The economic and fiscal effects of the mississippi historic preservation tax incentives program

The Economic and Fiscal Effects of
The Mississippi Historic Preservation Tax Incentives Program
An Overview for Decision-Makers
Prepared at the Request of:
Philip Gunn, J.D.
Speaker of the House
Mississippi State ResearchTeam
Judith Phillips, M.B.A.,ABD, Research Analyst
Kayla Lee-Hopkins, M.P.P.A.
John Harper, M.P.P.A.
Dallas Breen, Ph.D., Associate Director
P. Edward French, Ph.D., Director
August 2015

Mississippi State University Graduate Students
The Stennis Institute of Government and Community Development at Mississippi State University employs Graduate Research
Assistants enrolled at Mississippi State University to provide assistance to the Institute to conduct research and to work with Institute
staff to conduct a broad scope of work. Funding received by the Stennis Institute is used to provide graduate students with tuition and
graduate student stipends, thereby enabling them to pursue graduate level course work at Mississippi State University. These students
make a significant and important contribution to all research conducted by the Stennis Institute.
John Harper is from Braxton, Mississippi and graduated from Mendenhall High School in 2007.  He
earned an associate’s degree in Business Administration from Copiah‐Lincoln Community College
before transferring to Mississippi State University where he received a bachelor’s degree in Political
Science.  John began his work as a Graduate Research Assistant at the Stennis Institute upon entering
the master’s degree program at Mississippi State University.  He completed his master’s degree in
Public Policy and Administration program in 2013.  John is currently pursuing a doctorate degree in
Higher Education Leadership to prepare for a career in administration at a college or university.

Kayla Lee‐Hopkins is a native of Brandon, Mississippi and graduated from Northwest Rankin High school in 2007.
Previously, she worked as a Program Support Clerk for the Department of Veterans Affairs in Jackson, Mississippi. Kayla
received her bachelor’s degree in Political Science from Mississippi State University and graduated summa cum laude in
2011.  That year, she subsequently entered graduate level study with the Department of Political
Science and Public Administration at Mississippi State, and it was at this time that she began work as a
Graduate Research Assistant for the Stennis Institute of Government.  In 2013, Kayla earned a master’s
degree in Public Policy and Administration in addition to the receiving the award for Outstanding
Graduate Student.  Currently, she is in the process of pursuing a doctoral degree in Community College
Leadership from Mississippi State’s Department of Leadership and Foundations.  Specifically, her
interests in a higher educational context include research and institutional effectiveness; assessment;
and data analytics, reporting, and governance.

THE STENNIS INSTITUTE OF GOVERNMENT & COMMUNITY DEVELOPMENT

EXECUTIVE SUMMARY
Mississippi enacted a state historic tax credit in 2006; this law was intended to
promote private investment in historic properties with the goal of stimulating job
growth, increasing the tax base, and revitalizing communities. The Mississippi
Historic Preservation Tax Incentives Program provides a 25 percent tax credit for the
rehabilitation of historic structures that are used for residential or business purposes;
eligible expenditures must have been incurred after January 1, 2016 to qualify for the
tax credits. Eligibility for the Mississippi Historic Rehabilitation Tax Incentives
Program first requires that the building be listed individually in the National Register
of Historic Places or certified as contributing element to a National Register-listed
historic district, or be designated as a Mississippi Landmark. Secondly, the project
must meet a substantial rehabilitation test — rehabilitation expenditures must exceed
$5,000 or 50 percent of the total basis of the building; the basis is the purchase price
less the cost of land and prior improvements minus prior depreciation. Finally, as a
condition for receiving the credit, all work on the property must meet the U.S.
Secretary of Interior’s Standards for Rehabilitation and the completed work must be
approved by the U.S. National Park Service and the Mississippi State Historic
Preservation Office of the Mississippi Department of Archives and History.
This report is designed to provide decision-makers with information regarding the
economic impact of Mississippi’s state historic tax credit. The report begins by
providing an overview of federal historic rehabilitation tax credits, which are
commonly used in combination with state historic tax credits to leverage investments
in the rehabilitation of historic structures. To provide a contextual framework, this
report provides a synopsis of the use of historic tax credits by other states and studies
that have been conducted on the economic impact of federal and state tax credits; a
brief review of public policy issues associated with tax incentives is also included in
this report.


EXECUTIVE SUMMARY
To examine the economic and fiscal effects of Mississippi’s historic tax credit
program, the Stennis Institute’s Public Policy Research Group utilized the
Preservation Economic Impact Model (PEIM), a comprehensive economic input-
output model developed by Rutgers University for the National Park Service and used
by the National Park Service to annually evaluate the impact of historic tax credits for
the federal government. The PEIM©
model is similar to the more widely known
IMPLAN©
econometric modeling software, but the PEIM©
model was found to
generate more conservative estimates of labor income, value-added, output, and tax
revenues. Therefore, the analysis of the economic effects of Mississippi’s historic tax
credit program that is presented in this study is considered to be relatively
conservative.
This report focuses only on projects that have been completed and received Part III
approval; it does not include an estimated 45 pending projects that are nearing
completion but have not yet received Part III approval as of August 2015. Part III
approval indicates that all construction work has been completed and approved by the
National Park Service and the Mississippi State Historic Preservation Office and that
the building is ready to be placed “in-service;” it is only after the receipt of Part III
approval that the historic tax credit may be claimed by Mississippi taxpayers.
The study area for the analysis contained in this report is the state of Mississippi; any
economic effects that may occur outside of the state are not included. The analysis
contained in this study is focused only on construction-related spending during
rehabilitation; it does not include the economic benefits of potential new business
activity that will occur after historic buildings are placed in service. Further, this study
does not measure any non-market benefits, such as the aesthetics or intrinsic value of
preserving historic buildings, the contribution of historic structures to promoting
heritage tourism, the impact that the renovation of a historic structure may have in


EXECUTIVE SUMMARY
motivating investments in the surrounding area, or the contribution that historic
rehabilitation may make to community revitalization.
During the 9 years since the state of Mississippi enacted the Mississippi Historic
Preservation Tax Incentives Program, 252 historic rehabilitation projects have been
completed within the state. By allowing owners and developers to invest $59.9
million in lieu of state taxes, Mississippi’s state historic tax credit has stimulated a total
of approximately $269.1 million in local, qualified, non-acquisition related historic
rehabilitation construction expenditures between fiscal years 2007 and 2015. These
construction related expenditures have generated approximately 5,573 full-time
equivalent jobs in the state of Mississippi with income to workers of $148,478,800.
The largest employment impact of historic rehabilitation expenditures has been in the
Construction industry, although historic rehabilitation investments have positively
impacted employment in all sectors of Mississippi’s economy. For example, 2,807
full-time equivalents jobs were created in the Construction industry while there were
approximately 606 full-time equivalent jobs created in the Manufacturing sector, 928
full-time equivalent jobs were created in the Services sector, and approximately 105
jobs were created in the Transportation & Public Utilities Sector. Every dollar the
state of Mississippi has invested in historic tax credits leveraged approximately $2.48
of labor income for residents of the state of Mississippi.
Over the period from 2007 through 2015, the economic effects of construction
spending on historic rehabilitation projects that have been incentivized by
Mississippi’s historic tax credits have created $432.5 million in total economic output.
Therefore, every state dollar invested in historic tax credits has leveraged $5.71 of
economic activity in the state of Mississippi.
Historic rehabilitation projects that used Mississippi historic tax credits generated
$16,399,600 of state and local tax revenues during the construction phase prior to


EXECUTIVE SUMMARY
receiving Part III approval; this indicates that the state of Mississippi recouped
approximately 27.4 percent of its investment of $59,894,173 in historic tax credits in
the form of tax revenues before these buildings were placed in service and taxpayers
were eligible to claim these credits against their state income tax.
From 2007 through 2015, historic rehabilitation investments that have been
incentivized by Mississippi’s state historic tax credit have contributed $198.9 million
to Gross State Product — a leveraging factor of $3.31 for every dollar the state of
Mississippi has invested in historic tax credits; of this amount, $2.98 has been retained
as in-state wealth.
There were an additional 45 historic rehabilitation projects that had received Part I
approval for historic preservation in the state of Mississippi that were not included in
the Stennis Institute’s economic impact analysis of Mississippi’s Historic Preservation
Tax Incentives Program. Of the 45 excluded projects, 20 projects with anticipated
qualified rehabilitation expenditures of $37,370,000 had received Part II approval and
were nearing completion. The Stennis Institute estimates that $59,894,173 of
Mississippi’s $60 million aggregate cap on historic tax credits have been exhausted and
that the 20 projects that have received Part II approval will require, at minimum,
$9.34 million in state historic tax credits.
Over the 9 year period since the enacted of the Mississippi Historic Preservation Tax
Incentives Program, 252 historic rehabilitation projects have been allocated
$59,894,173 in state tax credits; this represents an average annual allocation of $6.65
million in historic tax credits, which is equivalent to approximately 0.12 (0.12%)
percent of average General Fund revenues, one percent (1%) of state revenues from
Corporate Income and Franchise taxes, and 0.38 (0.38%) percent of state revenues
from individual income tax.


