The URL can be used to link to this page

Home My WebLink About20070305 - VI-12VI-12 March 1, 2007 TO: The Honorable Mayor and City Council FROM: John Grossman, HPC staff RE: Resolution in support of tax credit legislation Request: The Heritage Preservation Commission unanimously voted on February 20, 2007 to request that City Council approve the enclosed resolution. Background: The Historic Structure & Community Re-Investment Tax Credit, if it becomes law, will encourage the appropriate rehabilitation and maintenance of designated historic commercial and residential property by authorizing a credit on state income taxes equal to 25% of the qualified costs. This would be a great advantage to the citizens of Hastings as it would help historic property owners invest in their buildings, it would employ local tradespersons, and would tend to improve the older neighborhoods of the community. THE CITY OF HASTINGS DAKOTA COUNTY, MINNESOTA Resolution No. 02- -07 A Resolution of the City Council of the City of Hastings In Support of the Minnesota Historic Structure & Community Reinvestment Tax Credit WHEREAS Minnesota Senate File 385 and House of Representatives File 1240 will enable a state income tax credit equal to 25 percent of the qualified costs of rehabilitation on certified historic residential and commercial properties; and WHEREAS The CITY OF HASTINGS AND 1TS HISTORIC PRESERVATION COMMISSION supports the need to preserve Minnesota's physical heritage, promote economic development of its historic areas, encourage the appropriate rehabilitation of underused or vacant historic properties, and believes SF 385/HF 1240 will significantly advance these objectives. NOW THEREFORE BE IT RESOLVED: That the CITY OF HASTINGS AND ITS HISTORIC PRESERVATION COMMISSION support Senate File 385 and House of Representatives File 1240, and directs that a copy of this resolution be forwarded to the Minnesota Senate and House of Representatives and the legislative delegation for the City of Hastings. Adopted by the City Council of Hastings, Minnesota, this 5th day of March, 2007. Ayes: Nays: Absent: Paul J. Hicks, Mayor ATTEST: Melanie Mesko Lee, City Clerk (seal) Minnesota Historic Structure & Community Re-Investment Tax Credit Strengthening and Preserving Minnesota's Main Streets dy Hirtoric Places A coalition of cities, historical groups, and property developers is actively promoting proposed legislation that would allow a credit on state income taxes equal to 25 per- cent of the qualified cost of a historic rehabilitation of residential or income- producingproperties. The proposed legislation, similar to provisions in over 29 other states, would encourage private investment in historic properties in both urban and rural Minnesota, generating jobs and stimulating economic development within exist- ing communities. How Does It Work. • Allows credit on state income taxes equal to 25% of the qualified cost of a historic rehabilitation. • Parallels federal historic preservation 20% tax credit, creating more development opportunities in Minnesota. • Useful for both commercial and residential property, developers and homeowners. Federal credit is for income producing properties only. Economic and So«al Benefits • Creates jobs and economic activity far beyond level of tax credit. • Leverages more federal resources for the state. • Replenishes the tax base through new sales and payroll taxes and an increased tax base. • Preserving historic structures is among the most environmentally friendly of building methods. Resources and energy previously invested in historic buildings are not wasted by going to the landfill. • Creates affordable housing by ~ helping first-time and moderate income buyers through mortgage credit provision. Lender uses tax More labor intensiae than new construction, rehab construction strengthens the local employment base. credit and lets owner buy down rate or reduce mortgage. ~ encouraging low-income rental housing when partnered with the federal low-income housing tax credit. • Encourages private investment in derelict or underused buildings in historic core neighborhoods and puts neglected properties on the tax rolls at a higher value, stimulating more economic invest- ment in surrounding areas, especially on main streets and in historic commercial corridors. • Speeds redevelopment of long vacant buildings, returning them to income-producing and taxable status. • Limits sprawl, supports open space preservation & pro- motes environmental conservation efforts by concentrat- ing on already developed areas. • Supports community identity efforts to capitalize on his- toryand heritage as a tourism draw. In the state of Missouri, the cost of the credit was recouped in additional payroll taxes alone. Vacant jot years Rehabbed in 2003 jot 52.3 million What is Eligible? The tax credit would be available for a property that is any of the fol- lowing: • Listed on the National Register of Historic Places. • Certified as a contributing element of a National Register Historic District. • Certified as historic by local heritage preservation commission or Certified Local Government. historic structure rehabilitation. A taxpayer who incurs costs for the rehabilitation of an eligible property may take a credit against the tax imposed in an amount equal to 25 percent of the total costs of rehabilitation. The costs of rehabilitation must exceed 50 percent of the total basis in the property at the time the rehabilitation activity begins, and the rehabilitation must meet standards consistent with the standards of the Sec- retary of the Interior for rehabilitation as determined by the State Historic Preservation Office of the Minnesota Historical Society. A bill has been introduced in the Minnesota Senate (S. F. 385) and is expected to be introduced in the House. Why Should We Act Now? In the past 30 years, we have lost scores of historic buildings to QUIC% FACTS ON TAX CREDIT USE In Missouri, annual ewnomic impact of rehab tax credit - $1.016 billion - due to economic activity related to historic preservation. In Floods, $2 returned for every jl invested and a 10-fold return for the Main Street program. In Virginia, over $316 million in rehabilitation spurred. 29 other states, including Wisconsin, Iowa and North Dakota, have similar state tax czedits. deterioration and neglect because rehabilitation costs did not make them attractive to development Many of them are in older residential neighborhoods, small-town main streets, and urban commercial cores. Reinvesting in these areas and spurring development will have a signiE- cant impact on their future health and vitality. Although the federal preservation tax credit provides incentives for reha- bilitation, most projects cannot be accomplished using federal credits alone As a result, without a state credit, Minnesota receives lower federal tax credit per-capita than other states. Now is the time to augment the federal historic tax credit with a state credit that will encourage this rede- velopment to occur before it is too late. Artrpace Projects, Inc. Central Community Housing Trust City of Duluth City of Minneapolis City of Pipestone City of Saint Paul City of Wabasha Duluth Affordable Housing Coalition Supporting Organizations Duluth LISC Minnesota Solutions Duluth Preservation Alliance National Tnut for Historic Preservation Historic Saint Paul 1000 Friends of Minnesota League of Minnesota Cities Preservation tllliance of Minnesota Maplewood Area Historical Society Regional Council of Mayors Minnesota Historical Society Twin Cities LISC MN State History Preservation Office White Bear Lake Area Historical Society Minnesota Landmarks Preservation Alliance of Minnesota • Bonnie McDonald, Executive Dinxtor 219 Landmark Center • 75 W. Fifth St. • St Paul, MN 55102 • Phone: 651.2939047 www.mnpreservation.org • bmcdonald(~frtnpreservation.org Pact Sources: State Ffistoric Prese[vation Office of the Minnesota Histoucal Soeiety Donovan Rypkema, The Emawnru ejHiCorir Prermmtiaa, 1994 Taylor & Weber, Histouc Preservation Tax Credit Study, Humphrey institute of Public Affa¢s, University of Minnesota, 2004 Proposed Legislation The proposed legislation, based on a highly successful Missouri law passed in 1997, provides an income tax credit for expenditures for R'aytce Hertel, Crookston Vacant since 1996 Tax jorjeited property now owned by the County, awaiting rehab at estimated 84 million cost; esti- mated demolition costr, 8500.000 Vacant many years Rehabbed at 82 Million in 1994