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Economic Reasons For Investing In Historic Preservation

The economic impacts and benefits of historic preservationare both far-reaching and profound. Preservation is a vital economic development tool for communities and regions, while at the same time it is a proven means for creating jobs, attracting investment, generating tax revenue, and supporting small business and affordable housing.

The following statistics from recent studies are typical of the positive findings of preservation’s economic benefits:

• Rehabilitation of historic properties in Georgia during a five-year period created 7,550 jobs and $201 million in earnings.
• Historic preservation activities generate more than $1.4 billion of economic activity in Texas each year.
• Each dollar of Maryland’s historic preservation tax credit leverages $6.70 of economic activity within that state.
• In one year, direct and indirect expenditures by heritage tourists in Colorado reached $3.1 billion.

Studies conducted in a number of states over the last 15 years support some general findings:

Job Creation. Historic preservation projects create jobs, especially in the manufacturing, retail trade, services, and construction sectors. In FY 2008, projects approved for federal tax credits had average budgets of $4.58 million and generated 55 jobs each.

Tax Revenue. Historic preservation makes a substantial contribution to tax collections for state and local governments as well as the federal government.

Investment Leveraging. Public funds as well as other public investment in historic preservation projects through grants, revolving funds, loans, and tax credits are matched many times over with private investment in local rehabilitation projects. In 2008, for example, approximately $1.128 billion in federal tax credits stimulated private investment totaling $5.64 billion.

Property Values. Historic preservation in localities and neighborhoods generally helps to maintain property values. For example, while complex and locality-specific, research in both commercial and residential areas in several locations in Colorado concluded that historic designation did not decrease property values, but increased value or maintained it at the same level as nearby undesignated areas.

Small Business Development. Main Street, local and regional heritage tourism initiatives, and similar community programs generate small business investment and strengthen other public investments. Many statewide studies have found the National Main Street program highly effective and extremely cost-effective.

Heritage Tourism. Visitors to states, localities, and regions spend billions of dollars while visiting historic sites and cultural attractions. Visitors to historic sites and cultural attractions stay longer and spend more money than other kinds of tourists, and therefore make an important contribution to local lodging and restaurant taxes, suppliers of goods and services, and other businesses. Projects that advance heritage tourism are proven economic generators, leveraging existing resources to achieve immediate results for a wide range of local and small businesses. As reported in 2002, in Florida more than $3.7 billion was spent by tourists visiting historic and cultural sites.

Public Property Management. Publicly-owned historic properties help anchor and sustain communities, attract investment, and may provide a visitor destination in addition to their other uses. They support local and regional economies through ongoing facility operations, repair and maintenance, concessions, and other related enterprises.

A synthesis of research on economics and historic preservation (Rypkema 2005) has concluded that “very few of the 500 or so categories of economic activity” has as much economic impact (measured as jobs created, increase in household income, and demand created on other industries) as the rehabilitation of historic buildings. The author goes on to note that “virtually every example of sustained success in downtown revitalization—regardless of the size of the city—has included historic preservation as a key component of the strategy.” The Main Street approach of small business development in historic areas is singled out as an extraordinarily cost-effective strategy for commercial revitalization.

Over the last 15 years, there have been studies conducted at the statewide level in at least 22 states on the economic benefits of historic preservation. These studies provide substantial support to these general findings and, in local real estate markets, point to enhanced property values and tax revenue associated with both commercial and residential historic districts.

The most recent statewide study, prepared by The Rutgers University Center for Urban Policy Research, Edward J. Bloustein School of Planning and Policy in cooperation with Professor Dan Rickman of Oklahoma State University, was published in 2008 for the state of Oklahoma. The study found that in Oklahoma, a total of $357 million annually in direct spending (including rehabilitation of historic structures, heritage tourism, and the Main Street program) created more than 8,000 jobs in Oklahoma. These jobs generated $460 million in output, $166 million in labor income, $243 million in gross state product, and $25 million in Oklahoma state and local tax revenues.

Studies show that building rehabilitation outperforms new construction in creating economic activity, and that “Dollar for dollar, historic preservation is one of the highest job-generating economic development options available.”

In Michigan, $1 million in building rehabilitation creates 12 more jobs than does manufacturing $1 million worth of cars. In West Virginia, $1 million of rehabilitation creates 20 more jobs than mining $1 million worth of coal. In Oklahoma $1 million of rehabilitation creates 29 more jobs than pumping $1 million worth of oil. In Oregon $1 million of rehabilitation creates 22 more jobs than cutting $1 million worth of timber. In Pennsylvania $1 million of rehabilitation creates 12 more jobs than processing $1 million worth of steel. In California $1 million of rehabilitation creates five more jobs than manufacturing $1 million worth of electronic equipment. In South Dakota $1 million of rehabilitation creates 17 more jobs than growing $1 million worth of agricultural products. In South Carolina $1 million of rehabilitation creates eight more jobs than manufacturing $1 million worth of textiles (Rypkema 2005).

These are not just temporary construction jobs but also permanent jobs of various types, including continuing building repair and maintenance. As past studies have found, there are both direct and indirect economic effects from historic preservation, and there is an economic multiplier effect that ripples through the economy.

Key References

Clarion Associates, The Economic Benefits of Historic Preservation in Colorado, prepared for Colorado Historical Foundation, Denver, July 2005.

Leithe, Joni and Patricia Tigue, Profiting from the Past: The Economic Impact of Historic Preservation in Georgia, prepared for Athens-Clarke County Unified Government and Georgia Department of Natural Resources, Government Finance Officers Association, Atlanta, 1999.

Listokin, David, Michael L. Lahr, Bryan Grady, and Dan Rickman, Economic Impacts of Historic Preservation in Oklahoma, prepared for Preservation, Oklahoma, Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers, The State University of New Jersey, New Brunswick, September 2005.

Listokin, David, Mike L. Lahr, Timothy McLendon, and JoAnn Klein, Economic Impacts of Historic Preservation in Florida, prepared for Florida Department of State, Center for Government Responsibility, Frederic G. Levin College of Law, University of Florida, and Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers, The State University, Gainesville, September 2002.

Mason, Randall, Economics and Historic Preservation: A Guide and Review of the Literature, Metropolitan Policy Program, The Brookings Institution, September 2005.

National Park Service, Federal Tax Incentives, Annual Report for Fiscal Year 2008, U.S. Department of the Interior, National Park Service, Technical Preservation Services, February 2009.

National Park Service, Measuring the Economic Impact of Federal Historic Properties, U.S. Department of the Interior, National Park Service, Federal Preservation Institute, June 2005. Preservation Maryland, The Value of Historic Preservation in Maryland, Annapolis, 2000.

Rypkema, Donovan, The Economics of Historic Preservation, National Trust for Historic Preservation, Washington, DC, 2005 (2nd edition).

Texas Historical Commission et al., Historic Preservation at Work for the Texas Economy, Center for Urban Policy Research, Rutgers, The State University, and LBJ School of Public Affairs, University of Texas at Austin, 1999.

Updated April 14, 2009

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