DEPARTMENT OF COMMUNITY DEVELOPMENT Economic impact of projects leveraged by the Minnesota Historic Structure Rehabilitation Tax Credit: Fiscal year 2023 and historic school building projects A report of the Economic Impact Analysis Program Authored by Brigid Tuck and Ashley Petel Program sponsor: Minnesota Department of Administration, State Historic Preservation Office; Photo: Historic Duluth Central High School, credit to Duluth News Tribune Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 1 Economic impact of projects leveraged by the Minnesota Historic Structure Rehabilitation Tax Credit: Fiscal year 2023 and historic school building projects A report of the Economic Impact Analysis Program January 2024 Authored by Brigid Tuck, senior economic impact analyst, and Ashley Petel, graduate student researcher Cover Photo Credit: Duluth News Tribune Editor: Elyse Paxton, senior editor, Department of Community Development Report Reviewers: Michele Decker, administrative specialist, State Historic Preservation Office Catherine Sandlund, design reviewer, State Historic Preservation Office Bruce Schwartau, program leader, Department of Community Development Amy Spong, director and deputy state historic preservation officer, State Historic Preservation Office Natascha Wiener, historical architect, State Historic Preservation Office Pursuant to Minnesota Statutes, Chapter 3.197 regarding the cost of reports, the total for this study was $3,500. The Minnesota State Historic Preservation Office is financed, in part, with federal funds from the National Park Service, U.S. Department of the Interior. However, the contents and opinions presented do not necessarily reflect the views or policies of the Department of the Interior, nor does the mention of trade names nor commercial products constitute endorsement or recommendation by the Department of the Interior. Regulations of the U.S. Department of Interior strictly prohibit unlawful discrimination in federally assisted programs on the basis of race, color, national origin, disability, or age. Any person who believes he or she has been discriminated against in any program, activity, or facility operated by a recipient of federal assistance should write to: Office of Equal Opportunity, National Park Service, 1849 C Street, N.W. Washington, DC, 20240. The data, analysis, and findings described in this report are specific to the geography, time period, and project requirements of the Minnesota Historic Rehabilitation Tax Credit. Findings are not transferable to other jurisdictions. Extension neither approves nor endorses the use or application of findings and other contents in this report by other jurisdictions. © 2024, Regents of the University of Minnesota. University of Minnesota Extension is an equal opportunity educator and employer. In accordance with the Americans with Disabilities Act, this publication/material is available in alternative formats upon request. Direct requests to 612-624-2116. Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 2 Table of contents Executive summary 1 Introduction 3 Historic Structure Rehabilitation Tax Credit and historic school buildings 3 Housing 4 Leveraging private investment: Central Grade School 5 Leveraging private investment: Madison School 6 Developing private-public partnerships: Cloquet High School 7 Developing private-public partnerships: Historic Central High School 8 Creating community partnerships: Alexander Baker School 9 Addressing affordable housing shortages: New Ulm High School 10 Community spaces 11 Community centered spaces: Pillsbury Academy Campus Historic District 11 Impacts of school building rehabilitation on property tax collections 12 Economic impact of all projects leveraged with the historic tax credit, fiscal years 2011-2023 13 Total impacts by fiscal year 13 Location of projects in-progress between FY11 and FY23 15 Photo credits 16 End notes 17 Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 1 Executive summary of projects leveraged by the Minnesota Historic Structure Rehabilitation Tax Credit: Fiscal year 2023 and historic school building projects Developers have used Minnesota’s Historic Structure Rehabilitation Tax Credit to rehabilitate a wide variety of historic buildings in Minnesota. Among them are warehouses, manufacturing facilities, hotels, and even movie theaters. Historic school buildings, found throughout Minnesota, are also conducive to utilizing historic rehabilitation tax credits. As school districts build new facilities to meet ever-evolving educational needs, student safety concerns, and community security requirements, they often vacate existing school buildings. These buildings are usually in the heart of the community and reflect the history and character of the region. Since the state tax credit’s launch, seven historic school buildings