PARTNERS

IN

PROSPERITYThe Economic Benefits of

Historic Preservation in New Jersey

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A nyone who has stayed at a Victorian bed-and- breakfast in Cape May,

shopped along Westfield�s re-vitalized Main Street, openedthe door to affordable housingin a 19th century Camdenrowhouse, or club-hopped inhistoric Hoboken knows thisinstinctively: historic preserva-tion not only restores build-ings, it rejuvenates the souland revitalizes communities.The ambiance and integrity ofhistoric buildings foster asense of place, a connection tothe past and an enhancedquality of life. But along with

those intangible qualities isthe very quantifiable benefitof dollars and cents. Historicpreservation pays, and all NewJersey citizens benefit.

In the nation�s most com-prehensive statewide study ofthe economic benefits of his-toric preservation, the RutgersUniversity Center for UrbanPolicy Research has docu-mented the vigorous role thatpreservation plays in primingthe economic pump. Preserva-tion is a powerful tool in cre-ating jobs, generating income,stimulating tax revenue, nur-

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An Economic Engine

turing tourism and enhancingolder cities. As an economicforce, it surpasses investmentin new housing or commercialconstruction.

Each $1 million spent onnon-residential historic reha-bilitation creates 2 jobs more

than the same money spent onnew construction. It also gen-erates $79,000 more in in-come, $13,000 more in taxes,and $111,000 more in wealth.

Each year in New Jersey,preservation pours more thanhalf a billion dollars into theeconomy, including $123 mil-lion in improving historicbuildings, $432 million in heri-tage tourism spending, and$25 million in spending byhistoric sites and organiza-tions. This triggers a wealth ofeconomic benefits. Considerthese:

Jobs

Preservation in New Jerseycreates 21,575 jobs each year,10,140 of them in the state.

�Merchantville�s historic downtown hascome back to vibrant life through theMain Street New Jersey program,encouraging local people to invest in thecommunity. It�s a gathering place, a niceplace to shop, and a wonderful place towork.�

Janice Wilson Stridick

Wilson Creative Marketing, Merchantville

Main Street New Jersey�sdowntown revitalizationprograms generatethousands of new jobs andhundreds of new businesseswithin the state, andleverage $32 in privatereinvestment for everypublic dollar allocated.

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An Economic Engine

Income

Preservation generates $263million in income for NewJerseyans and $572 millionnationwide.

Taxes

Preservation stimulates $298million in federal, state and lo-cal taxes in New Jersey and$415 million in taxes nation-wide. New Jersey historicproperties contribute $120million annually in propertytaxes, an amount that in-creases when historic rehabili-tation enhances property val-ues.

Wealth

Preservation contributes $543million in gross state productand $929 million in gross do-mestic product. These quanti-fiers represent the total valueat retail prices of all the goodsand services produced by astate�s or nation�s economyduring a given period and arethe broadest available measureof economic activity.

Historic preservationtouches the lives of New Jer-sey residents in a personalway, from tourists indulging ina weekend of antiquing, tobusiness owners making a liv-ing in a historic town center,

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An Economic Engine

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dto low-income renters enjoy-ing a safe and comfortablehome in a renovated historicbuilding. All these ways of ex-periencing historic preserva-tion are possible because pres-ervation is profitable. It canplant the seed for lucrativeheritage tourism in a smalltown or jump-start acommunity�s comeback amidurban decay. Historic preser-vation means money to NewJersey.

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A s an economic engine, historic preservation is a particularly powerful

force driving heritage tourism.When it comes to creatingjobs, generating income,stimulating tax revenue andproducing wealth, preserva-tion is a star player. And NewJersey is a rich stompingground for a type of travel thatcapitalizes on an area�s historicand cultural assets. MonmouthBattlefield, Thomas Edison�slaboratories, Cape May, theBarnegat lighthouse�theseand a plethora of other attrac-tions tell the story of New Jer-sey and a new nation. The

tourists who venture to suchplaces tell another story: heri-tage tourism is a lucrative andexpanding force in theeconomy. Its devotees tend tobe full-time professionals whoare more free-spending thantourists with different inter-ests. Compared with othertourists, heritage tourists aremore affluent, take longertrips (often in family groups),plan them further in advance,spend more money, and returnhome more satisfied.

