For years, Oregon has lacked a financial tool that exists in 35 other states to help restore historic buildings and revitalize distressed downtowns and commercial districts: a Historic Rehabilitation Incentive (HRI).
In 2014, as Restore Oregon prepared to launch a campaign to create a state HRI, we compiled data on the economic impact this kind of tool has had in other states. It’s pretty impressive. For instance, every dollar invested by Minnesota or Ohio generates over $8 in economic activity.
But Oregon is a unique place, so we engaged ECONorthwest, a highly regarded economic research and consulting firm, to conduct a study to determine what the impact of an HRI would be for Oregon’s economy.
The HRI as proposed by Restore Oregon and introduced as The Revitalize Main Street Act (SB 565) provides for the public auction of income tax credits at a capped amount, with the proceeds used to create a Historic Rehabilitation Fund. The Fund would pay a 25-percent rebate for qualified rehabilitation expenses for historic buildings, closing the financing gap that keeps so many historic buildings from being restored and repurposed.
For this economic impact study, ECONorthwest specifically considered the net impact of an HRI over the period of 2016 – 2025, asking the question: Is Oregon’s economy better off having a state Historic Rehabilitation Incentive or not?
Its objective research, which relied primarily on records from the Internal Revenue Service and other federal government sources, determined that Oregon would indeed be better off with a state HRI.
EcoNorthwest concluded that, at a cost of $9.6 million in 2016 and growing modestly to $11.5 million in 2025, the impact of the proposed HRI to Oregon’s economy would be:
- A four-fold increase in the number of certified rehabilitation construction projects;
- Net new economic output of $32.0 million in 2016, rising to $43.5 million in 2025;
- Between 428 and 581 net new jobs per year in construction and related services;
- Each job would average over $53,000 in wages and benefits, and add a net $22.8 million to $31 million in labor income to Oregon’s economy;
- The federal Historic Tax Credit dollars spent in Oregon would more than double – attracting $11.9 million more in 2016 and growing to $16 million in 2025;
- A net increase of $30.1 to $40.9 million a year in Oregon’s Gross Domestic Product (GDP);
- By 2025, the net increase in real market value of properties rehabilitated as a result of the HRI will exceed $919 million and pay an additional $9 million in local property taxes per year; and
- The buildings rehabilitated and reoccupied as a result of the HRI will house over 12,000 jobs by 2025.
Additional impacts of a state Historic Rehabilitation Incentive that can be inferred but were not quantified in the study include:
- The environmental benefits of reusing the materials and embodied energy of existing buildings;
- The positive economic “halo” effect on surrounding property values from the restoration of a historic building;
- Local government savings from reusing existing downtown infrastructure;
- Increased heritage tourism attracted by more historic destinations; or
- The restoration of tangible assets that serve their communities for decades to come.
As of this writing, SB 565 has been forwarded from the Senate Finance Committee with a “do pass” recommendation to the Joint Committee on Tax Credits where it faces stiff competition for funding. Hopefully this compelling economic data will help win the day!