from PreservatioNation:
About Missouri’s Rehabilitation Tax Credit
In total, 29 states offer some form of tax credit for rehabilitating older buildings, and for good reason – these incentives are absolutely critical to preserving local heritage. However, not all state credits are created equally and, as a result, overall effectiveness varies considerably.
As one of the first states to enact such a program, Missouri continues to lead the way with its rehabilitation policy, which currently offers a 25% credit for qualified expenses in rehabilitating commercial and owner-occupied properties listed on the National Register or located in a certified historic district.
Former church, now the Ivory Theatre, rehabbed with state tax credits
Unlike the federal-level rehabilitation tax credit, the Missouri state-level credit includes residential properties – although they comprise only about 3% of all historic tax credit projects in Missouri – into the mix. For commercial projects, the state-level credit can be “stacked” or combined with other federal incentives.
Another important component of Missouri’s exemplary credit is that it permits transferability, or the ability to make an outright transfer of the tax credit to another person or entity. This provision allows the party that earns a credit – which may not have substantial tax liability – to sell the credit to a third party with greater tax liability.
Above all, the most crucial aspect of Missouri’s highly successful historic tax credit is the absence of either an annual aggregate or a per-project cap. These types of restrictions typically lead to a high degree of uncertainty for developers, lenders and investors, therefore resulting in a sharp decline in usage.
Missouri’s Rehabilitation Tax Credit By the Numbers
St. Louis residence rehabbed with state tax credits help
In just ten years, over 900 rehabilitation projects in 37 counties and 55 communities across the state of Missouri have been completed thanks to the historic tax credit. This translates into over $2 billion that has been invested in the rehabilitation of historic buildings.
The program works for small as well as large projects. Only 11% of the projects completed were those with over $5 million in expenditures. The majority are smaller preservation projects. In fact, over 45% had less than $250,000 in expenditures, and nearly 15% were below the $100,000 mark.
Not surprisingly, Missouri leads the nation in use of the federal-level rehabilitation tax credit. Statistics from Missouri show that having a productive state historic preservation tax credit program increases the use of the federal tax credit. According to state officials, the number of projects using federal rehabilitation tax credits doubled after the introduction of the state credit.
Visible Impact of Missouri’s Rehabilitation Tax Credit
From the rehabilitation of Main Streets and residences to the transformation of major urban centers, the impact of Missouri’s policy can be seen across the state. One of the biggest success stories comes from St. Louis, where the credit was used to help rehabilitate nearly 100 vacant and abandoned buildings in the core of the city.
However, the impact of the policy goes far beyond just the restoration of historic structures and the preservation of heritage; it has had major economic, environmental and social implications as well.
To quote John Williams, the president of the St. Louis Association of Realtors, “Economically, restoration projects have created well-paying jobs and increased tourism dollars. Property vales have increased, as well as revenue to local municipalities. Environmentally, restoring versus demolishing old buildings has helped reduce construction debris and conserve energy. Psychologically, more people are considering downtown as a viable place to work, play and live.
See recent press: “St. Louis Mayor Francis Slay says the program has been the single most important factor in reversing the city’s population decline and stabilizing its pool of jobs.”