Heritage tourism tugs atthe traveler�s emotions and in-tellect. As travel authority

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Arthur Frommer put it:�People travel in massivenumbers to commune with thepast. We all gain solace, plea-sure and inspiration from con-tact with our roots.... Seeingthe cultural achievements ofthe past, enshrined in periodbuildings, is one of the majormotivators for travel.��

For historically diverseNew Jersey, this motivationtranslates into money. Heri-tage travelers spend $432 mil-lion annually in the pursuit ofthat connection with the past.And they spend more gener-ously than the typical traveler:for example, heritage travel-ers�who combine a historicsite with something else, suchas business�spend an averageof $252 for an overnight trip,60 percent more than the $157

spent by the general New Jer-sey traveler. This same trav-eler stays longer in New Jer-sey (4.7 nights) and spends 78percent more in restaurantsthan other travelers. Of over-night travelers who spend$1,000 or more on a trip, 18percent are heritage touristscompared with 8 percent forthe general New Jersey trav-eler. Heritage travelers alsospend more on lodging�84percent compared with 59 per-cent spent by the general trav-eler.

Day trippers with historicdestinations spend about 20

Time Travelers

Credit: Old Barracks Museum Association

�Historic preservation was the organizingforce for revitalization of Cape May as aVictorian attraction. Tourists here arelooking for a special experience�our mostexpensive rooms are always booked first.�

Elan Zingman-Leith

Innkeeper, Cape May

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percent more than travelerswith no interest in history.They spend significantly moreon meals and shopping.

The $432 million that heri-tage tourists inject into theNew Jersey economy createsjobs, income, taxes andwealth, with about half theseeconomic gains staying in theGarden State.

Jobs

Of the 15,530 jobs createdfrom heritage tourism, 7,085stay in New Jersey, with more

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History is amajor tourismdraw, andheritagetourists aregenerousspenders.

than half serving the restau-rant and lodging industries. Ofjobs generated elsewhere inthe country, the bulk are in re-tail, services, manufacturing,and finance, insurance andreal estate.

Income

Slightly more than $383 mil-lion in income is created fromvisits to historic sites, with$168 million staying in NewJersey. Of the overall figure,more than half is in retail andservices, particularly lodging,restaurants and bars.

Taxes

Federal, state and local gov-ernments gain $216 million intax revenue from heritagetourism. Slightly more thanhalf that money goes to fed-eral coffers, while nearly 36percent goes to state govern-ments and 13 percent goes tolocal communities.

Wealth

Of the $559 million generatedin wealth, $287 million staysin New Jersey. Services andretail account for 45 percent ofthat overall figure, including asignificant amount from thelodging and dining industries.

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Historic Tourism�s Untapped Potential

Although its economic contribution is substantial, heritagetourism remains a small fraction�3.7 percent�of all travelspending in New Jersey. Heritage travel�s 9.1 million aver-age annual trips to New Jersey account for only a little morethan 5 percent of all state travel. Currently, historic and cul-tural destinations are weaker draws than casinos and theshore, but the economic potential of heritage tourism is enor-mous.

Travel is one of the nation�s fastest growing industries, andheritage tourism, one of the top reasons for pleasure travel,has become increasingly important not only to travelers butto the communities that thrive from these visits. New Jer-sey, already ranked seventh in the nation in terms of travelrevenues, is poised to capitalize on its underdeveloped his-toric assets.

Industry experts expect sites of historic and cultural inter-est to play an ever more prominent role in travel, both na-tionally and in New Jersey. This is partly the result of a trendtoward increased pleasure travel and shorter trips closer tohome, especially weekend getaways. �Baby boomers��thatlarge chunk of the population now enjoying a growing dis-cretionary income�are also fans of heritage tourism.

By further developing and promoting its heritage tourism at-tractions, New Jersey can draw more visitors from fartherafield than the mid-Atlantic regions, encourage more over-night�and, thus, more lucrative�trips, expand the varietyof destinations beyond the popular shore and casinos, andenhance the state�s image as a historically rich vacation spot.

