Missouri Missouri Legislature Public Policy

Video Tour of St. Louis Equity Fund Projects

by Michael R. Allen

In January, the Federal Reserve Bank of St. Louis posted this video of a bus tour of affordable housing developed by the St. Louis Equity Fund (SLEFI). SLEFI President John Wuest led a tour that included south city, the Loop, Hillsdale, north St. Louis and downtown. The majority of the projects included are rehabilitation of historic buildings that leveraged state and federal low income housing tax credits with state historic rehabilitation tax credits.

At one point during the tour, Wuest said that after several projects in one area there can start to be serious impact. That’s a realistic approach that differs from the large-scale urban renewal projects that have failed again and again. Yet the project-by-project effort to create a community impact is difficult to finance, especially if the end product is affordable housing. The recession has made the work even harder, but changes to the tax credit programs that make this work possible would be disastrous.

Missouri Missouri Legislature Public Policy

St. Louis Post-Dispatch: "Dubious Policy Based on False Urgency"

by Michael R. Allen

Today the Post-Dispatch has an excellently-titled editorial on Governor Jay Nixon’s tax credit proposal: “Tax credit plan advances dubious policy based on false urgency”.

The editorial writer makes many good points, but a key observation is the timing of the proposal:

The tax credit debate hardly is new; the Legislature has been debating it for at least two years. Mr. Nixon has had ample time for an orderly, informed public debate on how best to proceed. But he chose to drop this complicated proposal out of the blue, with just six weeks remaining in an otherwise busy and contentious legislative session.

The timing of the proposal has led some observers to view it as a red herring designed to get the legislature to act. However, the resonance of Nixon’s views with those of Republican Senators like Jason Crowell and Matt Bartle cannot be underestimated. In past years — including last year — the governor stood on the side lines of the tax credit debates in the legislature, frustrating many urban Democrats who has enthusiastically supported his election.

This year, Nixon has aligned with those who view tax credits as “welfare” and who view welfare — and most government spending — as stealing. Some tax credits are dubious, but a true overhaul would evaluate the net economic benefit of each program before making cuts. The Rutgers study of state historic rehabilitation tax credits is a model of careful analysis that should guide decision-makers. This writer doubts that every program would show a net benefit if analyzed carefully. In the absence of such study, we are left with the prospect of continued contest of interests. Nixon’s proposal would amp up that contest, and create a wholly political tax credit system. Nixon is playing politics, not making policy. And Missouri’s legislators should reject his proposal.

Governor Nixon can be reached at:

Office of Governor Jay Nixon
P.O. Box 720
Jefferson City, MO 65102
(573) 751-3222

Missouri Legislature Public Policy

Bartle’s Tax Credit Bill Didn’t Get Out of Committee

From Anna Ginsburg, Staff Coordinator of the Missouri Coalition for Historic Preservation and Economic Development:

Senator Matt Bartle’s bill (SB 584) to sunset Missouri tax credits was heard Friday 2/19/10 before the Senate Government Accountability and Fiscal Oversight Committee. The language from Senator Crowell’s bill SB 728 was attached to SB 584 as an amendment. Crowell’s bill would put 40 Missouri tax credits including Historic’s under the annual budget appropriations process. The committee voted to not send the bill to the Senate Floor by a vote of 4 -3. Senators Days, Schmitt, Schoemyer and Schaffer voted to kill the bill. Senators Purgason, Lembke and Lager voted to pass the bill out.

A second bill introduced by Senator Crowell (SB 890) was heard the Senate Jobs, Economic Development and Local Government Committee. SB 890 places a one year moratorium on low income housing tax credits and Missouri Development Finance Board tax credits. Several other economic development bills have been introduced into this committee and they could be used as vehicles for attaching Crowell’s bill SB 728 or some varation.

Missouri Legislature Public Policy

Crowell Bill Fails to Pass Committee

by Michael R. Allen

Today the Missouri Senate’s Government Accountability Committee deadlocked in a 3-3 vote on SB728, the bill introduced by Senator Jason Crowell (R-Cape Girardeau) that would subject all tax credits to appropriation by the legislature. Among the credits included would be the state historic rehabilitation tax credit, already reduced by a cap on large projects placed by the legislature last year. Crowell will now attempt to attach his proposal through amendment to other bills.