have received approval for the historic tax credit. In turn, six have been, or are being, repurposed for housing. The seventh was rehabilitated for a community-centered space. This report dives into those projects. In general, developers used four approaches to complete the housing-related projects. Approach 1: Leveraging private investment For two of the projects, developers primarily leveraged private investment. Beyond the tax credit, these projects used minimal public investment, and the projects rent on the open market. Approach 2: Developing private-public partnerships In other cases, project developers partnered with additional public entities to complete their projects. Common approaches include using low-income housing tax credits, or working with organizations like the Greater Minnesota Housing Fund. Approach 3: Creating community partnerships For one project in Greater Minnesota, the community identified the preservation of its historic school buildings as a priority. To get this done, they came together as a community to raise funds and complete the work. Approach 4: Addressing affordable housing shortages A final strategy related to housing is to use the historic tax credit as leverage to address critical housing needs, particularly around affordable and workforce housing. The seventh school building project was rehabilitated for use as school facilities. The campus now includes a private academy, summer camps, and a charter school, in addition to being available for community events. This leads to a fifth strategy used by developers. Authored by Brigid Tuck and Ashley Petel, January 2024 Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 2 Approach 5: Creating community-centered spaces With the final project in this report, the historic rehabilitation created a community-centered space. The large common areas in school buildings lend themselves to this type of reuse. Beyond providing critical housing and community spaces, the projects also create economic activity. Project developers directly invested $107 million into the seven historic school building projects.i These investments spurred economic activity in Minnesota through spending for construction- related supplies and spending by workers on the projects. In total, Extension estimates the projects generated $180 million of economic activity and supported 798 jobs. For these seven school building reuse projects, $18.5 million of tax credits have, or will be, awarded. State and local taxes collected as a result of the projects total an estimated $8.2 million, meaning the projects repaid 44 percent of the tax credit upon completion. In addition, public school buildings are classified as exempt from property taxes. Once the properties are sold to the developer and start producing income, local jurisdictions also begin to collect property taxes, contributing to the local tax base. Extension’s analysis finds that for every dollar of state tax credit invested in reusing historic school buildings, the rehabilitation work generated between $10.70 and $14.40 in economic activity (depending on the project). Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 3 Introduction Americans have long recognized the importance of preserving historic buildings and structures. In 1966, Congress passed the National Historic Preservation Act. The Act established the formal processes and structures, such as the National Register of Historic Places, to support preservation in the United States.ii By 1976, the federal government began offering a federal tax credit to support the rehabilitation of historic buildings.iii With the historic preservation act, Congress also established State Historic Preservation Offices (SHPO) to oversee preservation efforts at the state level. Once the federal tax credit became available, individual states began to adopt a complimentary state tax credit. Minnesota adopted the Historic Structure Rehabilitation Tax Credit in 2010. While the credit was sunsetted in 2022, it was reauthorized by the Minnesota legislature in 2023. Minnesota’s tax credit allows for a 20 percent state tax credit, with the option for a grant in lieu of the credit. It mirrors the federal tax credit and project developers pair the credits together. Projects must meet several requirements to qualify for the tax credit. The requirements include: • The project must be a certified historic structure. To meet this criterion, it can either be listed on the National Register of Historic Places or contribute to a Registered Historic District. • The project, when completed, must be income producing. • The project must meet a substantial rehabilitation test (the cost of rehabilitation must exceed the pre-rehabilitation cost of the building). • Project plans must be approved by the National Park Service (NPS) and certified as meeting