Missouri Missouri Legislature Public Policy

Urgent: Missouri House Votes to Cut Historic Tax Credits; Senate Action Ahead Tomorrow?

by Christian Frommelt

Around 5:30 pm this evening the Missouri House passed SB112 (New Markets Credit) that included an amendment to reduce the historic tax credit cap from $140 million to $90 million ($10 million cap on small projects) and another amendment to renew Paul McKee’s Distressed Areas Land Assemblage Tax Credit. As each of you know, this is legislation that would significantly harm St. Louis’s efforts to continue essential revitalization of historic buildings. This revitalization creates jobs, leverages private investment, broadens the tax base, and preserves the unique historic environment that remains our biggest asset as a region. It’s imperative that we call on advocates in the Senate to speak out against this bill to defeat it.

Paul McKee’s credit has created exactly zero jobs while the historic tax credit has created over 43,000. Paul McKee has torn down irreplaceable historic buildings with no promise of redevelopment while the historic tax credit has had an enormous impact in returning similar historic buildings back to life and property tax rolls. Defeating SB112 and its amendments is the obvious choice for future economic development and historic preservation in St. Louis. Pleas urge our senators to defeat SB112, which will be discussed tonight or tomorrow.

Sen. Jamilah Nasheed: 573-751-4415, 314-409-5730 (c) |
Sen. Joe Keaveny: 573-751-3599 |
Sen. Scott Sifton: 573-751-0220, 314-631-0445 (c) |

Missouri Missouri Legislature Public Policy

Missouri Has Historic Tax Credits For a Reason

by Michael R. Allen

Buildings on the 2300 block of St. Louis Avenue in the St. Louis Place Historic District are eligible for Missouri’s rehabilitation tax credit.

Wednesday was a sobering day for historic preservation in St. Louis. Very early Wednesday the Missouri Senate perfected a bill (SCS SB120, passed n voice vote) that would reduce the cap on historic tax credits from $140 million to $45 million, while imposing a $5 million cap on “small” projects. Small projects are defined as those with costs of 1.1 million or less — which is about 55% of projects but last year only about $10 million in allocations. The majority of members of the Missouri Senate would slow down both large and small projects. Some senators aren’t doing this to balance the budget or better focus job creation, because they spent yesterday debating a bill for a giant tax cut. The Missouri House seems to be headed toward a more modest cut inn historic tax credits, while Governor Jay Nixon’s current stance is evanescent.

Missouri Missouri Legislature Public Policy

Missouri Senate Votes to Slash Historic Rehab Tax Credit

From Deb Sheals of the Alliance for Investment, Jobs and Preservation

The Missouri Senate just passed a bill that will cap the historic tax credit program at $75 million per year, with no small deal exemption. This is a drastic cut from the current cap of $140 million. The bill is the Senate Substitute for HB1865, sponsored by Sen. Lembke.

Even though the House has already passed HB1285 to extend sunsets for many social service tax credits due to expire this year, several senators refused to allow those programs to continue unless the historic program was slashed, and the bill was passed out of the Senate with the new cap.

Sens. Keaveny, Schaffer, and Curls were stalwart supporters of the Historic program.

The bill will now go to the House for consideration. We still have strong support in the House and are hopeful that they will not take this up, but this is a hot issue and it’s the end of the session, so about anything goes.

It’s really unfortunate that a few senators feel the need to hold good social programs hostage for this. At a time when unemployment in the construction industry is well above 14%, we need programs that stimulate construction activity, and we all know the historic credit does that quite well. (Stats from the U.S. Bureau of Labor Statistics)

We will be watching this very closely, obviously, and will keep you in the loop.

As always, let your legislators know how you feel about this, especially those in the House of Representatives. Good things come to squeaky wheels.

Missouri Missouri Legislature Public Policy

Communities First

by Michael R. Allen

Today the Missouri Senate will convene to consider the “economic development” bill (HCS SS SCS SB 8 ) passed by the House last week that would cut neighborhood and Main Street development across the state. The bill’s most damaging provisions are those that cap the issuance of historic tax credits for “small” projects at $10 million a year and one that would prohibit stacking the 9% low income and historic rehab tax credits. Anyone who has observed the renewal of urban neighborhoods and small towns across the state knows that small projects have led the way, and that stacking historic and low income tax credits have made transformative projects like Dick Gregory Place in St. Louis’ Ville possible. The use of these credits has created economic growth that has outpaced the US GDP, strengthened real property values and created wealth for thousands of Missourians.

