The Economic Benefits of Preservation: A National Perspective

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The Economic Benefits of Preservation A National
Perspective
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Recent Preservation Economic Impact Studies

• Fredericksburg (1991)
• Galveston (1991)
• Virginia (1995)
• Indiana (1997)
• Kentucky (1997)
• New Jersey (1998)
• North Carolina (1998)
• Philadelphia (1998)
• Maryland (1998)

• Georgia (1999)
• Texas (1999)
• Maryland (1999)
• South Carolina (2000)
• Colorado (2002)
• Missouri (2002)
• Michigan (2002)
• Florida (2002)
• Massachusetts (2002)
• South Carolina (2002)

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Basic Kinds of Studies

• Property Value Studies
• Sector/Institution Studies
• Economic Impact Studies
• Statewide
• Citywide

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Levels of Analysis

• Academic Technical Professionals
• Practitioners
• Graduate Students
• Do it Yourself

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The 5 Major Measusrables of the Economic Impact
of Preservation

• Job Creation and Household Income from the
  Building Rehabilitation Process
• Heritage Tourism
• Success of Preservation-Based Economic
  Development Strategies
• Impact on Property Values of Local Historic
  Districts
• Impact of Museums/Institutions

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Jobs and Household Income
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The Measurement of Impacts RIMS II
527 Industry Categories
Jobs Direct Indirect
Output in
Impact on Other Industries
Household Income Direct Indirect
Regional Input-Output Modeling System
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Labor Intensity in Historic Preservation New
Construction Rehabilitation
Labor
Materials
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Job Creation in North Carolina
Building Rehabilitation vs. Textile Manufacturing
(per 1 Million in Output)
Textile
11.3
22.0
Manufacturing
Building
19.3
22.1
Rehabilitation
0
5
10
15
20
25
30
35
40
45
Jobs Created
Direct Jobs
Indirect Jobs
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Household Income in North Carolina
Building Rehabilitation vs. Textile Manufacturing
Per 1 Million of Output
Textile
226,600
482,300
Manufacturing
Building
431,900
369,600
Rehabilitation
0
200,000
400,000
600,000
800,000
Household Income
Household Income -- Direct
Household Income - Indirect
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Job Creation in North Carolina
Building Rehabilitation vs. New Construction
Per 1 Million in Output
New Construction
14.7
21.2
Building
22.1
19.3
Rehabilitation
0
5
10
15
20
25
30
35
40
45
Indirect Jobs
Direct Jobs
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Impact of Various Economic Activities Per 1
Million in Expenditures
Highway Construction 33.6 1,197,000 101,00
0 85,000
New Construction Buildings 36.1 1,223,000 1
03,000 86,000
Rehabilitation of Historic Buildings 38.3 1,30
2,000 110,000 92,000
Jobs Household Income State Taxes Local Taxes
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Jobs Household Income in Tennessee(per 1
Million of Output)

• Jobs
• Manufacturing
• 28.8
• New Construction
• 36.1
• Rehabilitation
• 40.0

• Household Income
• Manufacturing
• 603,800
• New Construction
• 764,200
• Rehabilitation
• 826,600

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Heritage Tourism
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What Visitors to Virginia Come to See
80
70
60
50
40
30
20
10
0
Historic
Discount
Shopping
Beaches
Theme Parks
Golf Courses
Preservation
Centers
Centers
First Time Visitors
Repeat Visitors
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Preservation Visitors in Virginia
5
4.5
4.7
4
4.2
3.5
Preservation Visitors
3
2.5
Other Visitors
3.3
2
2.1
1.5
1
Preservation Visitors
0.5
0
Other Visitors
Sites Visited
Days Spent
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• Preservation Visitors in Virginia
• Stay Longer
• Visit Twice as many Places
• Spend 2 ½ Times as much Money as Other Visitors

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Preservation Based Economic Development Strategies

• Main Street

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Preservation Based Economic DevelopmentMain
Street
Over the past 20 years in Main Street Communities

• 16.1 Billion invested in
• Physical Improvements
• 56,300 Net New Businesses
• 226,900 Net New Jobs
• 88,700 Building Rehabilitation Construction
  Projects
• Cost per Job Created -- 2,504
• Leverage of Public Funds -- 39.96 to 1.00

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Impact of Local Historic Districts on Property
Values
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Property Value Appreciation Rates
Six Historic Districts in Maryland
30.0
26.8
26.0
25.0
24.4
20.0
17.9
16.4
16.8
15.0
15.4
15.1
11.7
11.0
10.0
7.4
5.0
6.0
0.0
Annapolis
Berlin
Chestertown
Frederick
Laurel
Mt.Vernon --
Baltimore
Historic District
City Overall
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Change in Property Values
Staunton, Virginia 1987 -- 1995
70.0
60.0
Non-Historic District
50.0
51.9
54.2
51.1
62.8
66.0
Newtown Historic District
40.0
Beverley Historic District
30.0
20.0
Gospel Hill Historic District
10.0
Stuart Historic District
0.0
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When Local Historic Districts Have the Greatest
Positive Impact on Property Values

• Staffed
• Clear, written, illustrated guidelines
• Firm but consistent decisions
• Educational outreach

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Impact of Museums/Institutions
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The Economic Impact of Biltmore

• 215,000,000 to the
• Economy of North
• Carolina
• 760 Employees
• 5,000,000 in Taxes
• 9,500,000 in Direct Payroll

• 8,400,000 Indirect Payroll Impact
• Every 1 spent adds 12.31 to the Regional
  Economy

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The Accidental Findings
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Other Measures of Impact