the Secretary of the Interior’s Standards for Rehabilitation. • The completed work must be approved by the NPS and allowed the federal tax credit. • To access the state credit, the developer must submit a complete application to the State Historic Preservation Office before project work begins. Historic Structure Rehabilitation Tax Credit and historic school buildings Minnesota’s original tax credit legislation required the SHPO to annually analyze the economic impact of the credit. To do this, SHPO partnered with University of Minnesota Extension, which has quantified the impact of the credit since fiscal year (FY) 2011. With its sunset in 2022 and subsequent reauthorization in 2023, SHPO and Extension selected a new approach to reporting on the impact of the tax credit. This year, the report focuses on how the tax credit has been used to address community needs. In particular, it explores how the historic tax credit has been used to rehabilitate and repurpose historic school buildings. During the tax credit’s existence, seven historic school buildings have been approved for the tax credit. As of December 2023, developers are bringing forward additional projects, but as they are still in the application process, they are not included in this report. The seven projects demonstrate the breadth and depth of how the credit is paired with private and public investment in ways that both preserve the historic structure and fill a community need. Given student safety and security needs, along with funding options, when faced with substantial building upgrades, many school districts opt to construct new school buildings. Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 4 Often, and particularly in Greater Minnesota, the school district moves school operations into the new building, leaving the former building empty. These buildings are typically located within neighborhoods and reflect the history of the community. Cloquet High School, for example, was built following the fires of 1918. Central Elementary School in Winona features marble columns and a lion’s head frieze that were donated by the Watkins family, owners of the Watkins brand of natural products, founded in Winona in 1868 (Figure 1). The seven school building projects that received the credit can be broadly grouped into two categories— those used for housing and those repurposed as shared community spaces. As mentioned previously, to qualify for the historic tax credit, the project’s final use must be income-producing. For housing projects, this typically translates into the development of rental units. In the repurposing example, the structures are being used for private schools and camps. Housing Six of the seven projects with approval for the Minnesota tax credit have been, or are being, rehabilitated for housing. In general, developers used four approaches to completing the housing- related projects. Approach 1: Leveraging private investment For two of the projects, developers primarily leveraged private investment. Beyond the tax credit, these projects used minimal public investment, and the projects rent on the open market. Approach 2: Developing private-public partnerships In other cases, project developers partnered with additional public entities to complete the project. The most common approach is to work with low-income housing tax credits or organizations like the Greater Minnesota Housing Fund. Approach 3: Creating community partnerships For one project in Greater Minnesota, the community identified the preservation of their historic school buildings as a priority. To get this done, they have come together as a community to raise funds and complete the work. Approach 4: Addressing affordable housing shortages Finally, some communities are using the historic tax credit as leverage to address critical housing needs, particularly around affordable and workforce housing. Figure 1: Interior of Central Elementary School, Winona Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 5 Leveraging private investment: Central Grade School Historic significance Winona Public Schools conceptualized Central Grade School during a period of growth in the mid- 1920s. Many of Winona’s original schools dated to the 1880s and were overcrowded and considered unsafe. The school district launched an initiative to build five new buildings, of which Central Grade School was the second. The building reflects the educational design standards of its time. From an architectural perspective, Central Grade School is a two-story Gothic Revival style building. It features building materials and design elements showcasing the geography and history of Winona. Building materials include Winona “travertine,” a local limestone. In addition, Paul Watkins, president of J.R. Watkins Company, made donations to the building, including Italian stone