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Tea Party and Sierra Club Should Love Historic Tax Credits

Posted to MichiganNow.org on Friday, October 19, 2012

INTRO: Elections across the country are just days away. Pocketbook issues are expected to be big. Voters are asking which government programs are good and which are bad. An urban planner from Washington is in Michigan today saying fixing up old buildings, also called historic preservation, is a great investment for taxpayers. Michigan Now’s Chris McCarus reports.

The Michigan Association of Planning is holding its annual meeting in Acme Township. It ends today. A few of the 500 urban planners criticized the venue. Cherry orchards above Grand Traverse Bay were chopped down to make way for this modern high rise hotel. Planners prefer turn of the century neighborhoods. Keynote speaker was Donovan Rypkema.

“There is no such thing as the historic preservation industry. It’s not like the restaurant industry, the automobile manufacturing industry or growing cherries. There is no such thing. No industry itself.”

But there should be, says Rypkema. He owns an urban planning firm in Washington D.C. and has worked a lot with Oakland County’s Main Street program.

“When we’re struggling in state, local and national level tax revenues we ought to be looking at what’s generating taxes.”

This issue won’t come up in presidential debates. Not likely even in your race for local township trustees. First you gotta know what rightsizing is. It means using the correct amount of buildings and infrastructure for the population and money available.

“You’d think rightsizing is about Detroit, Cleveland and Buffalo. Well it’s not just about big cities. Between 2000 and 2010, 454 cities around the country lost population while five of them were over a half million in population.”

“In many cases, the city lost population as a whole but the population of the local historic districts grew.”

President Ronald Reagan got elected with quotes like “get big government off the backs of the people.” Donovan Rypkema says that shouldn’t apply to the rules set up for neighborhood historic districts.

“Now, the kind of rhetoric from the right says well if you have regulations that must hurt property values. Well, in fact it is the opposite that has happened. Here’s the reason. They’re paying the premium for the confidence that the lunatic across the street can’t do something to his house that’s going to have an adverse impact on my house. That’s where the premium of regulation comes from.

“Unlike other assets, the economic value of real estate is generated from conditions external to the property.”

You could shop in Muskegon, Jackson, Flint, Saginaw or Detroit and buy a mansion for $100,000. According to Rypkema, this shows Michigan has made bad investments for decades.

“I’m in some town every week and they’ll drive me through their great historic neighborhood and they’ll say look at that old Victorian house. If that were in Washington where you live it would be worth $3 million dollars. But yeah but it ain’t. Real estate value comes from its context. The economic role of land use in general and historic preservation districts in particular is to protect the context within which the individual properties exist. That’s where that premium is coming from.”

Rypkema’s firm has been working with a federal agency in Washington called the Advisory Council on Historic Preservation. They asked how many jobs can $1 million of investment create?

They found the pay is not the same but not too different. In Georgia, making cars yields 3 jobs, computers yield 4 jobs, airlines produce 9 jobs, chickens 10 jobs, new buildings 15 jobs, while rehabbing an historic building gives you 18 jobs. What does he think of the stimulus program?

“The republicans were wrong to say that we didn’t have to have a stimulus program. The world’s economy was going to hell. There had to be stimulus program. They’re idiots. The democrats were wrong on what they spend it for. I’m not picking on anybody. These are the White House’s numbers.”

Under the stimulus, project activity jobs cost $445,000 each. Historic rehabilitation tax credit program.  It costs taxpayers $9,000 per job. This is likely to be cut next year. The historic tax credit program has cost taxpayers $16 billion since it began 30 years ago. But it’s brought in $22 billion to the U.S. Treasury.

Says Rypkema,

“I don’t know why the hell the Tea Party and the Sierra Club aren’t holding hands at the front of the preservation parade.”

But they’re not. And this one of the few people in the country who’s saying they should.

For Michigan Now, I’m Chris McCarus outside Traverse City.

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Donovan Rypkema, principal of PlaceEconomics, a real estate and economic development consulting firm in Washington, D.C., before speaking to the Michigan Association of Planning Conference, October 18, 2012, at the Grand Traverse Bay resort in Acme.

Donovan Rypkema, principal of PlaceEconomics, a real estate and economic development consulting firm in Washington, D.C., before speaking to the Michigan Association of Planning Conference, October 18, 2012, at the Grand Traverse Bay resort in Acme.

The conference attracted several Michigan State University urban planning students. Outside the hotel are Catalina Alfaro, of Lansing and Courtney Dunklin of Detroit. "It was interesting he (Rypkema) thought both sides of politics don't seem to know what's best for historic preservation," said Dunklin.

The conference attracted several Michigan State University urban planning students. Outside the hotel are Catalina Alfaro, of Lansing and Courtney Dunklin of Detroit. "It was interesting he (Rypkema) thought both sides of politics don't seem to know what's best for historic preservation," said Dunklin.

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