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Notable players in NewJersey�s heritage tourism in-dustry are the more than 200historic sites and organiza-tions. Though most of theseoperations have no paid staffand a barebones budget, theyattract more than 6.4 millionvisitors annually. They alsocontribute to the economy bycreating 1,438 jobs, generating$33 million in income, produc-ing $13 million in taxes and$43 million in wealth.

Time Travelers

Travel is already key toNew Jersey�s economy. It isone of the state�s three largestbusinesses�bigger than con-struction, agriculture or min-ing�and it makes possible al-most 5 percent of all New Jer-sey jobs. Heritage tourism isgaining a stronger profile inthis significant area of thestate�s economy and has thepotential to play an importantrole in improving the stabilityand strength of the state�soverall tourism industry.

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The buzz of a sawcutting lumber fora historic porch, the

scraping of mortar as a masonrepoints the bricks of a neigh-borhood church, the slap ofwet paint on a downtownstorefront�these are thesounds of money flowing intothe economy. A major compo-nent of historic preservation�sfinancial impact is the moneyspent on �bricks and mortar�needed to make a building us-able or more attractive. Workdone on everything from theprivate home to the town hallcreates jobs and income, con-tributes to taxes and generateswealth. In fact, each dollar

spent on historic rehabilitationinjects more into the economythan the same dollar spent onalternative investments suchas new housing and commer-cial construction. Such is thepower of preservation.

Rehabilitation work is asubstantial component of NewJersey�s construction industry,especially in older cities. Na-tionally, rehabilitation repre-sents about 20 percent of allconstruction, but in New Jer-sey it is twice that. While his-toric rehabilitation accountsfor just 2.6 percent of all con-struction in New Jersey, itcontributes to 6.6 percent ($38

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million) in urban areas and 5.1percent (another $38 million)in mature suburbs. This con-centration suggests the vitalrole that preservation plays inthe state�s most densely popu-lated communities. Also, his-toric rehabilitation occurs mostoften on non-residential build-ings�$83 million, or 67 per-cent of all historic rehabilita-tion�indicating its high pro-file in our public life.

In New Jersey, an esti-mated $123 million was spenton the rehabilitation of desig-nated historic properties in1994, the year analyzed by theRutgers study. This is a con-servative amount because itdoes not include the manymore buildings that are eligible

for historic designation but notformally recognized. Thestate�s urban areas and maturesuburbs benefit most from thisrehabilitation activity, definedas additions, alterations andimprovements.

Restored Buildings

Restorationcreatesthousands ofjobs, benefitingeveryone fromthe quarryworker to localmerchants.

�Historic buildings add value to acentral business district by creating theexcitement that keeps a downtown alive.�

Tracy Challenger

Executive Director, Red BankRiverCenter Special ImprovementDistrict

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Each dollar invested in re-habilitation triggers a chainreaction that reverberatesthroughout the economy, ben-efiting everyone from the con-struction worker to the tax-payer. The economic benefitof restoring a rotting woodenporch on a historic house, forexample, goes way beyond thedirect impacts, such as thecarpenter�s paycheck and thelumber store�s cash register. It

making the tax burden a bitlighter for everyone else.

In this way, the $123 mil-lion spent on historic rehabili-tation is transformed into $526million, yielding a healthypayback in the form of jobs,income, taxes and wealth:

Jobs

A total of 4,607 jobs are cre-ated, slightly more than half ofthem in New Jersey. Of theNew Jersey jobs, three-quar-ters are in three industries�construction (40 percent of allthe New Jersey jobs), manu-facturing (19 percent) and ser-vices (16 percent). Most jobsgenerated outside the state arecreated indirectly in process-ing or manufacturing, to pro-duce the lumber for the porchrestoration, for example. YetNew Jersey retains just overhalf of all the high-payingmanufacturing jobs needed tosupport historic rehabilitation.

Income

Nearly $156 million in incomeis spawned by historic reha-bilitation in New Jersey, with

is also felt by the truck driverwho hauled the wood to thelumber store, the coffee shopthat served lunch to the car-penter, and the neighbors insurrounding houses, who mayenjoy enhanced property val-ues. It also benefits the town,which may collect more inproperty taxes as the improvedhouse rises in market value,

Credit: Arvid Myhre Construction

Restored Buildings

Skilledcraftsmenareessential topreservationwork.