EXECUTIVE SUMMARY
In return for its investment in historic tax credits, the state of Mississippi experiences
additional inflows of $45.8 million of federal historic tax credits and private
investments of $173.4 million in historic rehabilitation construction activity, which
generates approximately 5,573 full-time equivalent jobs, contributes $198.9 million to
state gross product, and provides $16.4 million in local and state tax revenues. These
economic benefits accrue to the state of Mississippi during the construction stage of
rehabilitation, before historic buildings are placed in service and taxpayers become
eligible to deduct historic tax credits from their state income taxes. These economic
effects do not include the contribution to economic activity that occurs when the
construction phase of rehabilitation is completed and buildings are placed in use for a
range of purposes to include rental housing and apartments, mixed-use retail, offices,
hotels, restaurants, and conference centers. In many cases, the economic contribution
of rehabilitated historic buildings after the buildings are placed in service may far
exceed the economic impact that occurs during the construction phase; this study
does not examine these additional benefits to the state of Mississippi. Prior research
has found that historic preservation supports community sustainability by revitalizing
communities, raises and protects property values, preserves cultural traditions, and
contributes to heritage tourism — this report did not examine these issues within the
state of Mississippi.
The Public Policy Research Group at the Stennis Institute conducts studies
and provides quantitative analysis for input into the policy decision‐making
process in the state of Mississippi at the request of the Mississippi
Legislature and other elected leaders; the Policy Research Group does not
provide policy recommendations. The information contained in this report is
not intended to be a policy recommendation.

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The Economic and Fiscal Effects of the Mississippi Historic Preservation Tax Incentives Program
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Table of Contents
Overview of Federal Historic Preservation Tax Incentives ........................................................................5
Overview of State Tax Credits for Historic Preservation..........................................................................11
The Economic Benefit of Federal Historic Tax Credits............................................................................17
The Economic Return on Investment for State Historic Preservation Tax Credits .............................24
Historic Preservation Tax Credits in Mississippi ........................................................................................33
Historic Tax Credit Usage in the State of Mississippi...........................................................................37
The Economic Impact of Mississippi’s Historic Rehabilitation Tax Credit Program......................45
Economic Impact of Projects using only Mississippi state historic tax credits.................................47
The Economic Impact of Historic Rehabilitation Projects that Combined Mississippi State
Historic Tax Credits with Federal Historic Tax Credits.......................................................................49
Mississippi’s Return on Investment in State Historic Tax Credits......................................................51
Additional Benefits of Historic Preservation Tax Credits.........................................................................55
The Public Policy Issues .................................................................................................................................59
Appendix A: Overview of State Historic Tax Credit Programs ........................................................... LIX
Appendix B: Detailed Economic Contribution by 2-Digit NAICS...............................................LXXIII
Index of Tables
Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties .......................14
Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014........22
Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax
Credits, 2007 to 2015........................................................................................................................................................36
Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015
..............................................................................................................................................................................................36
Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified
Projects, 2007 to 2015......................................................................................................................................................42

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Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of
Investment — Fiscal Years 2007 to 2015.....................................................................................................................43
Table 7: The Economic and Fiscal Effects of Historic Rehabilitation Investments Using Only Mississippi
State Historic Tax Credits, 2007 to 2015 ......................................................................................................................46
Table 8: The Economic and Fiscal Effects of Rehabilitation Projects that used State and Federal Historic Tax
Credits, Mississippi Fiscal Years 2007 through 2015..................................................................................................48
Table 9: The Combined Economic and Fiscal Impact of Mississippi's State Historic Tax Credit — Fiscal Year
2007 to Fiscal Year 2015..................................................................................................................................................52
Table 10: Detailed Economic Contribution by All Mississippi Historic Tax Credit Projects by 2-digit NAICS
2007 to 2015 ..............................................................................................................................................................LXXV
Index of Figures
Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State
Historic Tax Credits — 2007 to 2015 ...........................................................................................................................38
Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for
Mississippi State Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015
..............................................................................................................................................................................................38
Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family, Owner-Occupied Residential
Structures — 2007 to 2015..............................................................................................................................................39
Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal
Historic Tax Credits — 2007 to 2015 ...........................................................................................................................42
Figure 5: Annual Mississippi State Historic Tax Credit Allocations for Projects that Combined State and
Federal Historic Credits — 2007 to 2015.....................................................................................................................44
Figure 6: Comparison of Trends in U.S. Private Construction Spending and Mississippi Historic
Rehabilitation Construction Spending — 2007 to 2014.............................................................................................64
Index of Maps
Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving
Mississippi State Historic Tax Credits —2007 to 2015 ..............................................................................................40
Map 2: Geographic Distribution of Historic Rehabilitation Projects Using State and Federal Tax Credits —
2007 to 2015 ......................................................................................................................................................................54

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5
Overview of Federal Historic Preservation Tax Incentives
Historic preservation was codified with the passage of the National Historic
Preservation Act (NHPA) in 1966; this act created the National Register of Historic
Places and required the creation of state historic preservation offices. The
responsibility for structuring state historic preservations offices (SHPOs) was left to
the discretion of each state; as a result, the organizational structure of state historic
preservation offices differs from state to state. For example, in New York, the SHPO
is housed within the Department of Parks, Recreation, and Historic Preservation; in
Connecticut, the SHPO is housed in the Department of Economic & Community
Development in the Office of Culture and Tourism; in Louisiana, the SHPO is
located within the Office of Cultural Development. In some states, the state historic
preservation office is a free standing agency (e.g. California and Maryland). In
Mississippi, the SHPO is housed within the Mississippi Department of Archives and
History.
Congress created tax deductions for the rehabilitation of historic buildings and the
donation of easements that preserved the façades of historic buildings in the Tax
Reform Act of 1976 (Pub. L. No. 94-455); Congress enacted the federal historic tax
credit (HTC) in 1978 (Pub. L. No. 95-600).1
Current tax incentives for historic
preservation were established by the Tax Reform Act of 1986 (Pub. L. No. 99-514
and Internal Revenue Code Section 47); there are two types of Federal tax credits for
historic preservation:
 A 20 percent tax credit for the certified rehabilitation of certified historic
structures; this credit is available for the rehabilitation of commercial, industrial,
1 Author’s note: a tax credit is different from an income tax deduction; a tax credit lowers the amount of tax owed, while a
tax deduction lowers the amount of income that is subject to taxation.

6
agricultural, or rental residential purposes, but not for properties that that are used
exclusively as the owner’s private residence.
 A 10 percent tax credit for the rehabilitation of non-historic, non-residential
buildings built and first placed in service before 1936 and rehabilitated for non-
residential uses.
 The 20 percent historic preservation tax credit and the 10 percent historic
preservation tax credit are mutually exclusive.
The Tax Reform Act of 1986 also established a tax credit for the acquisition and
rehabilitation or new construction of low-income housing. This tax credit for low-
income housing can be combined with the tax credit for the rehabilitation of certified
historic structures, within the guidelines established by the Internal Revenue Service.
The low-income housing tax credit is approximately 4 percent per year for 10 years
for projects subsidized by tax-exempt bonds or below market Federal loans and is
approximately 9 percent per year for 10 years for projects not receiving certain
Federal subsidies.
This paper is concerned only with the 20 percent tax credit for the certified
rehabilitation of certified historic structures and uses the term HRTC to indicate the
20 percent federal credit program.
The federal historic rehabilitation tax credit (HRTC) provides an income tax credit for
qualifying expenses related to the rehabilitation of historic, income-producing
buildings that are certified historic structures as determined by the Secretary of the
Interior through the National Park Service. Federal historic rehabilitation tax credits
provide a dollar-for-dollar offset against the owner’s federal tax liability.

7
The HRTC program is administered by the National Park Service in tandem with the
Internal Revenue Service and local state historic preservation offices2
to ensure that
qualifying investments in historic properties are in compliance with the Secretary of
the Interior’s Standards; these standards provide separate guidelines for each of the
four approaches — preservation, rehabilitation, restoration, and reconstruction.
Rehabilitation is the most prevalent treatment for the use of Federal historic
preservation tax credits; as codified in 36 CFR 67, rehabilitation is defined as “the
process of returning a property to a state of utility, through repair or alteration, which makes possible
an efficient contemporary use while preserving those portions and features of the property which are
significant to its historic, architectural, and cultural values.” The Internal Revenue Service
administers the U.S. Department of the Treasury’s allocation of Federal historic
preservation tax credits and defines qualified expenses for which the historic
preservation tax credit may be taken. Within IRS guidelines, developers and/or
property owners may transfer historic tax credits to investors in return for equity
investment in a project. Investor equity lowers the amount of debt that is required by
the developer to finance a project, reduces the developer’s debt burden, and reduces
the risk exposure of lenders, thereby facilitating the developer’s ability to secure debt
financing for historic rehabilitation projects. In addition to offsetting the risk of
complex preservation projects and the additional costs that arise from the combined
effects of unforeseen complications that arise during construction and the added costs
of remaining in compliance with the Secretary of the Interior’s Standards for historic
preservation, the historic tax credits provide added financial security to private-sector
lenders.
2 In Mississippi, the State Historic Preservation Office (SHPO) is within the Mississippi Department of Archives and
History.

