An Economic Development Tool

Fueled by preservation incentives such as grants and tax credits, historic preservation projects bring new investment to older buildings and communities. Preservation projects are local-labor-intensive, on average generating higher construction wages than new construction and, as a nice by-product, higher local spending. As communities seek to replace lost industries, they should innovate and give historic preservation a long look – after all, it’s an industry that puts people to work and customers in the stores just by investing in local, often underutilized, assets.

Promotes Sustainable Living

The adaptive re-use of existing structures not only saves millions of tons of landfill each year, it also leverages the prior investment of energy (so-called “embodied energy”) in those structures and neighborhoods. The former benefit is illustrated by preservation economist Donovan Rypkema’s estimate that demolishing a small commercial building negates the positive impacts of recycling 1.3 million aluminum cans. While the latter benefit is illustrated by studies indicating that you would need to accumulate 40 years of energy savings from the efficiencies of a new “green” home in order to absorb the loss of the embodied energy from demolishing an older home of the same size. In short, community innovators recognize that “the greenest building is the one that’s already built.”

Closes the “Gap” in Project Financing

In many older communities, the cost to rehabilitate older buildings outpaces the income that can be generated after completion. More commonly known as a “funding gap”, sponsors of these projects often cannot raise enough capital to make their rehabilitation project feasible. Unless, of course, the developer is innovative and invests in a building that is eligible for historic rehabilitation tax credits. In that case, the rehabilitated building will generate federal and (often) state tax credits that can be “syndicated” to corporate investors to help balance the project’s capital budget.

An Outlet for Communities to Celebrate Their Heritage

Historic preservation is, in a word, “grassroots”. Preservation efforts can start with just one building, and with just one person who cares about that building. Every community is unique, so preservation efforts by nature start locally, rather than in response to a one-size-fits-all directive from above. Whether it’s through the creation of a new historic district or the birth of a neighborhood organization hoping to preserve a local landmark, historic preservation does indeed begin at home. Within older communities that often have little to cheer about, innovators turn to historic preservation to boost civic and economic investment.