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MASSACHUSETTS HISTORIC

REHABILITATION TAX CREDIT

LEVERAGING FUNDS TO
STIMULATE DEVELOPMENT
AND ECONOMY
Massachusetts State Historic Rehabilitation Tax Credit Program
Chapter 141, Section 22 of MGL
Introduction

Since April, 2004, the Massachusetts Historic Rehabilitation Tax Credit program
has been catalyzing the rehabilitation, reuse and revitalization of historic properties
across the Commonwealth. These historic structures have been rehabilitated to
create quality affordable and market rate housing, community centers, commercial
and office space, performing arts venues and restaurants and more, benefiting our
communities in numerous ways.

In 2002, Preservation Massachusetts organized a statewide coalition of organizations


to find an initiative that would have a resounding benefit for preservation efforts
in our Commonwealth. The answer was unanimous: a state historic rehabilitation
tax credit. Led by Preservation Massachusetts, the Coalition has seen success
in drafting, lobbying and celebrating the benefits of the State Historic Tax Credit
since the first application round in April of 2004.

Administered by the Massachusetts Historical Commission, this credit program


has proven to be a critical tool for preservation projects and economic
development across Massachusetts. From theatres in Worcester and Pittsfield, to
hotels in Boston and Stockbridge, to new housing stock in Lawrence and New
Bedford, this tax credit actively demonstrates the economic benefits of historic
preservation while revitalizing our neighborhoods. Not only is the historic fabric
of our Commonwealth being reused and communities reenergized, but vital links
between preservation, development, businesses and other professions are being
forged and strengthened. Jobs are being created, lights are being turned back on,
and downtowns are being revitalized.

The program has grown steadily in popularity over five years, from 14 first round

1 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


MASSACHUSETTS STATE TAX CREDIT
applicants to nearly 60 in January 2009, and the demand for the credit is higher
than ever. The original $10 million credits annually available increased to $15
and then $50 million in 2006. But even with these expansions, there are not
enough credits available to aid the projects that rely on them as a vital funding
source. State Tax Credits, when coupled with federal credits, are increasingly
becoming the critical source for attaining project feasibility. It is anticipated that
the number of applicants and demand for state credits will continue to increase,
and an expanded program will be needed to unlock the enormous amount of
development potential that these projects represent. If the state credit program is
expanded, a potential $1.77 billion worth of re-investment will become possible.

As the lead organization in the conception, lobbying and expansion of the credit,
Preservation Massachusetts felt it imperative to quantify the direct benefits of the
historic tax credit back to the Commonwealth. It is not hard to see the impact of
the credit by viewing construction sites and seeing the before and after pictures of
historic structures restored. Yet it is the dollars spent as a result of redevelopment,
tax revenues, and jobs created and sustained, that paint the true picture of the
credit’s success and illuminate its potential for the future.

Through the support of a Legislative Sub-Committee, our lobbyist and numerous


individuals across Massachusetts, this economic study became a reality. This study
shows that preservation has potent economic development power and plays an
important part in the revitalization of communities. The dedication and support of
many made this credit program a reality, and Preservation Massachusetts continues
to lead the efforts to sustain and grow the program so it will continue as a vital tool
for preservation and re-building our economy.

MASSACHUSETTS STATE TAX CREDIT 3


A PROGRAM WITH STRONG SUCCESS AND INCREASING NEED

2002 2003 2004-2005


Preservation Massachusetts In a difficult economic time, the credit Senate Bill 2478
creates the Massachusetts legislation languishes in the Taxation is filed to increase
Preservation Coalition and Committee. Senate President Travaglini and the annual credit
it determines a historic staff suggest the credit be a part of the 2003 available for the state
tax credit would have the Senate Economic Stimulus Package. With the historic tax credit.
greatest impact on historic help of the development community, the credit The legislature
preservation throughout passes and is signed into law by Governor compromises and
Massachusetts. Romney in November. The credit program is: increases the cap by
$5 million, making a
The Coalition begins a • Up to 20% on certified rehabilitations total of $15 million
study of tax credit programs now available
in other states, and • A 5 year pilot program capped at $10 annually.
Preservation Massachusetts million credits available annually, $50
hires a lobbyist to begin million total credits
discussing the credit with
state legislators and to • Administered by the Massachusetts
actviely seek sponsors. Historical Commission