8
The federal HRTC program is national in scope and may be used in every state; it is
not limited by geography or by the income level of the community (or census tract).
An investment in any geographic location may qualify as long as the proper steps are
taken to qualify the building for the HRTC program. The federal HRTC program has
broad application because there are no federal ceilings on the amount of the credits
that may be used on a single project; the use of the HRTC is determined by the
eligibility of the historic structure and not by funding ceilings. If the building meets
the criteria of the National Park Service and the state historic preservation office, the
project will be eligible for federal HRTCs without a cap on the amount of tax credits.
Property owners and tenants under long-term leases3
may apply to the federal HRTC
program; to qualify for the tax credit, the work must be performed on behalf of the
party applying for the tax credit and that party must claim the depreciation for that
property on its federal tax return. The benefit of the tax credit may be transferred to
a tax credit investor in exchange for an equity investment in an entity created by the
property owner or the tenant (e.g. a limited liability corporation or partnership). To
qualify for the federal HRTC, the taxpayer must complete and submit an application
to the National Park Service; this application is submitted through the state historic
preservation office (SHPO) in the state where the property is located.
The first step in the federal HRTC process is the submission of a Part 1 application to
the SHPO to determine project eligibility; for the 20 percent HRTC,4
the building
must be individually listed in the National Register of Historic Places or be certified as
contributing to a registered historic district. Upon the determination of project
3 Author’s note: Under current federal regulations, long-term leases are leases that have a remaining lease term of more than 27.5 years
for residential property or more than 39 years for non-residential property.
4 Author’s note: A Part 1 application must also be submitted to determine project eligibility for the 10% federal tax credit for non-
significant buildings built before 1936 that are being rehabilitated for income-producing, non-residential purposes and in cases where
applicants are seeking a charitable donation for a historic preservation easement.

9
eligibility, owners who are seeking a 20 percent HRTC submit a Part 2 application to
the SHPO for designation as a “certified rehabilitation.” The Part 2 application
contains detailed architectural plans and drawings for the proposed work and is
reviewed by the SHPO to assure conformance with the standards; the Part 2
application is then reviewed by the National Park Service to assure that the
rehabilitation is in conformance with the Secretary of the Interior’s Standards for
Rehabilitation contained in 36 CFR 67. Certified rehabilitation projects must be
“consistent with the historic character of the property and where applicable, the district in which the
structure is located.” Part 2 applications include estimated qualified rehabilitation costs
(QREs). Normally, work conducted under a Part 2 application is completed within 24
months; projects can be phased in under a special 60-month provision. Certified
qualifying rehabilitation expenditures (e.g. construction hard costs, development fees,
architectural, engineering, and surveying fees)5
are reported on a Part 3 Project
Completion form; these are the qualifying costs of the rehabilitation and do not
include other costs that may be associated with the project such as property
acquisition, furniture, equipment, new construction, and the ancillary costs of
improvements such as parking lots, sidewalks, or landscaping. The HRTCs may be
claimed during the tax year that the project is placed in service; for phased projects,
the HRTCs may be allowed before the rehabilitation is complete as long as the project
meets specific “substantial rehabilitation” requirements. The federal HRTC has a
carry-back of one year and a carry-forward of 20 years; federal HRTCs may be subject
to recapture unless the owner or long-term lessee maintains an ownership interest in
the historic structure for five years following the completion of the project. If the
owner disposes of the building within one year after the building is placed in service,
5 Author’s note: Qualified rehabilitation expenditures are expenditures that are chargeable to the capital account for real
property, which can be depreciated under §168 of IRS §47(c)(2).

10
100 percent of the HRTC may be recaptured; after one year, the tax credit recapture
amount is reduced by 20 percent per year. During the five-year holding period, the
National Park Service or the state historic preservation officer may inspect the
rehabilitated structure at any time; if the work was not conducted in compliance with
that approved in the Part 2 certification or if unapproved alterations have been made
to the building, the HRTC eligibility certification may be revoked. There are multiple
provisions, including passive activity limitations and at-risk guidelines contained in the
Internal Revenue Code that govern the treatment of HRTCs — these provisions are
not described in this document.
Generally, historic preservation projects are costlier and have higher risks than new
construction, which makes these projects more difficult to finance; many projects are
located in deteriorating downtown areas, in buildings that have been vacant over a
long period of time, and/or are prohibitively expensive. Federal HRTCs provide
funding for developers that rehabilitate certified historic landmarks and other
buildings to reuse them as income generating properties that create jobs and promote
economic revitalization. The most common uses of HRTCs are:
 Commercial offices and retail properties
 Mixed-use (commercial/residential) properties
 Hotels and hospitality properties
 Entertainment and cultural facilities
 Community centers
 Educational facilities
 Factories and industrial facilities
 Agricultural facilities

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Historic tax credits are attractive to a range of individual and institutional investors
that have substantial federal tax liability; banks and other financial institutions are
frequent participants in HRTC projects because these investments enable banking
institutions to meet their Community Reinvestment Act requirements. HRTCs act as
incentives to enhance the ability to finance challenging projects by:
 Creating a source for lower-cost equity investment in marginal projects, enabling
equity investors to contribute capital to the project and improving investors’ rate
of return
 Reducing the developer’s project cost and improving the developer’s project cash
flow; tax credits improve the developer’s return on investment in the project
HRTC projects also create multiple opportunities within the banking and financial
sector to offer a range of products and services related to rehabilitation projects; these
include: predevelopment and acquisition loans, letters of credit, warehouse lines of
credit, mezzanine or bridge loans, construction loans, and permanent mortgage
financing.
Significant development investments that might not otherwise be feasible can be
successfully financed by coupling HRTCs with a range of federal, state, or local
incentives that may include Low-Income Housing tax credits, New Market Tax
Credits, Community Development Block Grants, Brownfield Economic
Development Initiative Grants, USDA Rural Development Loan Programs, Tax
Increment Financing, and state-level historic preservation tax credits.
Overview of State Tax Credits for Historic Preservation
There are approximately 35 states in the U.S. that provide state-level historic tax
credits to encourage the preservation and rehabilitation of historic structures.
Generally, state historic preservation tax credits mirror the characteristics of the

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federal HRTCs: a criteria for establishing qualifying buildings, standards for
rehabilitation, a method for calculating the allowable tax credit based upon a
percentage of rehabilitation expenditures, and a minimum required investment;
however, these policies vary by state. Some states allow developers to use the state
tax credit on single-family owner-occupied housing; the federal HRTC may not be
used for this purpose. State policies also vary with regard to the level of the tax credit
percentage (e.g. 20 percent of the cost of qualified rehabilitation expenditures
[(QREs)] or 25 percent of QREs); for example, the state of Mississippi has a total
aggregate cap of $60 million on its state historic tax credit. In some cases, states have
placed annual caps on the total dollar amount of historic tax credits that may be
authorized (e.g. Connecticut places a $15 million annual aggregate limit on HTCs used
to convert commercial or industrial property for residential use only); other states
have set limits on the amount of tax credits that may be claimed for any single
rehabilitation (per-project caps), or requirements for the geographic dispersion of
investments using state historic tax credits. Certain states also allow a local option
historic tax credit (e.g. Maryland); other states provide a property tax abatement
through a reduction of between 10 and 50 percent to the appraised value of historic
properties that have been rehabilitated. Quite a few states have monetized historic tax
credits allowing eligible entities to opt to take the credit as a refund (in cases where
there is no state tax liability), to convert the tax credit to a mortgage credit certificate
for banks or mortgage lenders who provide financing for the rehabilitation (e.g.
Vermont), or to allow the sale or purchase of HTCs as a credit against franchise tax
liability (e.g. Texas, which does not have a state income tax).
State policies related to annual aggregate caps, individual project caps, and the
transferability of credits will determine the effectiveness of a state historic tax credit
program. States impose aggregate caps on the total dollar amount of credits that may

13
be awarded to rehabilitation projects for the purpose of limiting the liability exposure
of the state treasury; in addition to total aggregate caps, some states impose an annual
aggregate cap on the dollar amount of historic tax credits that may be issued. For
example, the state of Arkansas has an annual program cap of $4 million in credits, a
per-project cap of $125,000 in credits for income producing properties, and a per-
project cap of $25,000 for non-income producing properties. Annual program caps
and per-project caps may negatively impact the effectiveness of a state historic tax
credit program because the amount of the credit may be inadequate to provide a
sufficient incentive for large projects and may incentivize projects that do not require
the tax credit while excluding projects that cannot be financed without the credit. To
be rational, state historic tax credits must enhance the feasibility of projects that
would not be able to be financed otherwise or with the Federal rehabilitation tax
credit alone; otherwise, there is no reason to invest taxpayer funds in these projects
except for the purpose of attracting Federal HRTC dollars into a state.
Transferability is a key component to structuring an effective state historic tax credit
policy. An important consideration in the design of state historic tax credits is
whether the state credit will leverage more investment into the state through the use
of Federal rehabilitation tax credits, thereby attracting new dollars into the state and
increasing the economic benefit of rehabilitation investments. All state historic tax
credits are theoretically designed so that projects that qualify for state historic tax
credits (with the exception of single-family, owner occupied projects) also qualify for
federal HRTCs, making it possible to leverage federal HRTCs with state credits. State
historic tax credits only have value to those who owe state income taxes (a relatively
limited universe of investors), while the Federal HRTC is of value to those who owe

14
Table 1: Aggregate and Project Caps on State Historic Tax Credits for Commercial Properties
State Aggregate Per Project Cap Comments
Alabama $20 million $5 million Starts May 15, 2016
Arkansas $4 million $125,000 in credits
Colorado None $50,000
Connecticut $50 million over 3 years $5 million per project
Delaware $5 million None For both homeowners and commercial
Georgia None $300,000
Illinois None None River Edge Redevelopment Zone only
Indiana $450,000 None
Iowa $45 million None
Kansas None None
Kentucky $5 million None For both homeowners and commercial
Louisiana None $5 million per taxpayer In development district
Maine None $5 million per project
Maryland Annual appropriation $3 million per project
Approximately $10 million annual average
appropriation
Massachusetts $50 million None
Minnesota None None
Mississippi $60 million None
Missouri $140 million None
Projects with eligible costs less than
$1,100,000 are not subject to cap
Montana None None 5% add‐on to federal
Nebraska $15 million $1 million in credits
New Mexico None
$25,000 outside
$50,000 in Arts &
Cultural District
New York None $5 million only in designated distressed areas
North Carolina None None
North Dakota None $250,000 In a “renaissance zone” only
Ohio $60 million $5 million
Oklahoma None None
Pennsylvania $3 million $500,000 Started 2012
Rhode Island $34.5 million None Cap currently set by legislature
South Carolina None None
10% add‐on to federal; 25% for other
eligible properties
Texas None None Started Jan 1, 2015
Utah None None
limited to owner‐occupied and residential
property
Vermont $1.5 million None 10% add‐on to federal
Virginia None None
West Virginia None None 10% add‐on to federal
Wisconsin None None 20% credit
Source: National Trust for Historic Preservation
Author's Note: Appendix A provides more detailed information on state historic tax credit programs.