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the average annual incomecreated by such jobs being$33,926. Related workers liv-ing in New Jersey averageslightly higher annual in-comes�$35,011. Two-thirdsof that income is paid in theconstruction, manufacturingand services industries.

Taxes

Federal, state and local gov-ernment coffers receive a totalof $38 million in taxes gener-ated by historic rehabilitation.The federal government ben-

efits the most, taking in 60percent�$23 million throughcorporate and personal incometaxes, Social Security, and ex-cise taxes. States collect nearly22 percent ($8 million)through corporate and per-sonal income taxes, and sales,excise and other taxes. Localgovernments receive 18 per-cent ($7 million), contributedthrough property taxes andother taxes.

Wealth

To measure economic well-be-ing, economists calculate gross

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domestic product at the stateand national levels. Using thatyardstick in New Jersey, thereis nearly a $208 million benefitfrom historic rehabilitation ac-tivity, with $116 million gen-erated in state and $90 millioncreated outside the state. Con-struction, manufacturing, andfinance, insurance and real es-tate are the largest sources ofthis wealth.

Historic preservation morethan pays its way. Rehabilita-tion activity in New Jersey re-turns more to the nation in in-come and wealth than it coststo undertake. And slightlymore than half the financialgain stays in the state.

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Thousands of New Jersey residents enjoy amore livable community because of historicpreservation.

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T he renaissance story unfolds in commu- nity after community:

a tired, ignored downtownsprings back to life whenhistoric buildings are givennew life; a rundownneighborhood is reborn as thecharming enclave that buyersflock to; a derelict oldindustrial building becomesspacious, comfortable housingor a new night spot. Look atthe successful conversion ofJersey City�s Dixon PencilFactory into condos and aformer cigar factory in Trentoninto spacious apartments. Orconsider the Cooke Mill inPaterson, which now has a

medical center on the secondfloor and housing on the first.In each case, buildings arepreserved and tax rolls areserved. All are testimony tothe fact that historic buildingsmake a healthy contribution tothe property-tax rolls in NewJersey communities.

� Properties listed on na-tional, state or local historicregisters have a market valueof $6 billion, of which about$300 million can be attributedto the value-enhancing effectof historic designation.

� The owners of thesestructures pay approximately

BENEFITING THECOMMUNITY

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$120 million a year in propertytaxes, about $6 million of thatdirectly related to the build-ings� official historic status.

� Improvement of theseproperties through historic re-habilitation boosts propertyvalues, increasing the annualproperty taxes paid on NewJersey�s historic buildings byabout $1.5 million.

Heritage tourism and his-toric rehabilitation clearly con-tribute to the economy. Butthe effect that historic designa-tion has on property values�and, therefore, tax revenues�is harder to quantify. Designa-tion bestows recognition and

prestige and can spur rejuve-nation of the surrounding area,especially in the case of des-ignated districts. In thousandsof cases, historic designationtranslates into higher propertyvalues and, therefore,healthier tax rolls.

Yet, it is a matter of disputewhether historic designationof individual buildings anddistricts consistently enhancesproperty values or can also de-tract from them. Preservation-ists, planners and economicdevelopment officials com-monly argue that designationnot only adds prestige to a

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�Historic preservation has been a big assetin our community. Our four local historicdistricts have not only proven to protect thehouses in them, but to preserve and enhanceproperty values.�

Marvin Reed

Mayor of Princeton Borough

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property, but also elevatesproperty values because itbrings regulation that protectsdesirable historic character.Others, particularly someproperty owners, believe thatthe restrictions that come withregulation hurt property val-ues. Numerous studies haveexamined the impact of his-toric designation. Most con-clude that designation has ei-ther a positive or neutral effecton property values, while aminority find a negative result.No definitive study has pro-claimed the final word on thequestion, and often the answermust be determined case bycase.

What is clear, however, isthat several factors influencethe effect that historic desig-nation has on property values:whether historic property isdesignated as an individuallandmark or as part of abroader district; whether abuilding is residential or com-mercial; whether special main-tenance is required; the levelof regulation by each commu-nity; and the limits�legal,economic and political�ondevelopment in a community.These five factors can con-verge to have different out-comes on property values indifferent situations.