• Movie Industry
• Small Business Incubation
• Arts Crafts
• Ethnic Diversity
• Downtown Revitalization

• Affordable Housing
• Neighborhood Stabilization
• State Tax Credit as Investment Catalyst
• Major Tax Generator
• Anti-Sprawl Tool

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Other Impacts Are EmergingEconomics One Step
Removed

• Smart Growth
• Workforce Housing

Research into Policy
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Smart Growth
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Historic Preservation is Smart Growth
Public Infrastructure
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Historic Preservation is Smart Growth
Vacant Buildings Dont Produce Needed Revenue
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Historic Preservation is Smart Growth
Enhance Viability of Public Transportation
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Historic Preservation is Smart Growth
Pedestrian Orientation
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Historic Preservation is Smart Growth
Mixed Use
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Historic Preservation is Smart Growth
Reinvestment in Historic Neighborhoods is
Smart Growth not No Growth
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Historic Preservation is Smart Growth
Back to the City
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Historic Preservation is Smart Growth
Natural Incubator for Small Business
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Historic Preservation is Smart Growth
Diversity of Businesses Needs Diversity of Rent
Levels
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Historic Preservation is Smart Growth
Labor Intensity
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Historic Preservation is Smart Growth
Expensive Landfill
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Historic Preservation is Smart Growth
New Urbanism Good Real Urbanism Better
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Historic Preservation is Smart Growth
Density of Use
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Historic Preservation is Smart Growth
Not Liabilities but Assets Not Yet Put Back to Use
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Historic Preservation is Smart Growth
Jobs Where Workers Are
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Historic Preservation is Smart Growth
Economic Development that is Community Development
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Historic Preservation is Smart Growth
Reinforces Existing Schools
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Historic Preservation is Smart Growth
No New Land Consumed
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Historic Preservation is Smart Growth
Diversity of Housing Means Diversity of Humans
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Historic Preservation is Smart Growth
Demand Side Approach To Smart Growth
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Lessons from the Historic Preservation/Affordable
Housing White Paper
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Lesson 1
There really is a serious affordable housing
problem.
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Lesson 2
In the next decade the problem will get worse not
better.
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Lesson 3
The recognition of this need has moved beyond
traditional low income housing advocates to
much broader constituencies, importantly both the
economic development and real estate communities.
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Lesson 4

• The problem has three components
• Affordability
• Wealth
• Supply
• And a 4th component

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Lesson 5
Of those three, private sector new construction
can have negligible impact on the first, no
impact on the second, and limited impact on the
third.
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Lesson 6
The new construction market responses to the
supply problem are either mediocre buildings far
out where land is cheap, or mobile homes.
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Lesson 7
The current need for affordable housing both
ownership and rental is disproportionately
being met by older and historic houses.
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Lesson 8
The vast majority of this housing is provided
with no subsidies, incentives, or government
intervention of any kind.
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Lesson 9
If today we had to replace the older and historic
buildings occupied by households below the
poverty level, using the most cost-effective
Federal programs, the bill would be 335 Billion.
If today we had to replace the older and historic
buildings occupied by households below the
poverty level, using the most cost-effective
Federal programs, the bill would be 335 Billion.
335,000,000,000
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Lesson 10
However the existing supply of older and historic
housing is disappearing at an alarming rate 557
units every day for the last 30 years.
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Lesson 11
That loss is most significant among our most
historically significant structures during the
1990s 772,000 housing units built before 1920
were lost.
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Lesson 12
If we take mobile homes out the equation, more
affordable housing is being lost through the
demolition of older and historic homes than is
added to the affordable housing inventory we
are moving backwards.
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Lesson 13
We are systematically tearing down what is
affordable and building what it not.
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Lesson 14
Working families needing affordable housing also
need proximity to transportation, schools,
work, and shopping. The availability of each of
those categories in older neighborhoods is
decidedly closer than in new neighborhoods.
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Lesson 15
The biggest adverse effect on residential
property values is the close proximity of vacant
and abandoned housing. Nearly 10 of older and
historic homes have such property within ½ block,
causing a lost value of over 8000 per house.
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Lesson 16
Many of the groups concerned with the affordable
housing issue have noted the contribution of
older housing stock, but none has the
rehabilitation of those buildings as the central
component of an affordable housing
strategy.
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Lesson 17
Experts see the chances of preserving the
affordable older housing stock as dismal.
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Lesson 18
The overall condition of older housing is better
than supposed with 3 suffering from severe
physical problems and another 8 from moderate
physical problems.
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Lesson 19
Historic properties can address the supply
portion of the solution. Over 40 of rental units
constructed under the Historic Rehabilitation Tax
Act were created in buildings that were not
originally residential.
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Lesson 20
The Historic Homeownership Assistance Act could
address all three elements of the problem
affordability, wealth, and supply.
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The 4th Component
Education
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On The Horizon
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State Budget Cuts

• Tax Credit Programs
• Main Street
• Grant Programs
• SHPO

L.I.F.O.
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New Look at Secretarys Standards
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Tinkering With Existing Rehabilitation Tax Credit
to Aid Small Projects
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Comprehensive Look at Existing Studies
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Technical Corrections to 10 Credit
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Need to

• Communicate Locally One on One
• Mayor and City Council
• State Legislators, State Officials
• Congressional Staff
• Congressional Members

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Need to

• Communicate Upwards
• Successes
• Approaching Problems
• Analysis and Information
• Names of Potential Supporters

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Need to

• Listen and Learn
• How Other States Have Responded
• Tools and Techniques
• Successes Elsewhere
• Local Role for National Efforts

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Thank you very much