15
federal income taxes (a much larger potential universe of investors) — as a result,
state historic tax credits will have value for some potential investors, but not for
others, and the value of state and federal historic tax credits is limited by the tax
liability exposure (and other investment requirements) of each investor. Because few
project developers have sufficient tax liability to make full use of either the state or
the federal tax credits, some mechanism is required to enable the transfer of the tax
credits to those who can use the credit in exchange for money (equity investment).
For this reason, disproportionate allocation is an important consideration in the
design of state historic tax credit policies. Disproportionate allocation allows the
creation of a pass-through mechanism that enables the state historic tax credits to be
used by taxpayers with state income tax liability while also allowing the federal tax
credit for the same project to be used by out-of-state taxpayers (investors).
Mississippi and Kansas are among the states that have policies that allow for the
disproportionate allocation of state historic tax credits (see Appendix A for a
description of state historic tax credit programs). Some states allow the party who
qualified for the historic tax credit to sell the credit to a third party (e.g. Missouri).
States may also allow the historic tax credit to be structured so that it is refundable
(e.g. Maryland, Louisiana, and Mississippi); this structure is very effective because it
increases the flexibility of the credit, is beneficial for smaller projects where the
transaction cost of more sophisticated investment mechanisms are prohibitive, and
benefits those with lower incomes who may not be able to transfer the credit.
Federal HRTCs cannot be “sold” or transferred directly to a third party and must be
monetized to have value; normally, this is accomplished through a complex
partnership or syndication transaction that requires the creation of another entity that
uses a complex multi-tiered investment structure to function as a pass-through for tax
credits. These are sophisticated investments that require highly specialized legal and

16
tax expertise; the transaction costs associated with structuring partnership and
syndication investment mechanisms that comply with Internal Revenue Service safe
harbor guidelines can be quite high, reduce the financial value of the tax credits, and
set a floor on the cost-benefit of using federal HRTCs on specific projects (e.g.
rehabilitation projects where the investment may be less than $2 to $5 million). State
historic tax credits (HTCs) that have a high degree of transferability, have lower
transactions costs, and can be more easily combined with the federal HRTC have
greater value to the project developer and to tax credit investors; state tax credits that
are easily transferable facilitate the use of state HTCs and federal HRTCs on the same
project. This increases the amount of equity financing that is available for
rehabilitating historic buildings, increases the number of significant and capital
intensive rehabilitation projects that can be accomplished within a state, maximizes
the economic impact of historic rehabilitation projects, and may accelerate the state’s
pay-back for recouping its investment in state historic tax credits.
From the perspective of a taxpayer, state historic tax credits are worth less than
federal historic tax credits; a taxpayer who uses the state tax credit to reduce state
income tax liability can no longer deduct that amount from the amount of federal
income tax owed; therefore, the taxpayer may experience an increase in federal
income tax liability at the same time that state income tax liability is reduced —
depending upon the tax bracket of the taxpayer, the loss of deduction may reduce the
value of the state credit by up to 35 percent for a corporation and up to 39.6 percent
for individuals, depending upon the effective marginal tax rate of the taxpayer.
Generally, a state historic tax credit has an after-tax value in the range of $0.50 to
$0.60 cents on the dollar; although there are investment strategies that may be
designed to reduce these federal tax penalties, these strategies are extremely complex
and are only feasible for extremely large and sophisticated investments. In structuring

17
investments, the reduction in the face value of the state tax credit may be offset
through the use of the federal historic tax credit, which retains up to 100 percent of its
face value because it is not taxed by the federal government.
Research has consistently found that a state historic tax credit should be set at a rate
that is high enough to provide a meaningful incentive to offset the high cost and risk
associated with rehabilitating historic properties; studies by the National Trust for
Historic Preservation6
and others7
have recommended that state historic tax credits be
in the range of 20 to 30 percent of the qualified rehabilitation expenditures and have
no per-project cap in order to be effective. Of the 33 states that offer tax credits for
commercial historic rehabilitation, 19 states have no total aggregate program cap
(Table 1, page 14); however, even without an aggregate cap, many state historic tax
credit programs fail to effectively incentivize rehabilitation because either the
percentage rate or the per-project cap is set too low, or because there are significant
impediments to the transferability of state historic tax credits.8
The Economic Benefit of Federal Historic Tax Credits
Extensive research has documented the key role that historic tax credits have played
in the redevelopment and revitalization of communities.9, 10, 11, 12
The National Park
Service and the National Trust for Historic Preservation have identified historic tax
6 Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report
Produced by the National Trust for Historic Preservation’s Center for State and Local Policy.
7 Kuhlman, R. (2015). A Policy Brief on Return on State Investment. National Trust for Historic Preservation.
8 Schwartz, H. K. (2010). National Trust for Historic Preservation, State Tax Credits for Historic Preservation: A Public Policy Report
Produced by the National Trust for Historic Preservation’s Center for State and Local Policy.
9 Birch, E. L. (2009). Downtown in the “New American City.” Annals of the American Academy of Political and Social Science. 626
(November), 134 – 153. Di:10.1177/0002716209322169
10 Filion, P, Hoernig, H., Bunting, T., and Sands, G. (2004). The Successful Few: Healthy Downtowns of Small Metropolitan
Regions. Journal of the American Planning Association. 70(3), 328 – 343. Doi: 10.1080/01944360408976382.
11 Listokin, D., Lahr, M. L., and Heydt, C. (2012). Third Annual Report on the Economic Impact of the Federal Historic Tax Credit.
New Brunswick, N.J.: Center for Urban Policy Research, Edward J. Bloustein School of Planning and Public Policy, Rutgers – The
State University of New Jersey and the National Trust Community Investment Corporation.
12 Sohmer, R. R., and Lang, R. E. (2001). Downtown Rebound (Fannie Mae Foundation and Brookings Institute Center on Urban and
Metropolitan Census 03, May). Washington, DC. http://www.brookings.edu/research/reports/2001/05/downtown-sohmer.
Retrieved 8-10-2015.

18
credits as “the nation’s most effective program to promote historic preservation and community
revitalization through historic preservation.”13
Birch14
described the transformative impact
of investments in the rehabilitation of historic buildings as follows: “the occupation of
vacant, centrally located buildings, the increased presence of people on formerly empty streets, and
investment in supportive commercial activities and amenities help bring market confidence to worn-out
downtowns.”
Federal and state historic preservation tax credits are market-based incentives
designed to leverage private investment in historic properties. When the private
sector makes investments to rehabilitate buildings using historic tax credits there are
economic multiplier effects that ripple through local and state economies, bringing a
range of benefits that include the creation of jobs, labor income, and tax revenue.
The economic impact of investments in historic rehabilitation projects has been
found to be more significant than the impact associated with many alternative
investments made in other sectors of the economy.15, 16
There are two primary
reasons for the significant impact associated with historic rehabilitation investments:
1) the complexity of the design requirements and the structuring of investments that
use historic preservation tax credits require the engagement of highly skilled
professionals, to include accountants, investment and tax specialists, architects,
engineers, and preservation specialists; and 2) the unique construction requirements
and the labor intensity of historic rehabilitation projects entail more labor, require
labor that is more highly skilled, and create more jobs in the Construction Sector
13 National Park Service. (2012). Federal Tax Incentives for Rehabilitating Historic Buildings: Annual Report for Fiscal Year 2012.
Washington, CD: Technical Preservation Services, National Park Service, U.S. Department of the Interior.
14 Birch, E. L. (2002). Having a Longer View on Downtown Living. Journal of the American Planning Association. 68(1), 5 – 21.
Doi: 10.1080/01944360208977188 (page 2).
15 Ryberg-Webster, S. (2013). Federal Rehabilitation Tax Credits and the Transformation of U.S. Cities. Journal of the American
Planning Association. 79 (4) DOI: 10.1080/01944363.2014.903749.
16 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal
Historic Tax Credits for FY 2013, U.S. Department of the Interior, National Park Service.

