History and the Hill: Annual Rutgers Study Shows Federal HTC Generated 145,000 Jobs and Benefited Lowest Income Areas

By John Leith-Tetrault, National Trust Community Investment Corporation

On June 1, the Historic Tax Credit Coalition and Rutgers University released their annual study on the economic impact of the federal historic tax credit (HTC). This year's update shows that the federal HTC continues to outpace other economic activities such as highway construction, manufacturing and service sector industries in its ability to generate jobs, labor income, taxes and gross domestic product. This is clearly good news for the HTC industry as it continues to raise the profile of the HTC in Congress and lobbies for modernization of the Section 47 credit.

SOURCES: Department of the Interior, National Park Service, Technical Preservation Services; National Council of State Historic Preservation Offices; and calculations by Rutgers University.

Key Findings
The report, based on research conducted by the Rutgers Center for Urban Policy Research, indicates that for the years 2009-2010, $8.8 billion in federal HTC-financed transactions created an estimated 145,100 jobs. In addition, these projects generated $6.2 billion in earned income, $2.3 billion in federal, state and local taxes and $8.4 billion to gross domestic product. The program also continued its remarkable ability to pay for itself. Over the last two years, the National Park Service allocated $1.58 billion in tax credits that increased estimated federal tax receipts by $1.6 billion. In its summation of the credit's impact on the nation's economy, the Rutgers study concluded: "These impacts were especially welcome in 2009 and 2010 as the nation suffered from a severe economic downturn and various economic stimulus interventions were effected: HTC-inspired investment is stimulus on steroids."

The HTC's strong impacts during the past two years, despite the deepest real estate recession in generations, brought the program's cumulative job totals over the past 33 years to slightly more than two million as a result of the federal government's investment of $23.4 billion in credits. These credits leveraged $90.4 billion in historic rehabilitation activity.

In addition to Section 47's relative efficiency as an economic stimulus, the study shows that the credit is self-targeting to the areas that need it the most. This year's report looked at program investment patterns in Missouri and Kansas and found that they were concentrated in areas of higher unemployment, poverty and minority populations. HTC investments were also found more often in areas with lower rates of homeownership and a higher need for affordable housing.

Rutgers' research also found that states with strong state historic tax credit programs leveraged the highest volume of federal HTC investment. The value to state taxpayers was demonstrated in Missouri, for example, where 89 percent of the economic impacts of the state's $974 million in 2009-2010 historic rehab activity were retained in Missouri, a very high capture rate. That translated into the retention of more than 12,000 of the 16,000 national jobs generated.

National and State Trends
The report was not entirely good news for the industry. Total historic rehabilitation investment dropped sharply from $4.9 billion to $3.8 billion, a percentage drop of more than 22 percent. Credit allocations also dipped to $684 million in 2010, from $939 million in 2009, another indication that the market has declined significantly since the beginning of the recession in 2008. Jobs generated show a similar slowdown from an estimated 111,500 in 2009 to 85,300 in 2010. These reductions in total dollars invested in historic rehabilitation reflected a reduction of average deal size from $5.8 million to $3.8 million rather than a lower volume of Part 3 approvals. Part 3 approvals actually increased 10 percent from 806 in 2009 to 883 in 2010.

Indicated in the table below are the states with the highest dollar volume historic rehab activity in 2009-2010.

A copy of the full report can be downloaded at www.ntcicfunds.com.

John Leith-Tetrault has 32 years of experience in community development financing, banking, community organizing, historic preservation, training and organizational development. He has held senior management positions with Neighborworks, Enterprise Community Partners, Bank of America and the National Trust for Historic Preservation. Mr. Leith-Tetrault is the founding president of the National Trust Community Investment Corporation and serves as the Chairman of the Historic Tax Credit Coalition. He can be reached at (202) 588-6064 or jleith@ntcicfunds.com.

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