plaques, columns, and a lion’s head frieze.iv Local private developers purchased the building in 2018, eventually deciding to rehabilitate it into 15 market-rate apartment units. The rehabilitation retained multiple elements of the school building, including terrazzo flooring, colorful tiling, built-in coat closets, and blackboards. During Rehabilitation Post-Rehabilitation PROJECT FINANCING AND IMPACT Total Final Project Costs $2,622,473 State Historic Tax Credit Awarded $431,502 Economic Impact $5,112,480 Economic Activity Per Dollar of State Credit $11.85 Jobs Supported 23 State and Local Taxes Collected $232,450 Estimated Market Value 2023 $989,900 Funding Sources Primarily private Winona, Minnesota Previous use: elementary school Current use: Central Square (apartments) Year constructed: 1930 Years rehabilitated: 2020-2021 Total project costs: $2.6 million Status: fully rented Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 6 Leveraging private investment: Madison School Historic significance Madison School was the third of the five schools developed by Winona Public Schools in the 1930s. Like Central School, the building design fits with the changing educational standards of the period. Madison School is a two-story, Gothic Revival style building featuring bluff limestone ornamentation. Building architects shifted from the I-plan of the Central School to an H-plan with north-south classroom wings. The layout allowed east and west sunlight into all the classrooms.v A local developer, Andrew Brenner, purchased Madison School. Under his ownership, the property has been rehabilitated into 21 apartment units.vi As of fall 2023, the units were fully rented. With state historic tax credit projects, the tax credit awarded is based on qualifying rehabilitation expenses. Thus, the tax credit awarded for any given project can be lower than 20 percent of total project costs, as some costs do not qualify. In addition, developers report investing additional funds into projects after they are placed into service. For example, the developer for Madison School completed landscaping projects that are not included in the total final project costs listed here.vii Prior to Rehabilitation Finished Rehabilitation PROJECT FINANCING AND IMPACT Total Final Project Costs $1,674,402 State Historic Tax Credit Awarded $280,438 Economic Impact $3,264,230 Economic Activity Per Dollar of State Credit $11.60 Jobs Supported 15 State and Local Taxes Collected $148,420 Estimated Market Value 2023 $1,131,100 Funding Sources Primarily private Winona, Minnesota Previous use: elementary school Current use: Madison Place (apartments) Year constructed: 1932 Years rehabilitated: 2020-2021 Total project costs: $1.7 million Status: fully rented Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 7 Developing private-public partnerships: Cloquet High School Historic significance In October 1918, the combination of a dry season, high winds, and sparks from a passing train led to Minnesota’s worst natural disaster—a massive fire.viii Among the most devastated communities was the City of Cloquet. Only one of Cloquet’s school buildings survived the devastation.ix Within a year of the fire, ground was broken on the new Cloquet High School located on Carlton Avenue. The architecture of the building reflects the historical changes of the time. The 1921 construction is styled in the Classical Revival style. Meanwhile, the 1950 additions are simplified and modernist with decorative brickwork. Carved into two of the entrances are the words “Cloquet High School.”x The high school building, now known as the Carlton Lofts, is located in a residential neighborhood of Cloquet. Rents in the building primarily target workforce housing, but the building also has market rate units. Of the 57 units, 45 are affordable and 12 are market rate. This project used a mix of private and public funding sources. In addition the the developer, the Greater Minnesota Housing Fund (GMHF) provided financial support and additional resources. The GMHF also collaborated with the Federal Home Loan Bank to access flexibile credit during the project.xi During Rehabilitation Finished Rehabilitation PROJECT FINANCING AND IMPACT Total Final Project Costs $16,141,174 State Historic Tax Credit Awarded $2,939,133 Economic Impact $31,467,040 Economic Activity Per Dollar of State Credit $10.70 Jobs Supported 140 State and Local Taxes Collected $1,430,760 Estimated Market Value 2023 $82,900 (land only) Funding Sources Private/Public Cloquet, Minnesota Previous use: high school Current use: Carlton Lofts (apartments) Year constructed: 1921 Years rehabilitated: 2018-2020 Total project costs: $16.1 million Status: affordable units available for lease Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 8 Developing private-public partnerships: Historic Central