What Is Preservation Worth? The Need for Studying Economic Impacts
When the General Assembly held
hearings in December on Governor Rell’s deficit mitigation plan, Helen Higgins,
the Connecticut Trust’s executive director, and John Simone, President of the Connecticut Main Street
Center, both got
legislators’ attention by testifying about the effectiveness of preservation
programs as job creators. While figures from Rhode Island
and other nearby states helped them make their point, information specifically about
Connecticut
would have been much more persuasive.
As the economic crisis continues
and Connecticut,
like many other states, faces the prospect of drasticbudget cuts to remain solvent, historic preservation is receiving
extra scrutiny. Quoting Santayana (“Those who cannot remember the past are
condemned to repeat it.”) isn’t enough. Talking about character and quality of
life isn’t enough. The challenge, increasingly, is to demonstrate that
preservation offers measurable economic benefits.
What preservationists need to
remember, and all too often don’t, says economist Donovan Rypkema, is that historic
buildings are real estate. They cost
money to acquire, maintain, and operate, and the people who provide that money
expect some return on that money. In a few cases the return may be related to
mission or the satisfaction of doing good, but for most buildings the return
must be financial. Owners and developers want to be sure that investing in
historic buildings will make money for them, and legislators looking at funding
for preservation want to be sure that doing so will create jobs or increase tax
revenues or provide a catalyst for additional development.
Rypkema, a Washington D.C.-based
real estate and economic development consultant, is the nation’s leading expert
on the economics of historic preservation. Since 1983 he has provided ongoing
consulting services to the National Trust for Historic Preservation and the National Main
Street Center
and he has conducted statewide studies of the economic impact of historic
preservation in Virginia, Kentucky,
North Carolina, Indiana,
New York, and Maryland,
as well as a citywide study in Philadelphia.
Rypkema’s book, The Economics of Historic
Preservation: A Community Leader’s Guide (2nd edition 2005), is
the basic work on the subject.
Fortunately, the Connecticut Main
Street Center and the Connecticut Commission on Culture & Tourism (CCT) brought
Rypkema to Hartford just two days after the legislative hearing to present a
workshop called “Measuring Economic (and other) Impacts.”
The workshop was planned to lay the
ground for a major study of the economic impact of historic preservation in Connecticut, which the CCT
hopes to commission within the next year. Preservationists have long called for
such a study to help them make the case for preservation activities in Connecticut and to
support efforts to increase funding for preservation programs. Similar studies
from other places have been helpful, but none have carried the weight of a
Connecticut-specific study.
At the workshop, Rypkema primarily discussed
the various factors that go into undertaking an economic impact study. He
outlined the “measurables” as well as non-market approaches and innovative
international approaches. For an audience made up largely of historians and
old-building fans, the material was difficult but exciting. Rypkema showed that
in many states and cities, preservation does indeed provide a return on
investment, that rehabbing old buildings not only
makes sense culturally, it also makes sense economically.
The CCT study will look at
investment generated in Connecticut
by the federal rehabilitation tax credit and the three state rehabilitation tax
credits (see CPN November/December 2008). It will measure such results as jobs
created and number of housing units created; in addition, a new formula developed
in Maryland will be used to calculate the "positive environmental
impact" such as open space and farms not
developed as a result of historic buildings’ being put back into use. Preservationists
expect the results to provide useful arguments for supporting the tax credits
as well as preservation programs supported by the Community Investment Act.
The CCT must submit its proposal for the study to the Office of Policy
and Management for approval. Once it is approved and the contracts are signed,
it should take between 90 and 120 days to complete the study.
Measurables for Historic Preservation
What would an economic impact
study of preservation activity measure? Donovan Rypkema offered a long list of
potential areas in which preservation can make a difference.
When the General Assembly held
hearings in December on Governor Rell’s deficit mitigation plan, Helen Higgins,
the Connecticut Trust’s executive director, and John Simone, President of the Connecticut Main Street
Center, both got
legislators’ attention by testifying about the effectiveness of preservation
programs as job creators. While figures from Rhode Island
and other nearby states helped them make their point, information specifically about
Connecticut
would have been much more persuasive.