The development • 25% of the available credits must


community and be allotted for projects that contain
preservationists develop affordable housing
working relationships as
the economic impact of the • PM and other organizations commented
Historic Rehabilitation Tax on the Emergency Regulations, which
Credit becomes apparent. are promulgated

3 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


L
O
O
K
2006 2008-2009 I
N
The success of the state With the success of the state
G
historic tax credit is historic tax credit and the F
remarkable. The Senate increasing number of projects
O
seeks to raise the annual seeking allocations for
cap to $30 million, amounts that far exceed $50
R
while the House seeks million annually, Preservation W
$50 million. House and Massachusetts makes a strong A
Senate both agree on push to increase the credit cap. R
a $50 million annual The focus of legislative advocacy D
cap (retro active to efforts include extending the
2005) and extends the 2011 sunset clause, raising the
program sunset date cap to $100 million annually
until December 2011. and ensuring this vital program
Governor Romney does not suffer with the
vetoes the legislation challenging economic times.
Waltham Watch is a massive industrial
but a voice roll call in complex along the banks of the Charles River
the Legislature overrides An economic study of the credit, that blends Queen Anne and Romanesque
the veto unanimously featuring quantifiable numbers architectural styles. Used throughout the 19th
century until the mid 20th century by The
in the House and with on job creation, tax revenue,
American Watch Company, this now largely
only one lost vote in project profiles and testimony vacant 27 building complex will be converted
the Senate. Permanent of elected officials and others is to office, commercial, restaurant, and retail
regulations are undertaken. space. With tax credit assistance, this
promulgated. underutilized asset can bring jobs
and economy to Waltham.

MASSACHUSETTS STATE TAX CREDIT 4


UNDER 1 M
1M - 10 M

11 M - 20 M

21 M - 50 M

51 M - 100 M

* 101 M - 150 M

BARNSTABLE COUNTY n

$ 0.1 M POTENTIAL INVESTMENT


$ 0.0001 M TAX CREDIT DEMAND
BERKSHIRE COUNTY HAMPDEN COUNTY
$ 67.3 M POTENTIAL INVESTMENT $ 59.3 M POTENTIAL INVESTMENT
$ 7.4 M TAX CREDIT DEMAND $ 10.1 M TAX CREDIT DEMAND
BRISTOL COUNTY HAMPSHIRE COUNTY
$ 133.3 M POTENTIAL INVESTMENT $ 0.3 M POTENTIAL INVESTMENT
$ 25.1 M TAX CREDIT DEMAND $ 0.06 M TAX CREDIT DEMAND
ESSEX COUNTY MIDDLESEX COUNTY SUFFOLK COUNTY
$ 335.4 M POTENTIAL INVESTMENT $ 503.4 M POTENTIAL INVESTMENT $ 940.9 M POTENTIAL INVESTMENT
$ 73.2 M TAX CREDIT DEMAND $ 84.8 M TAX CREDIT DEMAND $ 128.6 M TAX CREDITS DEMAND
FRANKLIN COUNTY NORFOLK COUNTY
$ 77.7 M POTENTIAL INVESTMENT

CURRENT DEMAND
$ 83.8 M POTENTIAL INVESTMENT
$ 16.3 M TAX CREDIT DEMAND $ 10.2 M TAX CREDIT DEMAND

5 CREDIT IMPACT
BY COUNTY
LEVERAGING FEDERAL $$$
The Massachusetts State Historic Tax Credit has widely revived the use of the Federal
Historic Tax Credit across the Commonwealth. The combination of both state and federal tax
credits has proved enticing to developers and allowed many challenging programs to become a

CREDIT IMPACT
reality.

In FY 2008, the National Park Service reports that Massachusetts ranks number 2 in the
country with a total of $324,940,381 in certified expenses from 58 projects trailing just
slightly behind Missouri’s $376,705,762 in certified expenses from 134 projects.
(Source: Federal Tax Incentives for Rehabilitation Historic Buildings: Statistical Report and Analysis for Fiscal Year 2008,
The National Park Service, February 2009.)

IMPACT ACROSS MASSACHUSETTS

Current demand is 293.8 million, which could leverage


$ development investment of 1.7738 billion

With this investment, 25,729 jobs would be created*

4,094 housing units would be created with 910 being affordable


housing units

Nearly 8 million square feet would be rehabilitated

Return to MA in tax revenue: approximately 296.9 M

*In 2003 Preservation Massachusetts created a model for calculating financial impact of the Massachusetts Historic Rehabilitation Tax
Credit. The multipliers were calculated using a customized input-output model, the Preservation Economic Impact Model. Source:
Lahr, Mike L. & Listokin, David; Economic Impact of Historic Preservation in Massachusetts; Center for Urban Policy Research, Rutgers
University.
CREDIT IMPACT 3
4 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT
CREATING JOBS
• Massachusetts closed 2008 with an unemployment rate of 6.9%

• When development is spurred, jobs are created.

