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I I I The grants fr~ the Irate ~ available to ~11 local units of goverr~ent. Ii.aver, o~ly cities ~ ~un~ies u~er 50,000 population are eligible 9rants frc~ the federal funds. How much mon~ ts involved7 Through ~ of 1984 the state awarded a total of ~6,830,870 to 32 cities arour~ the state. Tax E~itures for L~ividuals I A) Depreciation What it is.--To compensate f~r the loss in a buildirg'.s value as a result of age, usage, etc., the federal and state 9o~_r~at allow building owners a I depreciatio~ tax *11o~ar~e. ~ depreciation for tax purposes exceeds the rate at Which kuildings actually depreciate, business tax liabilities are deferred. Depreciation allOWs building owners to significantly reduoe the I ~,~unt of their taxable incc~e ~ the useful lifespan of the which is about 40 years. Omanges in the tax law have ~11c~ buildi~ ~ners to accelerate the depreciation of the building by shortening the useful life of I the building to 18 years; as a result building owners reoeive the equivalent amount of tax benefits over a shorter period of time. I I I I I 'i Depreciation is allowed on buildinc3s in addition to any other subsidy the building may have received. Depreciation is a tax exper~iture and represents a Ices to the U.S. and state treauries. ~ much mcx~ is in~lved?--~he Reac3an Administration'.s Budc~et for fiscal. Year 1986 estimated the our]ay equivalent of the tax expenditure for acoelerated depreciation of buildir~s other than rental h~usirg: 1984 1985 1986 $6.49--6--bi llion $8.55~--6~-11 ion $9.72~--~11i on ~ Minnesota Depar~t of Bevenue estimated the fiscal iml~ct of depreciation -l~cm~noes as measured by 35 year straight line depreciation for real property and class life asset depreciation rar~es for perscamal property.- Individual Inc~e Tax FYB4 $21 million $ 8.3 million FY85 $2o million $ll million FY86 $19 million $21 million FY87 $19 million $29 millicx% Of oourse, the value of ail buildir~s usually does not actually decrease to the extexlt ar~ within the time period allowed by the depreciatio~ law. For instance, even tl~ the Foshay ~ower ~s built back in tk~ 1920s we certainly would not say it has lost its Na~lue. B) Historic Preservation Credit The federal gover~t provides tax incentives for preservation of historic I structures. ~he U.S. Joint _o~.~ tree on Taxation estimates the revemaes lost fox historic preservation.