Historic Preservation Missouri Legislature Public Policy

State Senator Crowell Bills Threatens Historic Tax Credits

Senate Bill 728 Wipes Out the Historic Tax Credit Legislation Passed Last Year

For Immediate Release
Contact:Eric Friedman
Coalition for Historic Preservation And Economic Development
Office: 314.367.2800 ext. 23, Cell 314.369.4702

ST. LOUIS (January 14, 2010) – Senator Jason Crowell (R-Cape Girardeau) introduced S.B. 728 which places nearly all state tax credits under the budget appropriation process which eliminates all legislative language on historic tax credits approved last year by the Missouri General Assembly. The ability for smaller historic restoration projects to not be counted against the cap has been eliminated. In addition, the application procedures for projects that ensure equity for small and large projects submitted to the Department of Economic Development will be eliminated. All tax credit programs will expire on June 30 2011 unless an allocation is made by the legislature, both chambers , for that specific year, through the appropriations process. This would not impact projects authorized or tax credits issued.
This bill pits all tax credit programs against one another to compete for a specific allocation.

Food pantry, neighborhood assistance, shelters for domestic violence victims, quality jobs, low income housing, brownfields, family farm livestock, pregnancy resource centers, youth opportunities and historic renovation tax credits are just a few of the programs that will be forced to fight for their existence each year and to fight for how much money they get each year. The financial uncertainty that would result from the passage of this bill will end historic preservation projects in cities and towns throughout Missouri, including the 30 Dream communities.

In an article in yesterday’s Southeast Missourian newspaper, Senator Crowell tried to portray these tax credits as a corporate bail-out for big business although, it is the small contractors, their employee, their suppliers and projects that will be hardest hit if the tax credit process is changed. These changes would devastate the construction industry and their suppliers in Missouri as it struggles to recover from the greatest economic challenge since the Great Depression. The Department of Economic Development shows that this program generated 4,000 jobs in one year. We know of no other program that has done that.

At the time of most serious financial and housing crisis since the Great Depression we need stability for investment in our communities and for the Historic tax credit program to continue to be the best Jobs, Housing, Green, Sustainable and Smart Development program in the country. Without that stability and predictability we will not get investments, and jobs we so desperately need in our communities across our state.

# # #

DALATC Kansas City Missouri Legislature North St. Louis Northside Regeneration Public Policy

Kansas City Seeks Change to Distressed Areas Land Assemblage Tax Credit

by Michael R. Allen

Once again, state Senator Yvonne Wilson (D-Kansas City) has offered a bill to reduce the acreage ownership requirement of the Distressed Areas Land Assemblage Tax Credit Act from 50 to 30 acres. This bill is SB 682 and was first read on January 6. Wilson’s past attempts to pass this bill have gone nowhere.

However, the bill certainly has merit. If the courts uphold the Distressed Areas Land Assemblage Tax Credit, and the legislature lacks the will to kill it, the credit should be reformed. Wilson and Kansas City lawmakers would like to use the credit to aid in a Kansas City redevelopment project. Why shouldn’t they be able to get the credit changed, if it is truly a public benefit law under the Missouri Constitution?

Of course, the premise of the tax credit remains as dangerous as it was when first proposed in 2007, and the effect of the type of real estate activity it encourages is terrible for struggling neighborhoods. The tax credit’s main beneficiary has spawned copycat buying across north St. Louis. All we have to show are lost buildings, vacant buildings and neighborhoods caught up in a broadly-drawn development project that may not ultimately include them. It’s bad public policy, plain and simple. It could be a little better, though.

Historic Preservation Missouri Missouri Legislature Public Policy

Energy Efficiency Act Snubs Missouri Historic Tax Credit

by Michael R. Allen

Missouri State Senator Brad Lager (R-Savannah) won a legislative victory this year when his Energy Efficient Investment Act passed the General Assembly and was signed into law by Democratic Governor Jay Nixon.

The bill’s chief purpose is to allow utilities to recover costs of energy efficiency measures to deter construction of new power plants. Lager wisely has opposed public subsidy to power plant construction. The state’s Public Service Commission’s rule is that Missouri’s electric companies only raise rates if the rates are equal to or less than the rates that the companies would have charged if the company had built a new power plant. That rule encourages more energy output without addressing efficiency.