• The Massachusetts Rehabilitation Tax Credit catalyzes


development by providing up to 20% of the certified
rehabilitation cost leveraging the devloper’s initial
investment and allowing projects to move forward.

• Projects currently waiting in the wings for


tax credits could create upwards of 25,000
construction and permanent jobs for the
Commonwealth
LOOKING FORWARD The Hewood Wakefield Company Complex
in Gardner will create 100 construction
jobs and 50 permanent jobs. With State
Tax Credits, these jobs can become a reality.
CREDIT IMPACT 8
6 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT
PROVIDING NEEDED
HOUSING
• 25% of allocated credits must go to affordable housing projects

• Over the past five years, tax credit investment has created
851 new housing units with 422 of those units being
affordable housing units

Comprised of two mill


buildings, Wampanoag
Mills reflects Fall River’s
booming 19th century
textile industry. Mill
Number 1 once housed
upwards of 1,605 looms
and 64,872 spindles
in its five story granite
structure. The Mills
currently house some
commercial and factory
outlet tenants, and
future plans will
create quality rental
Wampanoag Mill Rendering
December 15, 2008
housing for persons
55 and older.
D E V E L O P E R : WinnDevelopment
Fall River, MA A R C H I T E C T : The Architectural Team

LOOKING FORWARD
CREDIT IMPACT 10
8 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT
REVITALIZING COMMUNITIES
In downtown Lawrence, mills stood vacant L
O
for many years after textile companies O
closed their operations. With the loss of K
the industry, former factories no longer I
stimulated the economy and instead N
G
drained Lawrence.
F
O
Washington Mills’ rehabilitation into
R
155 housing units which would not have W
been possible without State Tax Credits, A
brought $ 40 million worth of investment R
D
to downtown Lawrence. Now the home of
over 200 new residents, Washington Mills is
Built in 1929, Greenfield’s First National Bank’s Art
acting as a catalyst for future development Deco features stand out against the predominantly
Greek and Federal revival style of downtown. The
in Lawrence. strong forms of the building, reinforced concrete
and steel beams used in construction were meant to
inspire confidence in local banking. Years of neglect
Throughout Massachusetts, the State may have deteriorated some elements, but not plans
for creating retail and restaurant space in this local
Rehabilitation Tax Credit is filling the landmark. This project needs $.7 M in tax
funding gap to help revitalize communities credit allocation to strengthen their own
investment of $ 4.1 M.
and draw investment to cities like
Lawrence.
CREDIT IMPACT 12
Union Crossing is a major
redevelopment located
between downtown
Lawrence and a new
intermodal transportation
center. The project will
include 125 housing units
of mixed income housing,
including affordable housing
for working families,
approximately 125,000 sf of
commercial space, a 12,000
square foot daycare center,
and two acres of public
Promenade open space including a
streamlined pedestrian
thoroughfare, new park
Raised
space, and playground. This
Lawn Panel
project embodies so much
more than just preservation;
Shade
Trellis it answers a critical
and
Entry
Pavilion
need for housing, helps
bring new jobs to Lawrence,
promotes transit oriented
development and puts life
back into a complex that was
Playground in danger of becoming vacant
and blighted.

South
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North Canal
OTHER BENEFITS OF PRESERVATION
Urban Revitalization
Downtown cores become re-populated thus
improving the market for retail services, bringing
eyes on the streets and turning on lights in the
windows. Local economies are stimulated from
the increased demand resulting from infusion of
new building users.

Transit Oriented Development


Historic districts often have excellent access to
public transportation thus offering alternatives
to driving thereby reducing the states carbon
footprint.

Re-use of existing infrastructure


Cities and towns benefit by not having to build
new infrastructure.

Conservation
Building preservation preserves open space and
reduces waste. There is less new construction in
greenfields and less waste in our landfills.

Sense of Place
Preserving places with deep historical and
LOOKING FORWARD cultural significance improves our quality of
life.
CREDIT IMPACT 14
WHAT IS THE MA REHABILITATION TAX CREDIT DOING IN YOUR COMMUNITY?