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Historicdowntownsattractshoppersand maygeneratehigher taxrevenues.

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Preservation not onlypays its own way butenriches our lives as it

saves our past. In particular,public funding of historicpreservation has a paybackthat both reduces taxpayerburden and increases benefitsin numerous sectors of theeconomy.

A showcase for how taxpay-ers benefit is the New JerseyHistoric Trust�s bond program,one of the nation�s premiergrant programs for fundingbricks-and-mortar preservationprojects. Since 1987, when thefirst of three State bond issues

were approved by voters, theTrust has awarded over $52million in grants for restoring,rehabilitating and improvinghistoric sites. Taxpayers footthe bill for this by fundingboth the $60 million principalon the bonds and the $38 mil-lion in interest, for a total tax-payer debt of $98 million over20 years. Yet this debt is morethan offset by tangible eco-nomic benefits. That Statebond money for preservation,along with other money raisedto match the grants, leveragesabout $403 million for thepreservation of nearly 150 his-toric structures:

PRESERVATION PAYSITS WAY

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� These grants spur reha-bilitation projects that gener-ate�in New Jersey alone�6,200 jobs, $222 million in in-come, $102 million in taxes,and nearly $307 million instate wealth.

� They also fuel annualheritage tourism spending inthe state to the tune of 375jobs, nearly $9 million in in-come, $7.5 million in taxesand $15 million in statewealth.

This enhanced tourism andrehabilitation activity trans-lates into an economic benefittotalling $116 million over that20 year period: an $83 millionstate taxpayer credit and a $33million credit to local taxpay-ers. Not only is the original$98 million in debt paid off,but preservation puts taxpay-ers ahead by $18 million.

New Jersey�s citizens al-ready know the educationaland esthetic benefits of his-toric preservation. Now itseconomic importance hasbeen demonstrated by theRutgers University study.Preservation is a pump-primer,an economic developmenttool, a smart investment. It isvital for a host of reasons�ones that speak to history, cul-ture and quality of life. But ata purely dollars-and-centslevel, historic preservation of-fers an excellent rate of return.Preservation makes sense.

Preservation Pays Its Way

�Historic preservation is not just goodfor the eyes and heart, it is good for thepocketbook.�(New York Times, 8/3/97)

David Listokin

Center for Urban Policy Research,Rutgers University

Copyright © 1997 by the New York Times Co. Reprinted by Permission.

©Copyright 1998, New Jersey Historic Trust.

Printed on Recycled Paper.

Layout & Design: Nathan DuganText: Lisanne Renner

Funding for the publication of this report was provided by:

United States Department of the InteriorNational Park Service

National Center for Preservation Technology & Training

New Jersey Historic Trust

This booklet summarizes the results of Economic Impacts of Historic Preservation,a study conducted by the Center for Urban Policy Research at Rutgers Univer-sity and overseen by the New Jersey Historic Trust (see the back cover for fullresearch credits). This study is available as an electronic file for those interestedin the full statistical details. Contact the Trust by email at njht@dep.state.nj.us orvisit our web site at www.state.nj.us/dep/njht for more details.

Front cover image: Broad Street, Westfield, 1912. Inset image, this page: Builders at theLorre Estate in Orange, 1916. Both images appear by permission of the Special Collections

and University Archives, Rutgers University Libraries.

Research Oversight

New Jersey Historic TrustTrenton, New Jersey

Harriette C. Hawkins, Executive Director Thomas A. Hemphill, Fiscal Officer

Research Organizations

Center for Urban Policy ResearchRutgers, The State University of New Jersey

New Brunswick, New JerseyDavid Listokin, Principal Investigator Michael L. Lahr, Principal Investigator

N. Brandon, M. Sober, S. Chan, E. Wallace, J. Shek, S. Goga

with

Regional Science Research CorporationHightstown, New Jersey

Benjamin H. Stevens

Longwoods InternationalToronto, Canada

Jane Siegel

Research Funding

United States Department of the InteriorNational Park Service

National Center for Preservation Technology & Training

Task Force on New Jersey History

Casino Reinvestment and Development AuthorityState of New Jersey

Research Credits