19
where the pay scale is higher as compared to other industry sectors (e.g. the Retail
Sector, the Service Sector, or the Food and Accommodation Sector). Studies17
conducted by Listokin and Lahr in the states of New Jersey and Kansas found that
the rehabilitation of non-residential historic buildings generated two more jobs in
construction for each expenditure of one million dollars as compared to a one million
dollar expenditure on new construction; studies of rehabilitation programs in other
states have reached similar conclusions.18, 19, 20, 21
A 2012 study by the National Park
Service found that approximately 75 percent of the economic benefits of historic
rehabilitation investments are retained within the state and local economy where the
project is located, and because historic building rehabilitations are more labor
intensive than new construction, these projects require additional workers at higher
wages.22
The rehabilitation of historic properties creates two waves of economic impact. The
first wave of economic impact occurs during the planning and construction phase of a
historic rehabilitation; the second wave of economic impact occurs after the project is
placed in service and the ongoing operations of business activity commences.
Because historic rehabilitation projects repurpose historic structures for multiple
mixed-use purposes, to include hotels and conference centers, retail, office space,
and/or housing, as the rehabilitated buildings are occupied and business operations
commence, the economic activity associated with the ongoing operations of these
17 Listokin, D., Lahr, M. L., Daffern, M., and Stanek, D. (2009). Center for Urban Policy Research, Edward J. Bloustein School of
Planning and Public Policy, Rutgers University, New Brunswick, New Jersey.
18 Mason, R. (2005). Economics and Historic Preservation: a Guide and Review of the Literature. Discussion Paper prepared for the
Brookings Institution Metropolitan Policy Program. University of Pennsylvania.
19 Lipman, Frizzell, and Mitchell (2003). Historic Rehabilitation and Economic Revitalization Tax Credit Act: Economic and Fiscal
Impacts. Pittsburgh: Downtown Pittsburgh Partnership.
20 Rypkema, D. (1998). Economic Benefits of Historic Preservation. Forum News. 4 (5) (National Trust for Historic Preservation).
21 Leichenko, R. Coulson, E., and Listokin, D. (2001). Historic Preservation and Residential Property Values: An Analysis of Texas
Cities. Urban Studies. 38 (11): 1973 – 1987.
22 Rutgers University, Edward J. Bloustein School of Planning and Public Policy, Annual Reports on the Economic Impact of Federal
Historic Tax Credits for FY 2012, U.S. Department of the Interior, National Park Service. http://www.nps.gov/tps/tax-
incentives/reports.htm. Accessed 8-15-2015.

20
activities generates a second wave of employment, purchasing, and spending. This
second wave of economic impact from the ongoing operations of occupants of
rehabilitated structures is of longer duration than that which occurs during the
construction phase because they are continuous over multiple years into the future.
For example, the rehabilitation of an historic property to create a hotel and
conference center will have economic impact during the construction phase of project
activities. During construction, the project will have three types of economic impact:
direct, indirect, and induced. The direct, indirect, and induced effects that occur
during the construction phase of the rehabilitation of an historic property may be
described as follows:
Direct effects are expenditures made by developers and/or property owners who
rehabilitate historic buildings. The design, financing, and rehabilitation of historic
property requires expenditures by developers and/or property owners on the
purchase of goods (e.g. building materials and other supplies) and services from a
number of industry sectors to include architects, lawyers, engineers, and construction
contractors and workers. This initial spending has a multiplier effect across the local
and state economy; these additional multiplier effects are called indirect and induced
impacts.
Indirect Effects are associated with the inter-industry spending that occurs through
the supply chain that provides goods and services to the developer and/or property
owner. As suppliers must make purchases of goods and services from other firms to
accommodate the new demand, the economy is further stimulated.
Induced Effects are the economic effects of spending by employees of the directly
and indirectly affected industries. As businesses in the supply chain must provide
increased goods and services to accommodate new demand, they may need to hire

21
additional workers or pay existing workers for working longer hours. As wages and
salaries increase, workers will have more household income to spend on goods and
services; this spending will generate additional economic effects on the local and state
economy.
The economic impact of historic rehabilitation projects during the construction phase
of the project are a function of the magnitude of expenditures and industry specific
multiplier effects. Generally, the greater the expenditure, the greater the economic
impact (e.g. jobs created and tax revenues generated). Upon completion of the
construction phase of a historic rehabilitation, the economic effects will rapidly
decrease and end as construction related expenditures cease. Once construction is
completed, the rehabilitated historic structure will be placed in service for its intended
purpose and a new wave of spending associated with the intended use of the structure
will commence — owners will occupy residential structures, tenants will occupy
apartment buildings, and businesses will occupy commercial structures — the
economic impact of these activities are identified as the “ongoing operations (of
business activity).” For example, the ongoing operations of an historic building being
rehabilitated to create a hotel and conference center will begin when the historic
building is placed into service; furniture and fixtures will be purchased, staff will be
hired, and other expenditures will occur during start-up. Then, as hotel and
conference operating activities commence, spending associated with ongoing
operations will create a new round of direct, indirect, and induced economic impact
and new visitors will be attracted into the community, generating related economic
impact from their spending on goods and services. The ongoing operations of a
hotel and conference center require purchases of goods and services from suppliers,
and these suppliers also purchase goods and services from their suppliers; this

22
Table 2: Federal Historic Tax Credits: Qualified Rehabilitation Expenditures by State, Fiscal Year 2014
State
Part 1
Approved
Part 2
Approved
Part 3
Approved
Estimated QRE
at Part 2
Estimated QRE at
Project Completion
(Part 3)
Alabama 20 19 7 $82,449,803 $11,423,841
Alaska 0 1 0 $78,000 $0
Arizona 2 4 1 $57,439,618 $12,014,019
Arkansas 31 22 14 $12,503,023 $18,447,488
California 5 4 10 $65,600,000 $204,098,492
Colorado 7 5 2 $21,512,900 $1,492,681
Connecticut 18 11 3 $103,772,877 $13,513,340
Delaware 3 0 1 $0 $40,000
D.C. 6 3 1 $201,100,000 $18,500,000
Florida 14 5 12 $8,945,000 $77,531,993
Georgia 48 37 17 $72,901,000 $30,356,140
Hawaii 2 2 0 $2,487,385 $0
Illinois 25 17 26 $628,706,937 $726,641,040
Indiana 20 20 6 $107,242,747 $27,251,058
Indiana 1 0 0 $0 $0
Iowa 43 39 16 $88,456,936 $75,993,542
Kansas 13 11 9 $18,379,457 $32,340,132
Kentucky 52 48 20 $75,033,385 $29,669,915
Louisiana 151 106 64 $164,904,530 $228,237,249
Maine 9 10 7 $36,432,419 $59,024,773
Maryland 67 63 21 $118,686,734 $266,317,511
Massachusetts 49 34 48 $162,909,183 $298,369,154
Michigan 46 31 15 $212,675,447 $72,041,995
Minnesota 10 10 8 $253,032,709 $119,677,966
Mississippi 38 28 14 $37,340,000 $20,117,603
Missouri 89 109 60 $619,758,536 $155,051,092
Montana 2 1 3 $75,000 $2,336,631
Nebraska 12 7 8 $16,995,567 $44,003,882
Nevada 1 0 0 $0 $0
New Hampshire 2 4 3 $21,697,884 $30,757,492
New Jersey 18 7 6 $167,187,200 $28,852,602
New Mexico 0 1 1 $5,411,980 $19,421,446
New York 85 89 41 $468,166,306 $382,737,351
North Carolina 53 59 44 $76,080,136 $56,181,236
North Dakota 0 1 0 $9,000,000 $0
Ohio 98 75 52 $825,779,843 $207,910,835
Oklahoma 14 16 9 $82,979,149 $45,094,393
Oregon 6 9 8 $25,163,590 $42,947,470
Pennsylvania 45 37 35 $409,026,043 $430,622,509
Rhode Island 22 19 12 $42,518,655 $88,605,025
South Carolina 25 16 7 $101,296,190 $33,689,897
South Dakota 4 4 4 $7,920,000 $6,238,711
Tennessee 21 15 18 $25,375,000 $30,914,517
Texas 19 6 9 $22,823,000 $70,662,842
Utah 9 7 1 $8,997,000 $14,692,882
Vermont 12 12 9 $8,862,345 $20,557,247
Virginia 129 95 97 $278,310,316 $208,490,454
Washington 8 10 3 $78,150,000 $25,751,910
West Virginia 2 1 5 $3,100,000 $6,265,657
Wisconsin 19 25 5 $139,067,520 $28,892,094
Wyoming 1 1 0 $6,000,000 $0
Total 1,376 1,156 762 $5,982,331,350 $4,323,778,107
Source: Federal Tax Incentives for Rehabilitating Historic Buildings, Statistical Report and Analysis for Fiscal Year 2014, U.S. Department of
the Interior, National Park Service
QRE = Qualified Rehabilitation Expenditures

23
generates additional economic impact, or “ripples” of demand for goods and services
throughout the local, state, and national economy (multiplier effects). Direct
spending on goods and services by the hotel and conference center, supplier spending
on goods and services, and purchases by labor also generate new tax revenues for
federal, state, municipal, and county governments in the form of sales and use taxes,
property taxes, income taxes, and other fees and taxes. Although these secondary
waves of economic effects from the ongoing business operations that are created
when rehabilitated properties are placed in service are longer lasting and generally
more significant than the initial economic effect during the construction phase of
historic rehabilitation, these secondary effects may be excluded from studies on the
economic impact of federal historic preservation tax credits.
A 2015 report by the Office of the Comptroller of the Currency indicates that since
the enactment of the Tax Reform Act of 1976, the federal historic tax credit has
rehabilitated more than 39,600 buildings, leveraged more than $109 billion in private
funds, and generated 2.41 million jobs with associated income of $91.5 in the United
States. Advocacy studies have found that “every $1 of federal tax credit ultimately
generates $1.25 in federal tax revenue.” 23
A 2014 study found that every one dollar
of federal historic tax credit leverages a minimum of $4 in private investment, and that
for every $1 million in historic property investment, 16 jobs are created and $2.1
million in economic activity is catalyzed. 24
In fiscal year 2014, 1,156 proposed
projects with an estimated $5.98 billion in qualified rehabilitation expenditures
received Part 2 approval for the use of federal historic tax credits (Table 2, page 22).
Approximately 762 completed projects with $4.32 billion in qualified rehabilitation
23 PlaceEconomics (2013). The Federal Historic Tax Credit: Transforming Communities. The National Trust for Historic
Preservation, Washington, DC.
24 Federal Tax Incentives for Rehabilitating Historic Buildings, Annual Report for Fiscal Year 2014, U.S. Department of the Interior,
National Park Service, Washington, D.C.

