Most people in McPherson are familiar with the McPherson Opera House.

What many people may not realize is that the building looks the way it does today thanks, in part, to a relatively new state program involving tax credits.


Most people in McPherson are familiar with the McPherson Opera House.
What many people may not realize is that the building looks the way it does today thanks, in part, to a relatively new state program involving tax credits.
The Kansas Historic Tax Credits (KHTC) program was implemented in July 2001 to help provide funding for renovations to historic buildings. It allows for qualified buildings to receive state income tax credit equal to 25 percent of qualified expenses. The credits are issued by the Kansas State Historic Preservation Office.
Kansas is one of 30 states to have such a program. Every state program is modeled after the federal tax credit program.
A recent study sponsored by the Kansas Preservation Alliance examined the economic impact the program has on the state of Kansas. The study was completed in March 2010 with very positive findings.
Since its start, the KHTC has generated $53 million to help complete 542 projects. This created 4,443 jobs, which translated into $142 million in labor income and $56 million paid in taxes.
Overall, according to the study, the investment in preserving historic buildings gives more return than equal investments in new construction or in other businesses including manufacturing, and agriculture.
The direct economic impacts of KHTC projects include the labor and materials purchased to complete the necessary work.
There are also a number of indirect benefits. These include spending by the industries that produce the needed goods, such as the mill that produces the lumber, as well as purchases made by the households of the workers connected with the project.
State tax credits also have many long-term benefits. These include enhanced tourism, appreciating property values, a more attractive downtown, and future economic returns from the renovated buildings.
The federal historical tax credit program was implemented in the late 1970s and allows for a 20 percent credit on qualified buildings. The credit is in the form of a dollar-for-dollar deduction against federal taxes.
From its inception, the federal tax program has generated over $56 billion for investment in historic renovations.
While experts have said the tax credit program is one of the most effective tools for historic preservation, often the aid it provides is not enough to allow the project to be completed as desired.
That’s where the state program comes in. The 25-percent credit from the state is added to the 20-percent credit from the federal program for a total tax credit of 45 percent, which is often enough for the desired renovations to be made.
Buildings can also qualify as a state-alone project, in which the project only receives tax credits from the state and not from the federal program.
In order for buildings to qualify for KHTC, the building must be listed on the National Register of Historic Places or on the register of Historic Kansas Places. Buildings may also qualify if they are deemed to be a contributor to a National or State Registered Historic District.
The work done on the buildings has to follow a qualified rehabilitation plan, which must be approved by the State Historic Preservation office. In addition, project expenses must exceed $5,000. The use of the building may be for income purposes, such as a business, or non-income purposes, such as a family’s home.
If the credits are not used up in one year, they may be carried forward for up to 10 years.
Kansas tax credits have been used in about 50 counties throughout the state. On average, the credits are used on just under 70 projects every year, with the average investments totaling around $34 million per year.
McPherson County has had 14 buildings where renovations have been done, aided by tax credits. These projects have been done in Marquette, Lindsborg, and McPherson.
Some of the buildings worked on include the McPherson County Courthouse, the McPherson Power Plant, the McPherson Opera House, Marquette City Hall, and Farmer’s State Bank in Lindsborg.
In total, McPherson County has received over $1.8 million dollars in state tax credits and over $3 million in federal tax credits.
Since Kansas implemented its program, the number of tax-credit-funded preservation projects has increased about 10-times from the number of projects done when only federal tax credits were available.
The benefits of rehabilitated buildings are even greater when it is considered that they all add up to one major benefit: an enhanced quality of life.
In communities with renovated buildings, there may be larger groupings of creative people and the efficiency of workers is increased, among other benefits.