FEATURED TAX CREDIT PROJECTS n

BERKSHIRE COUNTY
RED LION INN, STOCKBRIDGE
THE COLONIAL THEATRE, PITTSFIELD

BRISTOL COUNTY
UNION STREET LOFTS, NEW BEDFORD
ESSEX COUNTY SUFFOLK COUNTY
BROWN SCHOOL, PEABODY 311 SUMMER STREET, BOSTON
CORDOVAN, HAVERHILL BAKER SQUARE II, DORCHESTER
WASHINGTON MILLS, LAWRENCE
WORCESTER COUNTY
FRANKLIN COUNTY HANOVER THEATRE, WORCESTER
RISTORANTE DIPAOLO, TURNERS FALLS PARKHILL MILL, FITCHBURG

HAMPDEN COUNTY
WORTHINGTON COMMONS, SPRINGFIELD
ORIGINAL USE: HOTEL
RED LION INN, STOCKBRIDGE
DEVELOPER: THE FITZGERALD FAMILY REUSE: HOTEL

17 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


TOTAL PROJECT COST:
$6M

TOTAL TAX CREDITS:


$ .50 M

TAX CREDIT PROJECTS 18


THE COLONIAL THEATRE, PITTSFIELD
DEVELOPER: THE COLONIAL THEATRE ASSOCIATION

Since the Colonial Theatre opened its doors in 2006, values of a typical home within
the city of Pittsfield have risen an average of 20%. More and more people are coming
downtown to the 40 plus new condo units, dozen-or-so restaurants, half dozen shops,
and a handful of small businesses that have been established since the reopening.
Mayor James M. Ruberto

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ORIGINAL USE: THEATRE REUSE: PERFORMING ARTS SPACE

TOTAL PROJECT
COST:
$17 M TOTAL TAX
CREDIT:
$1 M
TAX CREDIT PROJECTS 20
UNION STREET LOFTS, NEW BEDFORD
DEVELOPER: HALLKEEN AND THE WATERFRONT
AREA HISTORIC LEAGUE (WHALE)

New Bedford’s historic properties and their


architectural features are recognized as some of
the city’s greatest attributes. Without the MHRTC
our history and heritage would be at risk. It
takes a tremendous amount of dedication and
vision to restore these types of buildings for 21st
century use and the MHRTC plays an essential
role in their redevelopment.

Mayor Scott W. Lang, New Bedford

TOTAL TAX CREDITS:


$ 1.01 M
TOTAL PROJECT COST:
$12.3 M

21
35 HOUSING
UNITS
WITH 9
AFFORDABLE
UNITS

CONVERTED TO MIXED
INCOME HOUSING/
COMMERCIAL SPACE

TAX CREDIT PROJECTS 22


BROWN SCHOOL, PEABODY
DEVELOPER: STRATFORD CAPITAL

23 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


TOTAL PROJECT COST:
$15 M

TOTAL TAX CREDITS:


$ 1.0 M

41 NEW HOUSING
UNITS; 20 ELDERLY
AFFORDABLE UNITS

TAX CREDIT PROJECTS 24


THE CORDOVAN AT HAVERHILL STATION, HAVERHILL
DEVELOPER: BEACON COMMUNITIES LLC

TOTAL PROJECT COST:


TOTAL TAX CREDITS:
$39 M $2.50 M
25 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT
146 NEW MIXED INCOME HOUSING UNITS; 40%
AFFORDABLE UNITS

ORIGINAL USE: SHOE RELATED


MANUFACTURING

REUSE: HOUSING

TAX CREDIT PROJECTS 26


WASHINGTON MILLS, LAWRENCE
DEVELOPER: ARCHITECTURAL HERITAGE FOUNDATION AND BANC OF AMERICA CDC

TOTAL PROJECT
COST:
$42.1 M

TOTAL TAX
CREDITS:
$5.40 M

In a region dotted with historic mills, Washington Mills stands out—not only for
the quality of its recent renovation but also for the impact of its rebirth on the town
of Lawrence. This project has demonstrated in remarkable fashion how historic
preservation can be a real catalyst for downtown revitalization.
Richard Moe, President, National Trust for Historic Preservation