At right, a long-abandoned building rehabbed using low income and historic tax credits. At left, a neighborhood coffee shop owned by neighborhood residents. This is 14th Street in Old North.

These tools are not being curtailed to save the state money, or to cut back on tax credits. The Republicans in the legislature are not conservatives in any fiscal sense, because their leadership wants only to remove some credits to create new ones for cargo warehouses in suburban St. Louis, to lower the state corporate income tax and to increase the amount of money available each year — and the categories of eligible spending — for the Distressed Areas Land Assemblage Tax Credit (DALATC). While the leadership in the houses fortunately has failed to find consensus on how to shift available tax breaks from middle-class property owners to wealthy investors, there seems to be a possibility that the bill might be reconciled in conference if the Senate passes it.

Passage of the bill, and Governor Nixon’s signature, would be mistakes. Missouri’s strength comes from people who care about their communities enough to invest in their homes and buildings housing small businesses. These are people fighting similar patterns of disinvestment across the state, found on large scales in parts of St. Louis and Kansas City but also in small towns robbed of vitality and local wealth by corporate chains like Wal-Mart. The historic tax credit has enabled average people to reclaim their communities, and create skilled construction and professional jobs in the process. Not only have vacant or aging buildings been revitalized, but wealth has been created in local economies. Developers with larger capacity have joined these efforts by tackling big buildings.

Odd Fellows Hall in Ironton, Missouri sits vacant. Historic tax credits could help make reuse feasible.

Every year, the legislature seems to increase the flow of incentives toward activities that create wealth at the expense of communities. Cuts across the board would be one thing, and a philosophically consistent tax policy another. That is not what is on the table right now. Government policies that threaten local economies are far from conservative in any traditional sense. The legislature is looking at curbing proven, sustainable community development in order to enable large-scale economic activity that may not create wealth for struggling communities. Our state will suffer if these changes move forward.

Missouri Missouri Legislature Public Policy

Nixon Announces Tax Credit Commission

Contact: Scott Holste, (573) 751-0290

Sam Murphey, (573) 751-0290

July 21, 2010

Gov. Nixon creates new commission to perform comprehensive review of state tax credit programs
Panel of business and community leaders, legislators will make recommendations to enhance job creation, boost return on investment for state

JEFFERSON CITY, Mo. – Gov. Jay Nixon today announced the creation of a Tax Credit Review Commission that will review the state’s 61 tax credit programs and make recommendations for greater efficacy and enhanced return on investment. Gov. Nixon named 25 business, community and legislative leaders to serve on the commission.

“Missouri must have sharp, effective development tools that will promote growth, create jobs, strengthen our communities and continue to drive our economic recovery forward,” Gov. Nixon said. “This commission will perform a critical analysis to ensure taxpayers receive the greatest possible return on investment from tax credit programs and that those programs are used efficiently and effectively. The work of the commission will play a vital role in reshaping the way the state uses financial incentives to achieve those important goals.”

The commission will analyze the efficacy and return on investment for each of the state’s 61 tax credit programs and make recommendations for modifications as appropriate.

Gov. Nixon appointed Steve Stogel and Chuck Gross to co-chair the Tax Credit Review Commission. Stogel is the President of DFC Group in St. Louis; Gross is the director of administration for St. Charles County. They are joined on the commission by leaders from the development, education, finance and labor communities, as well as members of the Missouri General Assembly.

From the Missouri Senate, Gov. Nixon named Sen. Matt Bartle (R-Lee’s Summit), Sen. Jolie Justus (D-Kansas City) and Sen. Robin Wright-Jones (D-St. Louis). Gov. Nixon’s appointees from the Missouri House are Rep. Tim Flook (R-Liberty) and Rep. Sam Komo (D-House Springs).