High School Historic significance Between 1880 and 1890, the population of Duluth grew from around 3,400 to 33,000.xii With growth came the need for additional space to educate the community’s youth. The Historic Central High School, with its iconic clock tower and sweeping views of the lake, was built on an entire city block in a hillside neighborhood.xiii Architecturally, the building is considered one of the state’s finest examples of the Richardsonian Romanesque style. The three-story structure is largely composed of Lake Superior brownstone quarried from Fond du Lac.xivxv Under the ownership of Saturday Properties, the school is being rehabilitated for housing. The property is now known as Zenith DCHS, named after the high school yearbook. It has 122 units, of which 10 percent are reserved as affordable housing. As construction work wraps up in late 2023, units are currently available to rent starting in January of 2024. Financing included a mix of private sources, including investment from the AFL-CIO Housing Investment Trust (HIT)xvi and public sources, such as tax increment financing and federal and state historic tax credits.xvii The 2023 estimated market value of the property was $2.6 million. The assessment was conducted prior to project completion, so it will increase with the new assessment. Property taxes collected in Duluth will increase from $0 as a school building to $404,000 post-rehabilitation.xviii Post-Rehabilitation Post-Rehabilitation PROJECT FINANCING AND IMPACT Project Costs (estimated) $56,030,000 State Historic Tax Credit Awarded TBD Estimated Economic Impact (estimated) $109,715,500 Economic Activity Per Dollar of State Credit TBD Jobs Supported (estimated) 490 State and Local Taxes Collected (est.) $4,991,300 Estimated Market Value 2023 $2,551,900 Funding Sources Private/public Duluth, Minnesota Previous use: high school Current use: Zenith DCHS (apartments) Year constructed: 1892 Years rehabilitated: in progress Total project costs: $46.0 million (est.) Status: first rentals available 2024 Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 9 Creating community partnerships: Alexander Baker School Historic significance In the early 1900s, the rapidly growing population of International Falls was linked with the growth of the paper industry, necessitating construction of the Alexander Baker School in 1914. The newly built space served as a community resource for youth and adult education, agricultural extension classes, and teacher training. The neighboring Backus School building was built in 1936 with a grant from the Public Works Administration—a prime example of “Federal Relief Construction” during the economic collapse of the paper industry.xix While the two schools were built at different times with different architectural styles—the Baker School in Classical Revival style and the Backus School in art deco—efforts were made to match their massing and brick colors to create a unified look. The school names are inscribed above their main entrances.xvii Recently, International Falls has struggled with a lack of housing availability, with no rental housing developments in almost 40 years.xx Community members and partners have joined together to conduct housing studies and feasibility assessments, participate in design charrettes, and apply for funding to support efforts to bring affordable housing to the community.xvi Construction began in 2023 to convert the Alexander Baker School classrooms into 30 affordable housing units.xvi, xviii The adjoined E.W. Backus School will remain as the local community center. Before Rehabilitation Before Rehabilitation PROJECT FINANCING AND IMPACT Project Costs (estimated) $18,302,485 State Historic Tax Credit Awarded TBD Economic Impact (estimated) $35,680,490 Economic Activity Per Dollar of State Credit TBD Jobs Supported (estimated) 160 State and Local Taxes Collected (estimated) $1,622,150 Estimated Market Value 2023 N/A Funding Sources Primarily public International Falls, Minnesota Previous use: K-12 school Future use: housing Years constructed: 1914 Years Rehabilitated: in progress Total project costs: TBD Status: under construction Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 10 Addressing affordable housing shortages: New Ulm High School Historic significance New Ulm High School was originally built in 1915 at a time when the town’s population was growing and the sentiment for educational instruction was shifting from traditional academics—mainly reading, writing, and arithmetic—to also training for manual labor and domestic industries. The school got two major additions, one in 1939 with support from the Works Progress Administration and one in 1956 in response to the baby boom.xxi The site served students in junior high and high school until 2016. The architectural styles reflect the three