Economic Impact of Historic Preservation in Columbia, Missouri
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Historic Preservation Economic Impact Study Economic Impact of Historic Preservation in Columbia, Missouri Prepared for City of Columbia, Historic Preservation Commission August 2012 10 South Broadway, Suite 1500 WWW.DEVELOPMENT-STRATEGIES.COM St. Louis, MO 63102 DEVELOPMENT STRATEGIES 1 Historic Preservation Economic Impact Study Table of Contents Executive Summary 1 Introduction and Scope 3 Project Methodology Columbia Trend Analysis Economic Impact Structure Case Study: Missouri Economic Impact Study Historic Preservation Capital Expenditures 12 Overview Historic Preservation Tax Credits Economic Impact Heritage Tourism 20 Heritage Tourism in Columbia Economic Impact Downtown Columbia 24 Overview Demographic Analysis Economic Impact Sustainability and Historic Preservation 31 Overview Landfill and Demolition Impacts Conclusion 35 Acknowledgement 37 Appendix 38 DEVELOPMENT STRATEGIES 2 Historic Preservation Economic Impact Study EXECUTIVE SUMMARY This study, commissioned by the Historic Preservation Commission in the City of Columbia, seeks to identify the Historic Preservation by the Numbers economic impact of historic preservation in three sepa- Co- rate forms—historic preservation construction, heritage lumbia’s efforts to preserve historically significant tourism, and downtown development. buildings and districts has shown great impacts on the This interest in the economic aspects of historic preservation is a reflection economy of the City and region. Below are key indica- tors from this study that demonstrate the importance of how the preservation movement has evolved over time. The historic of historic preservation for Columbia: preservation movement began in the United States a century and a half ago. Many of the philosophical and legal approaches to preservation in America were taken from countries in Western Europe. But over the last Money directly invested in Columbia on 150 years, American historic preservation has responded to the particular $88.8 historic preservation because of, and American political and economic context. including, historic preservation tax cred- million its from 2002-2012. Today, historic preservation is a complex system of laws, incentives, poli- cies, and advocacy groups at the national, state, and local levels. There is The number of jobs supported in Colum- active participation from the public, private, and non-profit sectors. This 950+ bia, both directly and indirectly, as a result of private historic preservation network of interests spans geographical, political, social, and economic jobs efforts. perspectives. More importantly, historic preservation has become a fundamental tool The number of jobs created per $1 mil- for strengthening American communities. It has proven to be an effective 38 lion spent on historic preservation—six tool for a wide range of public goals including small business incubation, more than highway construction and jobs two more than new construction. affordable housing, sustainable development, neighborhood stabilization, center city revitalization, job creation, promotion of arts and culture, small town renewal, heritage tourism, economic development, and others. The amount of money generated by pri- $4.40 vate investment per every public dollar The City of Columbia, in order to better understand the economic roles spent on historic preservation tax cred- and impact of historic preservation, commissioned this study. its. DEVELOPMENT STRATEGIES 11 Historic Preservation Economic Impact Study What is the impact of the historic preservation—from earnings of almost $400 million (all in 2012 dollars). All estimates, as- construction, heritage tourism, and downtown develop- sumptions, and methodologies are explained throughout the report. ment—for the City of Columbia? Using a different measure, heritage tourism has a strong impact on the Historic preservation is integral to Columbia’s economy in terms of job Columbia economy because it attracts new and additional spending from creation, economic stimulus, and positive impact on local businesses. In visitors outside the city. Several events and institutions were selected and the last decade alone, private developers utilizing historic preservation tax analyzed for their impact on the economy. Through their operations, it is credits have invested $88.8 million in preserving and restoring historic estimated on an annual basis that 120 jobs are supported, $3.3 million buildings in Columbia. Including investments from the universities, local government, and institutions in Columbia, historic preservation expendi- in earnings are generated, and almost $9 million in total activity is gener- tures expand to well over a quarter billion dollars over this same period. ated. These impacts come from $2.7 million in direct spending on her- itage tourism. As explained throughout this report, ripple effects occur in the economy when spending takes place. The construction industry, like many indus- Finally, impacts on Columbia’s downtown are analyzed. Because of the tries, creates opportunities in the economy for other businesses and sec- need to analyze historic preservation spending in isolation from other tors by both direct and indirect spending. The economic impacts of physi- forms of spending on real estate (beautification, infrastructure improve- cal construction for preserving historic buildings are strong, partly because ments, non-historic buildings, etc.), the effects of historic preservation on other businesses and sectors in Columbia benefit from such investments. Columbia’s “main street” of Broadway and downtown were measured by comparing property value changes over time. Looking specifically at the impacts of expenses attributed to historic preservation tax credit projects, nearly 950 jobs (indirect and direct), $73 Using the Boone County Assessor’s property value records, values were million in earnings for households, and $201 million in total econom- compared for groups of sample properties around the region from 2002- 2012. Historic properties in downtown Columbia appreciated by the most ic activity in the city can be attributed to historic preservation efforts since of all property groups analyzed which also included other downtown 2002. But this is just the effect of using historic preservation tax credits. properties as well as those elsewhere in the city and in unincorporated Local universities, local government, and institutions have also invested in Boone County. These appreciated values, a benefit to property owners their historic structures. For the whole Columbia economy, including in- and the community, also benefit the city through incremental tax revenue. vestments made through universities, local government, and institutions, Tax revenue generated from increased assessment values was also greatest economic impacts since 2002 include over $1 billion in economic activi- in historically preserved buildings in downtown Columbia. ty, nearly 4,500 jobs created or supported, and estimated household DEVELOPMENT STRATEGIES 22 HistoricHistoric PreservationPreservation EconomicEconomic ImpactImpact StudyStudy I N T R O D U C T I O N A N D S C O P E Project Methodology Columbia Trend Analysis Economic Impact Structure Case Study: Missouri Economic Impact Study DEVELOPMENT STRATEGIES 3 HistoricHistoric PreservationPreservation EconomicEconomic ImpactImpact StudyStudy Project Methodology Despite the plethora of research and studies conducted on the economic Does historic preservation create value in a community? benefits of historic preservation, however, dilemmas still exist in truly un- Extensive literature demonstrates that historic preserva- derstanding and quantifying the economic benefits of historic preserva- tion—when adopted and promoted by a municipality, re- gion, or state—is generally considered to be a sound in- tion. This report establishes a repeatable and systematic input/output vestment. model for understanding the effects of historic preservation in the city of Preservation of buildings, both historic and contemporary, is more profita- Columbia. ble and efficient than new construction. If nothing else, many of the costs The methodology for this study was derived from researching noted his- to secure materials and to actually construct a building are largely eliminat- toric preservation economic impact studies—including Rutgers Universi- ed when renovation or rehab is undertaken. Moreover, historic preserva- ty’s study for the state of Missouri in 2002, Place Economics’ report to the tion upgrades the quality and value of the building in question which, in Advisory Council on Historic Preservation in 2011, and Michigan Historic turn, encourages investors in nearby structures to upgrade their properties, Preservation Network’s report in 2002. Details on sources of information historic or otherwise. In the process, property values rise, jobs are created, and research will be referenced throughout this report, but the general businesses and residents move into the newly improved spaces, economic methodological approach was as follows: activity is revived, and tax bases increase. Review literature, studies, and resources on the economic impacts While businesses and residents can vote with their feet by abandoning a of historic preservation. declining neighborhood or run-down building, the governments that man- Discuss implications of past research. age the community cannot. Thus, policy makers have a vested interest in preserving valuable contributions to the community. In tangible forms,