24
expenditures received Part 3 certification for federal historic tax credits in fiscal year
2014 (Table 2, page 22). A study by the Rutgers University Center for Policy
Research funded by the National Park Service found that completed projects certified
in fiscal year 2014 created an estimated 77,762 jobs in the United States.25
In fiscal
year 2014, over 50 percent of completed federal historic tax credit projects certified by
the National Park Service combined the use of federal and state historic tax credits.26
The Economic Return on Investment for State Historic Preservation Tax
Credits
A review of the research on state historic tax credit programs indicates these
programs have positive economic benefits and return the states’ investment within a
period of approximately seven years. Similar to federal historic rehabilitation tax
credits, state historic tax credits have economic effects that occur in two stages; the
first stage of economic impact occurs during the pre-construction and construction
phase of a historic rehabilitation, and the second stage of economic impact occurs
after the structure is placed in service, the buildings are occupied, and businesses
commence operations.
The payback period for state historic tax credits will vary depending upon the final
use of the renovated building. For buildings that are intended for commercial use or
mixed-use, the payback period for state historic tax credits and the magnitude of state
revenues related to income tax, sales tax, and other tax revenues will generally be
greater over the long-term as compared to single-family, owner-occupied residential
rehabilitation projects. For example, an historic renovated building that is used as a
hotel will have significant economic impact after the building is placed in service and
business operations commence. Employees are hired, purchasing and spending to
25 Ibid.
26 Ibid.

25
support on-going operations is continuous, and new visitors are attracted into the
community; this generates state tax revenues and payback occurs quickly. During the
construction phase of single-family, owner-occupied residential rehabilitation projects,
the hiring of labor and material purchasing will have positive economic effects in
terms of job creation and the generation of tax revenues (e.g. income and sales tax);
however, upon completion of the construction phase, the increased property value of
the residential structure and the stabilization of residential neighborhoods may be the
primary benefit once the building is placed in service. Because property tax revenues
accrue to the benefit of local counties and municipalities but not to the state, the state
may recognize relatively little payback on state historic tax credit investments in
single-family, owner-occupied residential structures when these investments are not
an element of a more comprehensive community revitalization strategy. For example,
in many communities, historic residential properties are an element of cultural
heritage and tourism — which attracts new visitors into the community — and new
tax revenues are derived from tourism related spending. When residential historic
rehabilitation occurs on a large scale within a community, this may contribute to the
revitalization of downtown areas, incentivize new business formation, and may also
enhance the community’s ability to attract businesses that consider the quality of life
during the site selection process. Historic rehabilitation projects that enable the
occupancy of formerly vacant or abandoned buildings can also contribute to the
reduction of crime and may incentivize new construction activity within communities.
Most states require that the rehabilitated building be placed in service before the state
historic tax credit can be claimed; this means that the rehabilitation must be
completed prior to occupancy and that all construction expenditures be completed (or
in the case of phased projects, some portion of the rehabilitation must be completed
for occupancy). Once the building is placed in service, the historic tax credit may be

26
claimed on the taxpayer’s tax return during the following year. Therefore, the
economic and fiscal payback of state investments in historic preservation tax credits
are front-loaded because tax revenues are generated during construction activities
prior to the time the building is placed in service and the historic tax credit may be
claimed. The state may also recognize tax revenues associated with ongoing business
operations for up to one year after the building is placed in service depending upon
the timing of the completion of construction activities, the occupancy of the building,
and the commencement of business operations. Therefore, states may start receiving
payback on the state’s investment in historic tax credits for multiple years prior to the
time the cost of these tax credits impact the state’s treasury. Depending upon the
project and the time it takes to complete construction, place the building in service,
and the time it takes to commence business operations, states may recognize tax
revenues from historic rehabilitations for multiple years prior to taxpayers claiming
the historic tax credit against their state income tax.
The majority of studies that have been conducted to examine the economic impact of
state historic tax credit programs and the return on states’ investment in historic tax
credit programs have found that states receive a significant and positive return on
their investment in historic tax credits; examples include:
Maryland. Maryland allows a 20 percent state historic tax credit for expenditures on
qualified rehabilitation projects; the state also provides a 5 percent additional credit
for high performance commercial rehabilitations that achieve LEED ratings and a 10
percent credit for non-historic, “qualified” rehabilitated structures for commercial
properties located in designated “sustainable” communities. A study by the
Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit
found that for every dollar of tax credit investment by the state, the state received an
average return of approximately $1.02 during the first year after a project’s completion

27
and $3.31 within five years after project completion.27
The Maryland taskforce found
that Maryland’s state historic tax credit program is “self-financing and does not require an
outside revenue source. The total fiscal benefits of the Program, taken as a whole, far exceed the cost
to the Treasury.” 28
The study found that large, commercial mixed-use historic
rehabilitation projects with multiple office and commercial tenants had the most rapid
rate of return on the state of Maryland’s investment in tax credits, and, many projects
were found to have a break-even period of one year or less. The study also found that
single use commercial rehabilitation, such as retail establishments or restaurants had a
break-even period of approximately five years.29
Wisconsin. Starting in 1989, the state of Wisconsin had provided a 5 percent HTC
on qualified rehabilitation expenditures; there is no aggregate cap on the state’s HTC
and no per-project cap. On January 1, 2014, Wisconsin increased its HTC from 5
percent to 20 percent of expenditures on qualified rehabilitation projects. Prior to
increasing its HTC, Wisconsin’s HTC program averaged 11 projects per year; in 2014,
31 projects were approved with $35.1 million in state HTCs. A study by the
University of Wisconsin-Milwaukee’s Historic Preservation Institute and Baker Tilly
Virchow Krause, LLP.30
produced the following findings on the economic impact of
25 of the 31 projects that qualified for Wisconsin’s state historic tax credit program in
2014:
 the state’s investment of $35.1 million in HTCs leveraged an additional $211
million in private investment expenditures
27 Final Report of the Governor’s Taskforce on Maryland’s Heritage Structures Rehabilitation Tax Credit, 2004.
28 Ibid.
29 Ibid.
30 Baker Tilly Virchow Krause, LLP. (2015). Wisconsin Historic Tax Credit: Impact Analysis.
http://milwaukeepreservationalliance.org/wp-content/uploads/2015/05/Wisconsin-Baker-Tilly-
HTC_FullReport_Final.pdf. Accessed 7-14-2015.

28
 2,185 full-time equivalent jobs would be created during the construction phase
with an associated labor income of $127.4 million
 the projects would have an overall economic impact of $353.3 million throughout
the state
 the projects would generate $14 million in new tax revenues before the projects
were placed in service and any tax credits were claimed
 the investment in HTCs would be paid back within 7 years (this included the
construction phase and the impact of ongoing operations after the structures were
placed in service)
 by the 10th
year of business on-going operations, an estimated $46 million in tax
revenue would be generated, indicating a 133 percent return on the state’s original
$34.9 million investment in state historic tax credits
Ohio. Ohio enacted a state historic tax credit program in 2006; the program has an
annual cap of $60 million and is jointly administered by the Ohio Historic
Preservation Office, the Ohio Department of Taxation, and the Ohio Development
Services Agency; it allows a tax credit of 25 percent of expenditures on qualified
rehabilitation projects. The tax credits are awarded during two application periods per
year. The Ohio Legislature requires a cost-benefit analysis for each HTC project
during the application process and the state determines whether awarding the credit
will result in a net revenue gain in state and local taxes once the building is placed in
service. Over the period from 2007 to 2013, the state of Ohio awarded $246,393,097
in state historic tax credits to 111 projects; the total construction costs associated with
these 111 projects was $1,411,551,249, and federal HRTCs represented $210.4 million
of construction costs while private funding accounted for $951.9 million of total

29
construction costs. A study conducted by Cleveland State University 31
examined the
impact of Ohio’s historic tax credit program over a period from 2007 through 2025.
This study modeled the staged construction impacts over a period from 2007 through
2015 and the economic impact of the ongoing operations of business activities upon
completion of construction activities over the period from 2010 through 2025; the
findings of this study included the following:
 every $1 of state historic tax credits generates $40.58 of impact during the
construction phase and from ongoing business operations upon completion of
construction
 every $1 of state historic tax credits leveraged $8.25 in construction spending
 for every $1 million in state historic tax credits, approximately 83 construction jobs
were created
 the state of Ohio recovered $0.31 of every dollar invested prior to the
disbursement of any tax credit funds from the Treasury
 every $1 of state historic tax credit leveraged $0.85 in federal HRTCs
 an annual average of 2,942 full-time equivalent jobs were created based upon
construction impacts that were modeled over the period from 2007 through 2013
 during the operation phase of rehabilitation investments, the study projected the
creation of 4,602 full-time equivalent jobs with wages of $4.6 billion, generating
$254.2 million in total state revenues and $92.3 million in local government
revenues
31 O’Brien, K. and Robey, J. (2011). Estimates of Economic Impact of the Ohio Historic Preservation Tax Credit
Program. The Great Lakes Environmental Finance Center of the Maxine Goodman Levin College of Urban Affairs of
Cleveland State University.
https://development.ohio.gov/files/redev/OHPTC%20Economic%20Impact%20Study%20-%20May%202011.pdf.
Accessed 8-14-2015.