Gov. Nixon also named: Zack Boyers of U.S. Bancorp Community Development Corporation in St. Louis; Mark Gardner of Gardner Capital in Springfield; Luana Gifford of the American Federation of Teachers in Jefferson City; Bill Hall of Hallmark in Kansas City; Dee Joyner of Commerce Bank in St. Louis; David Kendrick of the Kansas City Building and Construction Trades Council; Alan Marble, President of Crowder College in Neosho; Troy Nash of Zimmer Real Estate Services in Kansas City; Melissa Randol of the Missouri School Boards Association in Jefferson City; Tom Reeves of Pulaski Bank in St. Louis; Penney Rector of the Missouri Association of School Administrators in Jefferson City; Russ Still, a member of the State Board of Education from Columbia; Craig Van Matre, a member of the Coordinating Board for Higher Education from Columbia; Ray Wagner of Enterprise Rent-A-Car in St. Louis; Todd Weaver of Legacy Building Group in St. Louis; Shannon Weber of the Carpenters’ District Council of Greater St. Louis and Vicinity; Mike Wood of the Missouri State Teachers Association in Jefferson City; and David Zimmerman of the Sheet Metal Workers International Association, Local 36 in St. Louis.

Missouri Missouri Legislature Public Policy

DED Sort of Explains the New Rule on Historic Tax Credits

by Michael R. Allen

Tim Logan has a good article this morning about the state of Missouri’s historic tax credit program. Recently, the Department of Economic Development (DED) sent letters to already-approved historic tax credit project applicants stating that the projects were going back for further review. This applied to projects approved since July 1. The letters did not cite the substance of any DED rules that will govern further review.

In the article, DED spokesman John Fougere stated that the new rules were created to ensure compliance with the large project cap passed by the legislature in 2009. That cap went into effect January 1, 2010. Did DED miss the chance to ensure that half of this year’s projects are in compliance? And since estimated project cost is a requirement of even having an application reviewed, why are new rules needed to ensure that DED does not award too many tax credits? A calculator would suffice.

DED has not yet shared the language of the new rules with prospective applicants. If the new reviews are taking place, the rules must exist. If the rules exist, they should be shared. The historic rehab tax credit has been orderly, predictable and free from politics since day one. Some want to cut it or change it for budgetary reasons, and their arguments are respectable. What Governor Nixon is doing is something else entirely.

DALATC Missouri Missouri Legislature Public Policy

Tax Credit Accountability

by Michael R. Allen

The Show-Me Institute’s research on the Missouri Distressed Areas Land Assemblage Tax Credit raises questions about the Department of Economic Development (DED) rules for usage of that credit. One immediate contrast is the state Historic Rehabilitation Tax Credit, which has increased reporting requirements in recent years to maximize accountability and state regulation. DED ensures that users of the historic rehab tax credit have to account for every dollar claimed.

For one thing, projects using the historic rehab tax credit have to receive preliminary approval from DED before work can commence. This requires listing of buildings in the National Register of Historic Places before an application can be made. Then it requires submission of a detailed scope of work that is reviewed by DED as well as State Historic Preservation Office (SHPO) staff. This review must include itemized estimated costs of all aspects of work.

After preliminary approval, work can start. During work, SHPO review staff will usually be involved in making final decisions that impact the historic character of a building. When work is completed, an applicant has to submit a fully itemized account of all project expenses, with receipts proving money was spent as claimed. Homeowners that use the credit can learn the hard way that they needed to save every receipt. Without proof that they bought that $2.39 tube of caulk, it cannot be claimed as an eligible expense. DED’s rules will not allow any wiggle room — not even on a $50,000 project.

There is a lot of concern about the impact of tax credit programs on Missouri’s revenue. One can argue whether the historic rehab tax credit should exist, but one cannot claim that the program’s rules allow for unverified claims. The state gets exactly what it pays for, and gets to decide up front whether to pay at all. All other tax credit programs — especially programs that allow single applicants to claim $20 million in one application — should play by the same rules.

Historic Preservation Missouri Legislature Public Policy

Missouri House Committee to Consider Tax Credit-Busting Bill Tomorrow

by Michael R. Allen

What’s Happening

Tomorrow (April 6th) the Job Creation and Economic Development Committee of the Missouri House of Representatives will consider HB 2399, the bill that would gut Missouri’s successful historic preservation tax credit program. The committee will meet at 1:00 p.m. in Hearing Room 6 of the capitol.

Why It’s Bad

The bill, introduced by Representatives Steve Hobbs (D) and Sam Komo (R), would rescind most of the state’s current tax credit authorizations and institute a new set of provisions. The bill would implement the policy proposed by Governor Jay Nixon (D) and would turn over much discretionary power to the Department of Economic Development, whose director is always a political appointment.