distinct eras in which construction happened. The original school was built in a Classic Revival style, the 1939 addition with international style influences, and the 1956 addition in art deco style.xix The adaptive reuse project to create affordable housing aimed to preserve historic elements, such as built-in chalkboards, cupboards, and classroom door transoms, while incorporating modern systems, such as all new electrical, plumbing, and appliances.xxii The 49 apartment units are all reserved for low-income residents, an effort that involved a partnership between the City of New Ulm, community partners, Community Housing Development Corporation, and a nonprofit developer.xxiii The project also received funding from the federal Low Income Housing Tax Credit program.xxiv In addition to housing, the former school’s theater is owned and operated by a local nonprofit, which brings arts and performances to New Ulm.xxv Before Rehabilitation Finished Rehabilitation PROJECT FINANCING AND IMPACT Total Final Project Costs $16,383,773 State Historic Tax Credit Awarded $2,771,197 Economic Impact $31,939,980 Economic Activity Per Dollar of State Credit $11.50 Jobs Supported 140 State and Local Taxes Collected $1,452,350 Estimated Market Value 2023 $4,982,500 Funding Sources Primarily public New Ulm, Minnesota Previous use: junior high and high school Current use: Emerson Union Apartments Year constructed: 1915 Years rehabilitated: 2018 Total project costs: $15 million Status: some apartments available Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 11 Community spaces The seventh historic school building project utilized the credit to create community spaces. The rehabilitated building now hosts a charter/boarding school and summer camp. This continues the tradition of the building while also providing educational opportunities in the community. Community centered spaces: Pillsbury Academy Campus Historic District Historic significance The oldest buildings that make up the Pillsbury Academy campus in Owatonna were built by Minnesota’s first Baptist school, during a period of growth for denominational seminaries and academies. Opening in 1877, the school taught children from grammar school through high school. College courses were added in 1896. In 1920, the school became a military academy for boys. By 1957, enrollment changes led the school to convert to a co-ed Baptist Bible College. xxvi With this change, new buildings—primarily dormitories—were constructed on the campus. Built in 1889, the Academy Building (Old Main) was designed in Romanesque architectural style, while the additional original buildings represent Classical Revival designs.xxii Several of the buildings added in the 1960s adhere to the International style of dormitories. Pillsbury Baptist Bible College closed in 2008, with the campus sitting vacant until it was purchased by a private owner in 2014. Jenks Hall was renovated in 2014, converting the library into an open hall event space.xxii The dormitories have also been rehabilitated. The campus currently houses Pillsbury College Prep, Camp Pillsbury, and the Choice Technical Academy.xxvii xxviii Finished Rehabilitation Finished Rehabilitation PROJECT FINANCING AND IMPACT Total Final Project Costs $9,516,839 State Historic Tax Credit Awarded $1,291,674 Economic Impact $18,553,970 Economic Activity Per Dollar of State Credit $14.40 Jobs Supported 80 State and Local Taxes Collected $843,570 Estimated Market Value 2023 $1,915,000 Funding Sources Private Owatonna, Minnesota Previous use: academy, military school Current use: summer camp/event space Year constructed: 1889-1914 & 1956-1967 Years rehabilitated: 2015 Total project costs: $9.5 million Status: hosting classes, camps, and events Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 12 Impacts of school building rehabilitation on property tax collections In addition to tax collections spurred immediately by the rehabilitation work, the tax credit prompts annual increases in collections due to increases in property values. Higher property values translate into higher property taxes paid. To measure this impact, Extension examined the property tax records for the school buildings rehabilitated with the historic tax credit. Since the Alexander Baker and Duluth Historic Central High Schools are still under construction, they are not included in this analysis. On average, the value of the five studied properties grew by 440 percent, from $1.7 million prior to rehabilitation to $9.1 million post-rehabilitation (Table 1). By comparison, property values statewide increased 41 percent. As a result of property value increases, annual property taxes also increased. Property tax revenues on the five properties increased by an estimated $94,516 annually. Other than the Pillsbury Academy campus, all of these properties were