30
 during the operations phase, the redevelopment of the 111 historic buildings was
projected to leverage $32.33 in operating benefits for every $1 of state historic tax
credits and create 298 jobs for every $1 million in state historic tax credits over the
period from 2010 to 2025
 the payback for the state of Ohio’s investment of $246.4 million in historic credit
was projected to take 9 years
Georgia. The state of Georgia enacted a state income tax credit for rehabilitated
structures in 2002 (O.C.G.A. § 48-7-29.8); Georgia’s program is administered by the
Georgia Department of Natural Resources’ Historic Preservation Division and the
Georgia Department of Revenue. Georgia provides a 25 percent historic tax credit
for both owner-occupied residences and income-producing certified expenditures;
there is a $100,000 credit cap for owner-occupied residential investments and a
$300,000 tax credit cap for rehabilitation investments in income-producing buildings.
Georgia also allows an additional 5 percent historic tax credit for residential historic
rehabilitations that are located in HUD targeted areas. In 2013, the Georgia
Legislature considered increasing the per-project cap on income-producing historic
rehabilitations to improve the effectiveness of its state historic tax credit program; to
examine the impact of modifying Georgia’s tax credit program, a study was conducted
by the Georgia Tech Research Institute. 32
This study found that over a 20 year
period, Georgia’s historic tax credit program would have the following impact:
 the estimated cost of Georgia’s historic tax credit program to the state treasury is
$89.65 million; these tax credits were projected to leverage $668.07 million of
construction spending within the state
32 Georgia Tech Research Institute, The Projected Economic and Fiscal Impacts of Improvements to Georgia’s Historic
Rehabilitation Investment Incentive, March 2013.

31
 spending associated with the construction phase of historic rehabilitations was
projected to support 10,911 full-time equivalent employment (direct, indirect, and
induced) and create $541.66 million in associated labor income
 during the construction phase of rehabilitation, $54.37 million in tax revenue
would be returned to the state treasury; this indicates that approximately 60
percent of the state’s investment in historic tax credits would be returned prior to
the tax credits being claimed after the buildings were placed in service
 after the buildings are placed in service, the estimated annual recurring tax
revenues associated with the ongoing operations of business occupants of
rehabilitated historic structures were projected to be $19.7 million
 for every dollar the state invests in historic tax credits, it will collect $3.49 in new
tax revenues; this included the impact of the construction phase and the ongoing
operation phase of business activities
The positive economic yield on state investments in state historic tax credits has
motivated multiple states to implement historic tax credit programs or to expand their
existing tax credit programs. For example, six states including Minnesota, Illinois,
Pennsylvania, Texas, Alabama, and Nebraska have adopted state historic tax credit
programs since 2010; Texas, which does not have an income tax, allows the state
historic tax credit to be applied against franchise tax. As previously discussed, in
2014, Wisconsin increased its HTC from 5 percent to 20 percent of expenditures on
qualified rehabilitation projects; in 2014, Colorado increased its program cap to $10
million; and in 2015, and Georgia increased its state historic tax credit HTC program
by $25 million for projects with over $300,000 in qualified rehabilitation expenditures.

32

33
Historic Preservation Tax Credits in Mississippi
In March 2006, Governor Haley Barbour signed Senate Bill 3067 to create the
Mississippi state historic preservation tax incentives program to encourage the
rehabilitation of historic buildings; the Mississippi Department of Archives and
History is responsible for the administration of the program. The state of Mississippi
provides a 25 percent historic tax credit (Mississippi Code § 27-7-22.31) for qualifying
rehabilitation expenditures on certified historic structures. Mississippi’s guidelines for
qualified rehabilitation expenditures generally mirror the requirements for federal
historic tax credits; under Mississippi’s historic tax credit statute, properties that
qualify for the 20 percent federal preservation tax credit will also qualify for the state
tax credit. Mississippi’s historic tax credits may be carried forward for 10 years. Two
major differences exist between Mississippi’s HTCs and federal HRTCs: 1) Mississippi
does not require qualifying properties to be income-producing and allows the use of
historic tax credits on owner-occupied residential properties; and 2) when the amount
of the tax credit is greater than $250,000 and the amount of the tax credit exceeds the
total state income tax liability of the taxpayer, the taxpayer may elect to claim a refund
in the amount of seventy-five percent of the excess in lieu of the ten-year carry-
forward. These refunds are paid in equal installments over a two-year period and
there are specific regulations regarding the ownership structure of pass-through
entities (e.g. partnerships, limited liability corporations, multiple owner property). 33
In the state of Mississippi, the aggregate amount of state historic tax credits is limited
to $60 million. The state of Mississippi permits the transfer of state historic tax
33
On January 17, 2011, Representative Percy W. Watson introduced House Bill 1311 to allow the owners of historic property
income tax credits for rehabilitation expenses to claim a refund for seventy-five percent of the amount of the credit that exceeds a
taxpayer’s liability, rather than to carry the tax credit forward; this bill was passed unanimously by the Mississippi House of
Representatives and the Senate, and signed into law on March 30, 2011 by Mississippi Governor Haley Barbour. House Bill 1311
amended Mississippi Code § 27-7-22.31.

34
credits by disproportionate allocation; however, disproportionate allocation may not
be used in conjunction with the refund provision.
Mississippi’s allowance of a tax refund for historic tax credits achieves multiple
purposes:
 It maximizes the value of the historic tax credit and reduces the risk associated
with making rehabilitation investments in Mississippi’s historic structures. When
historic tax credits are not allowed to be used to receive a refund against state
income tax liability and the developer (owner) of a rehabilitated property is unable
to use the historic tax credit, a limited partnership may be created to allow third-
party investors to use the tax credits. Under these circumstances, third-party
investors may significantly discount the monetary value of the tax credits, resulting
in a reduction in the amount of the equity investment made by the third-party
investor. For example, assume a developer or owner intends to make a
rehabilitation investment that will create a historic tax credit with a “face value” of
$500,000. A third-party investor may discount the value of the tax credit by 50
percent; hence, the developer or owner will receive an equity investment of only
$250,000 rather than the full value of $500,000 for the HTC. The difference
between the “face value” of the HTC and the discounted value of the HTC
($250,000) represents an increase in the amount of debt financing that is required,
and this changes the rate of return on the investment because the developer must
borrow more money to complete the project and increases the risk profile of the
investment.
 The refund of historic tax credits has the potential to reduce the state of
Mississippi’s liability exposure to revenue losses associated with the redemption of
historic tax credits. For example, assume a developer or owner intends to make a

35
rehabilitation investment that will create a historic tax credit with a “face value” of
$500,000. If the developer or owner selects to receive a refund of 75 percent of
the “face value” of the HTC, this will reduce the state treasury’s liability exposure
from $500,000 to $375,000 — a potential reduction, or “savings,” of $125,000 for
the state of Mississippi. Based on Mississippi’s current historic tax credit aggregate
limit of $60 million, the allowance of a refund might be equivalent to savings of up
to $15 million to the state treasury, assuming all holders of state historic tax credits
exercised the option of taking a refund rather than deducting the full “face value”
of the historic tax credit from their income tax liability.
 Mississippi’s allowance of a tax refund for historic tax credits may encourage
Mississippians who have an interest in the preservation of Mississippi’s historic
landmarks but who do not own historic structures to help fund preservation
projects that increase local property taxes, enhance commercial activity, and
contribute to community revitalization.
Projects that piggyback federal historic tax credits and state historic tax credits are
able to attract equity investment from outside of the state; this represents a new
source of capital investment coming into the state of Mississippi. With no per-project
cap, a relatively high aggregate program cap of $60 million, proportional allocation,
and refund provision, Mississippi’s state historic tax credit program is designed to
effectively utilize both federal and state historic tax credits.
According to the National Park Service, from 2001 to 2013, a total of $45,601,295 in
federal historic tax credits were awarded to 172 rehabilitation projects in the state of
Mississippi; the total development expenditures associated with these projects was
$274,706,595. This indicates that every one dollar of federal historic tax credits
leverages $6.00 of construction expenditures in the state of Mississippi.