HB 2399’s worst aspects:

  • Eliminates tax credit provisions of all programs except the circuit breaker and homestead preservation credits, and would create six new programs;
  • Place a global credit cap of $314 million on all modified credits with annual fluctuation.
  • Cap “redevelopment” credit issuance at $78.5 million, which is 35% of FY 2009’s level. The historic rehabilitation, low income and land assemblage programs would compete for issuance.
  • Potential eliminate standards and review for the historic rehabilitation credit. There is no provision to continue the current review by the State Historic Preservation Office and no mention of the Secretary of the Interior’s Standards for Rehabilitation.
  • Give the DED director full discretion on whether to issue credits: “The decision of whether to authorize a tax credit under this section and the amount of any credit to be authorized is committed to the discretion of the director of the department of economic development…” (135.841.1)
  • Give DED full discretion to award 20% of all state tax credits to which ever program they choose. (135.840.7)

    The net result will be a highly politicized tax credit environment where one person — the DED director — will have broad discretionary power. The potential for special interest domination of Missouri’s tax credits — now simply a legislative problem — will be realized. Instead of rewarding incentivized economic activity, tax credits will reward personal political connections. Homeowners and small businesses will have hard time using the historic rehabilitation tax credit competing against large companies — and large companies the get the credits won’t be subject to the current level of oversight!

    What You Can Do

    Please contact members of the committee and let them know you oppose HB 2399.

    Flook, Timothy, Chair-Liberty R, — 573-751-1218

    Brandom, Ellen, Vice Chair-Sikeston R, — 573-751-5471

    Brown, Michael R. Kansas City D, — 573-751-7639

    Corcoran, Michael George St. Louis County (St. Ann) D, — 573-751-0855

    Diehl, John St Louis County (Town and Country) R, — 573-751-1544

    Jones, Tishaura St. Louis City D, — 573-751-6800

    Komo, Sam Jefferson County (House Springs) D, — 573-751-6625

    Kratky, Michele St. Louis City D, –573-751-4220

    Kraus, Will Lee’s Summit R, — 573-751-1459

    McGhee, Michael Odessa R, — 573-751-1462

    Riddle, Jeanie Fulton R, — 573-751-5226

    Scharnhorst, Dwight St. Louis County (Fenton) R, — 573-751-4392

    Schoeller, Shane Springfield R, — 573-751-2948

    Spreng, Michael St. Louis County (Florissant) R, –573-751-9628

    Webber, Stephen Columbia D, — 573-751-9753

    Zerr, Anne St. Charles R, –573-751-3717

    To find your Representative go to and enter your nine digit zip code

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    Missouri Legislature Public Policy

    Missouri House Bill Would Cap Tax Credits

    by Michael R. Allen

    Today Missouri State Representative Steve Hobbs (D) and Sam Komo (R) introduced HR 2399, a bill which would implement Democratic Governor Jay Nixon’s proposal to limit issuance of all economic development tax credits to not exceed seventy percent of the total dollar amount of all state tax credits redeemed during the fiscal year ending on June 30, 2009 and hand over discretionary allocation power to the Department of Economic Development. The bill would implement the policy effective July 1, 2010 and would greatly limit usage of the state historic rehabilitation tax credit as well as the low income and brownfields credits.

    The bill is referred to the Job Creation and Economic Development Committee chaired by Representative Tim Flook (R).

    Historic Preservation Missouri Missouri Legislature Public Policy

    Study on Missouri Historic Tax Credit: 43,150 Jobs, Most Tax Credit Projects Small

    by Michael R. Allen

    The Missouri Growth Association has released An Evaluation of the Missouri Historic Preservation Tax Credit’s Program’s Impact on Job Creation and Economic Activity Across the State, a 34-page report by Dr. Sarah Coffin, Rob Ryan and Ben McCall of St. Louis University.

    According to the report, the tax credit is responsible for 43,150 new or retained jobs with an average salary of $42,732 as well as $669.8 million in new sales/use and income tax revenues to state and local government.

    The report confirms advocates’ assertions that the credit enjoys wide usage and largely benefits small developers. Coffin and company found that, as of 2009, the range of historic rehab tax credits issued goes from $399 to $20.1 million.

    About 33% of the projects that have received Missouri historic rehab tax credits have used less than $50,000 in credits. Taking the number up to usage of $100,000 or less, there is a majority of 57% of projects. Less than 13% of projects used more than $1 million in credits.