owned by school districts and therefore were exempt from property taxes. In addition to addressing community issues, the rehabilitation also brings properties onto the property tax rolls. Table 1: Property Value Changes, Historic School Building Properties Receiving the Minnesota Historic Rehabilitation Tax Credit Category Pre-rehabilitation Post-rehabilitation Percent Change Estimated market value, case study projects receiving tax credit (five properties) $1,676,000 $9,054,900 440% Estimated market value, statewide, 2018-2023 $693,962,163,841 $979,760,018,170 41% Estimated annual increase in property tax collections, case study projects receiving tax credit (five properties) $94,516 Sources: Minnesota Department of Revenue, individual county property tax records, and University of Minnesota Extension estimates Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 13 Economic impact of all projects leveraged with the historic tax credit, fiscal years 2011-2023 To this point, the report has highlighted historic school building projects. This section of the report quantifies the impact of the tax credit throughout its history. Extension has measured the economic impact of the Minnesota Historic Rehabilitation Tax Credit annually since 2011. In FY23, no projects received approval due to the sunsetting of the program. Between FY11 and FY23, the Minnesota Historic Rehabilitation Tax Credit generated an estimated $6.0 billion in economic activity in the state (Table 2). The state credit has supported 29,570 jobs and $2.2 billion in labor income. Table 2: Total Economic Impact of Minnesota Historic Rehabilitation Tax Credit Projects Receiving National Park Service Part II Approval between FY 2011 to 2023 (Adjusted to 2023 Dollars) Impact Type Output (millions) Employment (FTEs) Labor Income (millions) Direct $3,307.8 15,880 $1,282.3 Indirect $1,129.7 5,320 $399.5 Induced $1,607.7 8,370 $541.5 Total $6,045.2 29,570 $2,223.3 Source: University of Minnesota Extension estimates, IMPLAN Total impacts by fiscal year Economic impact has varied by year (Figure 2). The biggest determinate of economic impact is the direct impact. Direct impact, in turn, depends on the number of projects and the average project investment. Fiscal year 2021 had the highest number of planned projects (34). FY15 also had a high number of projects with 23. Most years, the number of projects is in the range of 12 to 14. Fiscal year 2017 only had seven projects.xxix With the program sunsetting, FY23 had no completed projects (Table 3). Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 14 Figure 2: Total Economic Impact of Minnesota Historic Rehabilitation Tax Credit Projects Receiving National Park Service Part II Approval between FY 2011 and FY 2023 Table 3: Total Economic Impact of Minnesota Historic Rehabilitation Tax Credit Projects Receiving National Park Service Part II Approval between FY 2011 and FY 2023 Output (millions, 2023 $) Employment (FTEs) Labor Income (millions, 2023 $) FY 2011 $584.7 2,880 $195.4 FY 2012 $743.0 3,500 $240.1 FY 2013 $183.2 1,200 $61.4 FY 2014 $308.4 1,340 $111.8 FY 2015 $579.9 2,610 $203.6 FY 2016 $282.1 1,110 $88.0 FY 2017 $82.3 290 $24.8 FY 2018 $872.5 3,910 $287.0 FY 2019 $292.2 1,100 $90.9 FY 2020 $208.3 720 $58.8 FY 2021 $1,548.5 9,660 $762.7 FY 2022 $360.3 1,250 $98.8 FY 2023 $0 0 $0 Total $6,045.4 29,570 $2,223.3 Estimates by the University of Minnesota Extension Center for Community Vitality $- $200 $400 $600 $800 $1,000 $1,200 $1,400 $1,600 $1,800 2011 2012 2013 2014 2015 2016 2017 2018 2019 2020 2021 2022 2023 M ill io n s Ouput (no labor income) Labor Income Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 15 Location of projects approved between FY11 and FY23 Counties across Minnesota have benefited from the value generated by the historic rehabilitation tax credit. Figure 3 illustrates, by county, the location of projects awarded the credit between FY11 and FY23. While many of the projects have been in Ramsey and Hennepin Counties, 20 of Minnesota’s counties have properties with historic tax credit projects. Greater Minnesota counties with the highest number of properties include St. Louis, Winona, Otter Tail, and Stearns. Figure 3: Location of Minnesota Historic Rehabilitation Tax Projects Receiving National Park Service Part II Approval between FY 2011 and FY 2023 Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 16 Photo credits Cover photo: Duluth Historic Central High School, Duluth News Tribune Pages 4 and 5: Winona’s Central Elementary, Central Square Apartments (Facebook) Page 6: Winona’s Madison Elementary, Madison Place Apartments (website) Page 7: Cloquet High School, Cloquet Community Development and Carlton Lofts (website) Page 8: Duluth Historic Central High School, Zenith DCHS Apartments (website) Page 9: International Fall’s Alexander Baker