The bill allows utilities to count toward output energy not being consumed and enables utilities to establish programs where customers receive benefits for demand-side efficiency upgrades.

However, Lager could not resist riding his favorite hobby horse into the bill — opposition to the state’s historic rehabilitation tax credit, which was modified for the first time ever this year in response to Lager’s efforts to kill it.

Section 14 of the act states:

Any customer of an electrical corporation who has received a state tax credit under sections 135.350 to 135.362, RSMo, or received under sections 253.545 to 253.561, RSMo, shall not be eligible for participation in any demand-side program offered by an electrical corporation under this section if such program offers a monetary incentive to the customer.

Sections 135.350-362 deal with a range of tax credit programs that Lager also opposes, including the state’s low income housing tax credit, but sections 253.545-561 enable the state historic rehabilitation tax credit. Vigilance on the rehabilitation tax credit remains crucial in this post-Jeff Smith era.

Historic Preservation Missouri Missouri Legislature Public Policy

Historic Tax Credit Compromise Celebrated

by Michael R. Allen

Yesterday the Missouri Coalition for Historic Preservation and Economic Development sent a press release celebrating the legislative compromise reached in the Missouri Senate at the end of the session. The compromise language is included in an economic development omnibus bill awaiting signature by Governor Jay Nixon.

Here’s a summary of the compromise:

* A per-project residential cap of $1,000,000 in qualified rehabilitation expenditures (QREs) for owner occupied single family homes.

* A small project exemption for projects with $1.1 million in qualified rehabilitation expenditures (QREs) (these do not count toward a cap).

* $140 million cap on historic tax credits (existing projects do not fall under the cap).

* An effective date of January 1, 2010.

Historic Preservation Missouri Missouri Legislature Public Policy

Missouri Senate Passes Economic Development Bill That Includes Historic Tax Credit Cap

by Michael R. Allen

Last night, after a long impasse, the Missouri Senate passed a Senate substitute to economic development bill HB 191. The bill reflects a legislative compromise reached on historic tax credits: the state’s first cap on the program.

HB 191 places a $140 million cap on the annual issuance of historic tax credits, but exempts projects with qualified rehabilitation costs of $1.1 million or less — the majority of projects — from counting toward the cap. The figures will not be indexed to rise with inflation. The new rules won’t go into effect until January 1, 2010. Honestly, I don’t think that these changes will make much of an impact on the program.

The compromise was made possible when Senator Jason Crowell (R-Cape Girardeau), a staunch opponent of the program in the past, switched his position and began speaking in favor of the program on the Senate floor. Crowell and Senator Jeff Smith (D-St. Louis) worked with leadership and erstwhile historic tax credit foe Senator Brad Lager (R-Savannah) to forge an acceptable compromise. Without Crowell’s switch, a compromise may have been impossible.

The bill now heads to the House for final approval.

DALATC Historic Preservation Missouri Legislature Northside Regeneration Public Policy

Tax Credit Action in the State Legislature

by Michael R. Allen

Yesterday the Missouri House of Representatives passed the House Committee Substitute (HCS) to Senate Bill 377. Now included in the bill is a $150 million cap on the historic tax credit with a $250,000 (in credits issued) exemption and a $250,000 (in credits issued) per-project cap on residential rehabs. The $150 million cap might not have much impact with healthy “micro” exemptions like these. The question: Is this a good enough micro exemption to keep present level of tax credit activity going?

Meanwhile, Representative Tim Flook (R-Liberty) offered an amendment to the HCS for SB 377 that, among other things, changed the language of the Distressed Areas Land Assemblage Tax Credit (DALATC) to allow issuance of up to $20 million per year instead of the current $10 million. On the House floor, Rep. Flook stated that a group of representatives had met with developer Paul J. McKee, Jr. to see his plans for north St. Louis, and that those plans needed an extra boost during this session. Of course, McKee still has to be designated redeveloper by the St. Louis Board of Aldermen in order to apply for the DALATC. Since the DALATC credits must be spent on development within the project area, the higher issuance could mean more immediate development activity after McKee receives the credits.

Flook’s amendment passed.