Fiscal Impact of Federal Historic Rehabilitation Tax Credit Project Activity in Pennsylvania........................................... 54 Appendix G Additional Detail on How a State-Level Tax Credit Leads to More Historic Preservation Projects Being Completed...................................................................... 55 Appendix H Additional Detail on the Change in Compounded Annual Growth Rates Before and After Implementation of State Tax Credit Programs in Selected States...................... 56 Appendix I Additional Detail on the Difference in Estimated Economic and Fiscal Impact Between Having and Not Having a State-Level Tax Credit Program in Pennsylvania.. 58 Appendix J Historic Designation Property Value Analysis Methodology and Results.................... 61 Appendix K Additional Detail on Heritage Sites and Heritage Areas.............................................. 70 Appendix L Additional Detail on Heritage Tourism Visitation........................................................ 72 Appendix M Additional Detail on Heritage Tourism Visitor Spending Methodology and Results... 74 Appendix N Additional Detail on Economic and Fiscal Impact from Heritage Tourism Operating Expenditures and Visitor Spending.............................................................................. 77 Appendix O Additional Glossary of Historic Preservation Programs, Designations, and Resources Available to and Incorporated by Communities within the Commonwealth................ 78 Appendix P Additional Detail on the Main Street Program............................................................ 79 Appendix Q Additional Detail on Case Study Communities in Pennsylvania.................................. 81 Economic Benefits of Historic Preservation Activities in Pennsylvania 3 0.0 ExecutivE SUMMAry istoric preservation plays a vital role in communities across the Commonwealth of H Pennsylvania, providing a multitude of benefits for Pennsylvania and its residents. One often overlooked category of benefits associated with historic preservation activities is economic benefits. Historic preservation efforts can have significant positive impacts throughout the Commonwealth on property values, downtown revitalization, tourism activity, job creation, and tax revenue generation. This project is supported by a Preserve America grant from the National Park Service and administered by the Pennsylvania Historical and Museum Commission (PHMC).2 PHMC sub-granted the Preserve America grant to Preservation Pennsylvania, which engaged Econsult Corporation as a Re- search Partner to produce this report. The Econsult team also consists of Urban Partners, Studio for Spatial Practice, and J. Randall Cotton, former associate director of the Preservation Alliance for Greater Philadelphia. ES.1 Economic and Fiscal impact from Federal Tax Credit Projects Historic preservation projects within Table ES.1 Estimated Total Economic and Fiscal Pennsylvania have leveraged federal impact within the Commonwealth of resources through the Historic Rehabili- Pennsylvania resulting from Federal tation Tax Credit program to stimulate Historic rehabilitation Tax Credit considerable private investment through- Projects, from 1978 to 2010 (in 2010 $) out the Commonwealth, resulting in $7.0 Total from Annual billion in project expenditures from 1978 Tax Credits Average to 2010. Those expenditures have led Total $17.1 billion $534 million to $17.1 billion in total economic impact Expenditures within the Commonwealth, supporting Total 148,000 Jobs 4,600 Jobs Employment 148,000 jobs and generating $380 mil- lion in state tax revenues (see Table ES.1). Total State Tax $380 million $12 million Revenues While construction was by far the most Source: US Dept. of Commerce – Bureau of impacted industry, many other industries Economic Analysis (2007), National Park Service are also estimated to have benefitted (2011), PHMC (2010), Econsult Corp. (2011) from the historic preservation work: Economic Benefits of Historic Preservation Activities in Pennsylvania 4 68% of the expenditure impact and 65% of the employ- ment impact were in industries besides construction. Support of historic preservation efforts within the Com- monwealth makes possible the leveraging of the federal tax credit to stimulate significant private investment, re- sulting in considerable construction activity, with sizeable economic and fiscal implications for the Commonwealth as a whole. A robust historic preservation industry is therefore one that puts people to work, generates tax revenues, and converts federal dollars into local impacts. ES.2 Potential Economic and Fiscal impact of a State Tax Credit Program Landis Valley Farm Museum, Lancaster County. Photo by PHMC. It is projected that adding a state-level tax credit, which Table ES.2 Estimated Total Annual increase in is currently being discussed within the Commonwealth, Economic and Fiscal impact within the would induce an additional $55 million to $110 million Commonwealth of Pennsylvania from in historic preservation projects, which would conserva- Historic Preservation Projects as an Outcome of a Proposed State-Level tively create an additional $130 million to $270 million 25% Tax Credit Program, Assuming it in total economic impact each year, supporting 1,200 to induces 25% to 50% More investment 2,300 jobs and generating $3 million to $6 million in state (in 2010 $) tax revenues, and would be the equivalent of a 5% to 8% Total Expenditures $130 million to $270
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