School, AB Building (website) Page 10: New Ulm High School, Emerson Union Apartments (website), National Register application Page 11: Owatonna’s Pillsbury Academy, Pillsbury College Prep (website) Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 17 End notes i Two projects (Alexander Baker School and the Historic Duluth Central High School) are still currently under construction. For these projects, the total costs are based on the developers estimates. ii National Park Service. (n.d.) Historic Preservation Act. https://www.nps.gov/subjects/historicpreservation/national-historic-preservation- act.htm#:~:text=The%20act%20established%20permanent%20institutions,the%20Secretary%20of %20the%20Interior. iii Novogradac. (2023). Historic tax credit resource center. https://www.novoco.com/resource- centers/historic-tax-credits/about-historic-tax-credit iv Lucas, A.M., & Zellie, C.S. (2011a, June 30). Central grade school. National register of historic places registration form. https://s3.amazonaws.com/NARAprodstorage/lz/electronic- records/rg-079/NPS_MN/12000071.pdf v Lucas, A.M., & Zellie, C.S. (2011b, June 30). Madison School. National register of historic places registration form. https://s3.amazonaws.com/NARAprodstorage/lz/electronic-records/rg- 079/NPS_MN/12000073.pdf vi Kayser, Z. (2021, August 16). A new life for Madison, Central schools. Winona Post. https://www.winonapost.com/news/a-new-life-for-madison-central-schools/article_44ac6e1f- 964a-554d-9275-2caecd547002.html vii A. Bremmer, personal communication, January 2, 2024. viii Nelson, P. (2023, February 24). Cloquet, Duluth, and Moose Lake fires, 1918. MNopedia. Minnesota Historical Society. https://www.mnopedia.org/event/cloquet-duluth-and-moose-lake- fires-1918 ix Carroll, F.M., & Raiter, F.R. (1983). “At the time of our misfortune: relief efforts following the 1918 Cloquet fire”. Minnesota History, 48(7), 270-282. http://collections.mnhs.org/MNHistoryMagazine/articles/48/v48i07p270-282.pdf x Ludt, T. (2020). Cloquet High School. National register of historic places registration form. xi Greater Minnesota Housing Fund. (2021, January 26). Cloquet Middle School apartments = Historic rebuilding. https://gmhf.com/2021/01/cloquet-middle-school-apartments-success- story/ xii United States Census Bureau. (1890). Cities, towns, villages, and boroughs. https://www2.census.gov/library/publications/decennial/1890/volume-1/1890a_v1-12.pdf xiii X-Communication & Zenith City Press. (n.d.). Duluth central high school – 1892. Zenith City Press. https://zenithcity.com/archive/historic-architecture/duluth-central-high-school-1892/ xiv Cavin, B. (1972). Duluth Central High School. National register of historic places registration form. https://npgallery.nps.gov/NRHP/GetAsset/NRHP/72001488_text Minnesota’s Historic Structure Rehabilitation Tax Credit: Historic school buildings 18 xv Nickels, B. (2023, April 14). Zenith DCHS apartments: Once a place to learn, now a place to live. Kraus-Anderson. https://www.krausanderson.com/blog/zenith-dchs-apartments-once-a- place-to-learn-now-a-place-to-live/ xvi Good News Minnesota & McKirdy Media. (2022, May 31). Duluth’s historic Central High School to become Zenith Apartments. 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National register of historic places registration form. https://npgallery.nps.gov/GetAsset/2611d1d9-c39d-45d1-812c- 272db408a888 xxii Schuldt, C. (2019, September 13). Future apartments viewed. The Journal. https://www.nujournal.com/news/local-news/2019/09/13/future-apartments-viewed/ xxiii Schuldt, C. (2020, February 27). Emerson Union Apartments open – Former school building expected to be fully leased this year. The Journal. https://www.nujournal.com/news/local- news/2020/02/27/emerson-union-apartments-open-former-school-building-expected-to-be- fully-leased-this-year/ xxiv United States Department of Housing and Urban Development. (n.d.) Low income housing tax credits database access. https://lihtc.huduser.gov/ xxv State Street Theater Co. (n.d.). About us. https://statestreetnewulm.org/about-us/ xxvi Roberts, N. (1986). Pillsbury Academy Campus historic district. National register of historic places registration form. https://npgallery.nps.gov/GetAsset/27fd292f-8c32-40c4-84cd- 15fbef7b092f xxvii Hyatt, K. (2016, January 4). Holidays and history: Open house to celebrate Jefts Hall renovation, history with a festive twist. Owatonna People’s Press. https://www.southernminn.com/owatonna_peoples_press/features/article_52076c67-a372- 5fc5-93e0-224da21b9310.html xxviii Camp Pillsbury. (2023). Home page. https://camppillsbury.com/ xxix Occasionally, a project moves fiscal years or is missed during the analysis. When this is discovered, the project is incorporated into the data for the appropriate year. Therefore, the totals here may not match the report for the individual year.