Capturing the Impact of the Federal Historic Tax Credit in Predominantly African-American Neighborhoods

Posted on: August 29th, 2013 by Special Contributor 2 Comments

By: Jenna Dublin

In July, Rutgers University and the National Park Service (NPS) released their annual report on the nationwide economic effects of the federal historic tax credit (HTC). The numbers are impressive. Since its inception, the credit has attracted $106.1 billion in historic rehabilitation investment for 38,700 projects, generating approximately 2.35 million jobs and $121 billion in GDP. The credit has helped to transform dilapidated historic buildings into economic engines that revive older communities. These statistics, however, only tell part of the story.

My task as a summer intern at the National Trust was to figure out how to capture another side to the story--in particular, to answer the following question:

How can we more effectively capture the HTC’s impact in diverse communities, as it affects real people, places, and policy issues?

My assignment was to create reports that would demonstrate the HTC as a tool for economic revitalization in predominantly African-American neighborhoods. My work was further focused on five members of the Congressional Black Caucus (CBC), looking at the impact of the HTC in their congressional districts and predominantly African-American neighborhoods within them. Using NPS data of HTC projects completed between 2001 and 2012, we found that the percentage of HTC projects located in predominantly African-American neighborhoods in these five congressional districts ranged from 25 percent to 89 percent. In addition, the 78 projects generated local development expenditures ranging from $39 to $187 million and created 650 to 2,700 jobs.Ohio_FudgeDistrict_HTC_Page1

Analyzing the effects of the HTC through the lens of racial/ethnic-minority policy issues quickly raised important challenges and opportunities. In setting out to locate the districts’ predominantly African-American neighborhoods, I found enduring geographic racial divisions and associated inequalities. Because of inequality and neighborhood vulnerability, all communities do not welcome new real estate development and the associated risk of gentrification. In each district report, it was critical to highlight HTC projects that benefit existing residents and businesses, and to challenge the perception that use of the credit contributes to gentrification and the displacement of long-time residents.  It was also necessary to locate and feature HTC projects that preserved the buildings’ African-American history. These reports needed to reflect local priorities and challenges.

Creating a Research Methodology

With the assistance of the Government Relations and Policy department and the Office of Diversity, I developed a research method to capture the benefits of the HTC in racial/ethnic-minority communities. The results of this research formed the basis of the congressional reports. The research involved three basic tasks: creating a map of HTC projects, analyzing the economic impact of these projects, and developing a case study.

HTC Project Map

Using 2010 census tract demographic data and Esri ArcGIS mapping software, I created a map of all HTC projects in the predominantly African-American neighborhoods within the congressional district. The locations of completed HTC projects were provided by the NPS. Each project is marked on the map by a red dot.

Characterizing neighborhoods as African-American or by other racial/ethnic groups is not an easy undertaking due to the complexities of personal racial/ethnic identification and residential patterns. To better understand and capture these distinctions, I consulted expert analysts Jason Richardson of the NAACP Economic Department, and Darryl Cohen, a geographer with the U.S. Census Bureau Population Division.

Using ArcGIS, I selected the census tracts with a population of African-American residents greater than 50 percent, verifying that these districts could be considered predominantly African-American. These are highlighted by light blue lines on the map. This method is effective because the congressional districts cover metropolitan centers that have a high number of African-American residents and exaggerated separation between the residential areas of racial/ethnic groups. In other areas of the U.S.—particularly outside of metropolitan areas—this method cannot be applied because the population of African-American residents may be lower and more dispersed. A different methodology called the “location quotient for demographic groups” would be more effective in this situation, since it can be used to locate the local concentrations of a racial/ethnic group, even if not the majority.

Economic Impact Ohio_FudgeDistrict_HTC_Page2

Economic impacts are captured in a table that shows a side-by-side comparison of the economic activity of the district’s total HTC projects and the projects in predominantly African-American neighborhoods. The economic impact information was generated using the Rutgers University Preservation Economic Impact Model (PEIM), which uses total development costs and industry-specific regional multipliers. The comparison table makes a strong case for the HTC as an important tool for economic and community revitalization in the district and in predominantly African-American neighborhoods.

Case Study

Supporting economic impact information with case studies tells the full story of the HTC’s local benefits. For the CBC member report, it was important to represent a HTC project that aligns with local priorities and policy concerns. The selection of the case study project was guided by the following key criteria:

  • Benefits long-term residents (i.e., mixed-use developments that preserve local businesses, mixed-income residences, schools, and community centers) and is not gentrifying.
  • Preserves African-American history.
  • Led by minority-owned real estate and contracting companies.
  • Supports local employment.

Future Research

The research conducted for the five reports showed that a significant number of HTC projects are located in predominantly African-American neighborhoods. However, while the project did not result in a research methodology for capturing nationwide statistics on total HTC projects in African-American neighborhoods, it did demonstrate that it is critical to acknowledge neighborhood-specific concerns and to measure HTC impact accordingly.  The project also resulted in the creation of a set of guiding criteria that raised additional questions. For example, who are the individuals employed by HTC projects in diverse communities? HTC-related employment case studies would be a compelling alternative. Or, how does the HTC’s economic activity compare with other local stimulus programs?

I hope that the reports and the model will be useful for in-district historic preservation advocacy and can begin a conversation on locally relevant strategies for measuring HTC impact.

Jenna Dublin was a summer intern with the National Trust for Historic Preservation, in the department of Government Relations and Policy. She is pursuing a dual master’s degree in Historic Preservation and Urban Planning at the University of Maryland.

 

Advocacy, Diversity, Economics, Sustainability

2 Responses

  1. Donna Isaacs

    August 31, 2013

    Great work Jenna. It has also been my hypothesis that green rehabilitation is a successful tool for community revitalization in predominantly African-American communities. It is nice to have the data to back that up. I can also relate to the need to address the issue of displacement and gentrification with local policies and a commitment to local property ownership. We are getting ready to create a historic district to aid with revitalization of a predominantly African-American district in rural Louisiana and while HTC will be available finding a funder for these small rural projects in distressed communities (42% below poverty) poses a challenge. Did you come across any creative financing solutions while you were conducting your research that you may be able to share?

  2. Jenna Dublin

    September 6, 2013

    Dear Donna Isaacs,

    Thank you so much for your reply and comments. Creative financing for historic preservation and adaptive reuse is an incredibly important topic. The summer project and research focused on the African American communities of urban congressional districts. These included districts in Ohio, Illinois, New York, South Carolina, and Georgia. Many of the historic tax credit projects were quite large with significant funders and investment. One of the questions that came up frequently in our discussions aligns with exactly what you have described: when broadening our scope of HTC analysis to rural African American communities what additional opportunities and challenges will emerge?

    In terms of creative financing and adaptive reuse solutions, one exemplary project that I came across was the Homan Square- Power House High School in Chicago. In 2006, a vacant industrial complex in an underserved predominantly African American neighborhood was transformed into a LEED-platinum certified public charter school, mixed-income housing, and comprehensive community center. While it was a multi-million dollar project it utilized influential financing solutions and models for reuse that may be applicable to various projects, including the use of the New Market Tax Credit alongside the Historic Tax Credit, public-private partnerships, and innovative elements for sustainable communities including a multi-functional community service center and mixed land use planning.

    I am very interested in learning more about your work in Louisiana and your thoughts on the potential of the historic tax credit for community revitalization in rural African American communities.