36

Table 4: Qualified Rehabilitation Expenditures for Projects using Mississippi State Tax Credits, 2007 to 2015
Year
Qualified
Rehabilitation
Expenditures Part
3 Approval
Projects using
Only Mississippi
Historic Tax
Credits
Projects using
State and
Federal Historic
Tax Credits
Total
Projects
Percent of Projects
using Federal and
State Historic Tax
Credits Combined
2007 $1,698,016 8 5 13 38.46%
2008 $5,747,803 11 10 21 47.62%
2009 $7,711,314 9 12 21 57.14%
2010 $78,419,963 10 12 22 54.55%
2011 $46,591,248 11 23 34 67.65%
2012 $9,926,976 11 17 28 60.71%
2013 $36,758,981 24 14 38 36.84%
2014 $16,015,382 21 10 31 32.26%
2015 $36,707,007 26 18 44 40.91%
Total $239,576,690 131 121 252 48.02%
Annual
Average
$26,619,632.25 15 13 28 48.02%
Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History
Year
Projects using Only
Mississippi Historic
Tax Credits
Projects using
Federal and State
Historic Tax Credits
Combined
Total Qualified
Rehabilitation
Expenditures
2007 $985,317 $712,700 $1,698,016
2008 $1,491,045 $4,256,757 $5,747,803
2009 $865,464 $6,845,851 $7,711,315
2010 $518,242 $77,901,721 $78,419,963
2011 $1,535,854 $45,055,394 $46,591,248
2012 $632,050 $9,294,926 $9,926,976
2013 $1,798,524 $34,960,456 $36,758,980
2014 $1,223,445 $14,791,937 $16,015,382
2015 $1,561,550 $35,145,457 $36,707,007
Total $10,611,490 $228,965,200 $239,576,690
Annual
Average
$1,179,054 $25,440,578 $26,619,632
Source: Stennis Institute compilaton of data provided by the Mississippi Department of Archives and History
Table 3: Number of Projects Qualifying for Mississippi State Historic Tax Credits and Federal Historic Tax Credits, 2007 to 2015

37
Historic Tax Credit Usage in the State of Mississippi
The Mississippi historic tax credit was enacted in fiscal year 2006; state fiscal year
2007 was the first year that properties became eligible to claim Mississippi’s historic
tax credit. From fiscal year 2007 through fiscal year 2015, Mississippi’s historic tax
credit has leveraged an aggregate estimated project dollar total investment34
of $279.1
million in 252 completed historic
rehabilitation projects in the state
of Mississippi (Table 3, page36).
Over the 9 years since the
enactment of Mississippi’s
historic tax credit, the total
qualified rehabilitation
expenditures (QREs) that
received Part 3 approval from the
Mississippi Department of
Archives and History was $239.6
million (Table 4, page 36). Of the
252 total projects that used
Mississippi historic tax credits
over the period from 2007 to 2015, 131 projects have used only state historic tax
credits and 121 projects (approximately 48 percent) have combined state historic tax
credits with federal historic tax credits (Table 3, page 36).
34 Author’s note: this estimated total investment includes the portion of total project costs that qualify for the state tax credit (qualified
rehabilitation expenditure) and “non-qualifying” expenses (i.e. outlays that are ineligible for the state historic tax credit), such as
landscaping, sidewalks, or parking lots. While “non-qualifying” expenses are ineligible for the state tax credit, these expenditures are
included in the economic impact analysis presented in this study.
By the end of fiscal year 2015, the total qualified
rehabilitated expenditures for projects that had
completed Part 3 certification totaled $239.6
million. Assuming all completed projects receive a
state historic tax credit, taxpayers are eligible for a
total of $59,894,173 in Mississippi state historic tax
credits — this indicates that Mississippi is close
to reaching its $60 million aggregate cap on tax
credits. At the time of this report, there were an
additional 45 projects that were completed or
reaching completion with estimated qualified
rehabilitation expenditures of $37.4 million —
these projects will require an additional $9.4
million in state historic tax credits.

38
Figure 2: Distribution of Single-Family, Owner-Occupied Residential Rehabilitations Qualifying for Mississippi State
Historic Tax Credit by Total Value of Qualified Rehabilitation Expenditure — 2007 to 2015
Figure 1: Number of Single-Family, Owner-Occupied Residential Properties Qualifying for Mississippi State Historic Tax
Credits — 2007 to 2015

39
Of the 131 projects that have used only state historic tax credits, 122 projects (93
percent) were single-family, owner occupied residential structures that are not eligible
for federal historic tax credits; the qualified rehabilitation expenditures associated with
single-family, owner occupied residential structures was $10,156,002. Single-family,
owner occupied residential rehabilitation projects qualified for $2,539,000 in
Mississippi state historic tax credits over the period from 2007 to 2015; this indicates
that the average state historic tax credit received by single-family, owner-occupied
homes was $20,811 over the 9 year period.
The number of single-family,
owner-occupied residential
structures qualifying for
Mississippi state historic tax
credits has trended upward over
the period from 2007 to 2015,
increasing from eight projects in
2007 to 25 projects in 2015
(Figure 1, page 38). The
qualified rehabilitation expenditure
(QRE) associated with single-
family, owner-occupied residential homes ranged from a low of $5,272 to a high of
$1,100,000; approximately 42 percent of single-family, owner-occupied historic
rehabilitations had QREs of less than $25,000 and eight projects had QREs that
exceeded $250,000 (Figure 2, page 38). The total amount of Mississippi state historic
tax credits that have been approved for single-family, owner-occupied residential
projects has exhibited significant variation and a slight upward trend over the period
Figure 3: Mississippi State Historic Tax Credits Authorized for Single-Family,
Owner-Occupied Residential Structures — 2007 to 2015

40
Map 1: Geographic Distribution of Single-Family, Owner-Occupied Residential Structures Receiving Mississippi State Historic Tax Credits —2007 to
2015
Jackson
Biloxi
Tupelo
Hattiesburg
Vicksburg
Starkville
Canton
Brandon
West Point
Natchez
Oxford
Bay St. Louis
Aberdeen
Senatobia
Ocean Springs
Holly Springs
Greenwood
Cleveland
Hazlehurst
Crystal Springs
Tylertown
Raymond
Church Hill
Woodville
Friars Point
Carrollton
Pass Christian
$2,173,838
$27,278
$95,910
$378,487
$8,392
Not in data
$453,358
$97,301
$100,078
$88,819
$1,211,989
$109,731
$206,832
$1,898,475
$132,006
$132,082
$591,591
$253,613
$172,983
$94,765
$484,854
$44,067
$173,396
$214,848
$380,000
$551,817
$79,491
Total Qualified Rehabilitation Expenditures for Single-Family, Owner-Occupied Buildings
2007 to 2015
®
Total Qualified Rehabilitation
Expenditures 2007 - 2015
$10,156,002
(excludes $455,488 of QRE
for additional projects using
only MS Tax Credits, but were
not used for owner-occupancy)

41
from 2007 to 2015 (Figure 3, page 39); state historic tax credits have ranged from a
low of $129,560 in fiscal year 2010 to a high of $429,871 in fiscal year 2013.
As shown in Map 1 on page 40, single-family, owner-occupied residential projects that
receive state historic tax credits are reasonably well-distributed throughout the state of
Mississippi, with investments tending to cluster around larger cities within the state.
Over the period from 2007 through 2015, Mississippi state historic tax credits issued
for single-family, owner-occupied residential structures represented approximately
95.7 percent of the total tax credits for projects that used only state historic tax credits.
Over this period, state historic tax credits authorized for single-family, owner-
occupied residential structures represented approximately 4.24 percent of the total
$59.9 million in state historic tax credits that were issued for all historic rehabilitation
projects in the state of Mississippi (this includes projects that used state tax credits
only and projects that combined state tax credits with federal historic preservation tax
credits).
There were 9 historic rehabilitation projects that used only Mississippi state historic
tax credits that may have been eligible for federal historic tax credits (e.g. buildings
that were rehabilitated for commercial, multi-family apartments, or retail use), but did
not use federal tax credits for some reason. The qualified rehabilitation expenditures
associated with these 9 historic rehabilitations was $455,488 and these projects
received $113,873 in state historic tax credits.
Over the period from 2007 through 2015, an estimated $2,652,873 in state tax credits
were approved for 131 projects that used only state tax credits (Table 5, page 42).

42
Table 5: Mississippi State Historic Tax Credits and Federal Historic Tax Credits for Completed Certified Projects, 2007 to 2015
Figure 4: Number of Projects Using Only Mississippi Tax Credits and Projects Combining State and Federal Historic Tax Credits — 2007 to 2015

43
Of the 252 projects that used Mississippi state historic tax credits over the period
from 2007 to 2015, 121 projects combined state tax credits with federal historic tax
credits. On average, across the 9 years since the state of Mississippi enacted a state
historic tax credit, 48 percent of all projects combined state and federal historic tax
credits to finance rehabilitation projects (Table 3, page36). The total qualified
rehabilitation expenditures associated with the 121 projects that combined state and
federal historic tax credits was $228,965,200 (Table 4, page 36); the state historic tax
credits associated with these projects was $57,241,300 and the federal historic tax
credit was $45,793,040 (Table 5, page 42).
In the state of Mississippi, rehabilitation projects that combined state and federal
historic tax credits were used for a range of purposes to include the renovation of
historic properties for adaptive reuse as apartments and residential rentals, commercial
offices, retail and businesses services, and for mixed-use that combined business use
with residential housing. Historic structures that were rehabilitated strictly for
business use with no residential component represented the most frequent use of
historic tax credits; over the period from 2007 to 2015, approximately 54 percent of
qualified rehabilitation expenditures in the state of Mississippi were devoted to
rehabilitating structures for business purposes (Table 6, below). The second most
common use of state and federal historic tax credits was for investments that
rehabilitated historic buildings to provide rental housing; these investments
Table 6: Rehabilitation Projects that Combined Mississippi State and Federal Historic Tax Credits by Type of Investment — Fiscal Years 2007 to 2015
Project Type
Number of
Projects
QRE Part 3
Completion
Percent
of
Projects
Percent of
QRE
Amount of
State Tax
Credit
Federal Tax
Credits
Leveraged
Estimated
Total
Construction
Costs
Apartments and Residential Rental 45 $84,193,919 37.2% 36.8% $21,048,480 $16,838,784 $98,506,885
Commericial, Retail, Business Services 55 $123,678,418 45.5% 54.0% $30,919,605 $24,735,684 $144,703,749
Mixed‐Use with Business & Housing
Components
21 $21,092,863 17.4% 9.2% $5,273,216 $4,218,573 $24,678,650
Total 121 $228,965,200 100.0% 100.0% $57,241,300 $45,793,040 $267,889,284
Source: Stennis Institute compilation of data provided by the Mississippi Department of Archives and History

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