27 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


155 NEW
HOUSING
UNITS

10% OF
UNITS ARE
AFFORDABLE
HOUSING

TAX CREDIT PROJECTS 28


RISTORANTE DIPAOLO, TURNER FALLS
DEVELOPER: DENISE DIPAOLO

ORIGINAL USE:
DOWNTOWN
COMMERCIAL SPACE

REUSE: RESTAURANT

TOTAL PROJECT COST:


$ 385,000

29 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


TOTAL TAX CREDITS:
$ 59,000

TAX CREDIT PROJECTS 30


WORTHINGTON COMMONS, SPRINGFIELD
DEVELOPER: FIRST RESOURCE COMPANIES

TOTAL
PROJECT
COST:
$19 M

TOTAL TAX
CREDIT:
$2 M

31 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


ORIGINAL USE:
APARTMENTS

REUSE:
HOUSING

100%
AFFORDABLE
HOUSING UNITS

TAX CREDIT PROJECTS 32


The Massachusetts
311 SUMMER STREET, BOSTON State Historic Tax Credit
program has been
DEVELOPER: ADD, INC. and continues to be a
significant and critical
source of funding for
the development of our
company’s new home
at 311 Summer Street.
ADD Inc’s efforts to
rehabilitate this precious
asset that is a piece of
Boston’s history would
not have been possible
without the existence
of this funding source,
as well as the support
from so many of our
allies and partners that
spoke on our behalf
to secure continued
funding from the State.
Today, we occupy the
building, lease space on
A Street and Summer
Street, and have
successfully repositioned
an underutilized and at
risk asset to the benefit
TOTAL PROJECT COST: of the neighborhood and
TOTAL TAX CREDITS: the greater Fort Point
$ 30 M $ .70 M Channel community.

Fred Kramer, AIA,


39 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT Principal, ADD, Inc.
TOTAL PROJECT COST:
$30 M

TOTAL TAX CREDITS:


$.70 M

ORIGINAL USE: COFFEE MANUFACTURING

REUSE: OFFICES AND RETAIL/COMMERCIAL SPACE


TAX CREDIT PROJECTS 40
BAKER SQUARE II, DORCHESTER (LOWER MILLS)
DEVELOPER: WINNDEVELOPMENT
Walter Baker started manufacturing • Original Construction Date: Complex date: 1868-1947
chocolate on this site in the 1770’s. • Original Use: Chocolate factory

B
E
F
O
R
E

40 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT


ORIGINAL CONSTRUCTION DATES:
1868-1947 A
F
T
E TOTAL PROJECT COST:
$28 M
R
Baker Square
II received the
PM 2008 Paul
Tsongas Award
for preservation,
TOTAL TAX CREDITS:
economic
development and
$6.38 M
use of historic tax
credits.

80 NEW HOUSING
UNITS CREATED WITH 8
AFFORDABLE HOUSING
UNITS

TAX CREDIT PROJECTS 42


THE HANOVER THEATRE, WORCESTER
DEVELOPER: WORCESTER CENTER FOR PERFORMING ARTS, LLC

We could never have done


this project if it wasn’t for the
State Historic Tax Credit and
the support of Preservation
Massachusetts.

Ed Madaus, Founder, The Hanover


Theatre, Worcester

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TOTAL PROJECT COST:
$32.8 M
TOTAL TAX CREDITS:
$ .75 M
TAX CREDIT PROJECTS 44
PARKHILL MILL, FITCHBURG 86 HOUSING UNITS CREATED,
DEVELOPER: MASSINNOVATION 100% AFFORDABLE HOUSING

TOTAL PROJECT COST: TOTAL TAX CREDITS:


45 MASSACHUSETTS HISTORIC REHABILITATION TAX CREDIT $ 17.5 M $ 2.5 M
“Anwelt Heritage Apartments, New England’s first eco-friendly, affordable senior
housing project, is an excellent example of just how vital the State’s Historic
Rehabilitation Tax Credit Program is to Gateway Cities like Fitchburg.
This award-winning, $20 million, adaptive reuse project here in Fitchburg just would not
have been possible without the State Historic Tax Credit Program.”

-Fitchburg Mayor, Lisa Wong TAX CREDIT PROJECTS 46


Acknowledgements

Massachusetts Preservation Coalition


Composed of statewide developers and preservationists

Preservation Massachusetts
45 School Street
Boston, MA 02108
617.723.3383
www.preservationmass.org

This project has been funded in part by a grant from the National
Trust for Historic Preservation’s Eastern Massachusetts Preservation
Fund

By Cyndia Golze, Architectural Heritage Foundation, 2009