Category: Missouri Legislature

by Michael R. Allen

Yesterday Governor Matt Blunt signed into law the “economic development” omnibus passed by the Missouri legislature last week. The bill contains the Distressed Areas Land Assemblage Tax Credit, a measure designed to reimburse landbanking costs in impoverished areas. Specifically, the tax credits’ authors intend for them to be used in north St. Louis for a project by developer Paul J. McKee, Jr. The details of that project are not available to elected officials or citizens.

by Michael R. Allen

Yesterday, on the last day of the legislature’s special session, the Missouri House of Representatives passed the economic development omnibus (HB1) sought by Governor Matt Blunt. The bill contained a new version of the Distressed Areas Land Assemblage Tax Credit Act (DALATCA), modified slightly in the House and Senate economic development committees and on the floor of the Senate.

The basic formula proposed by Blunt survived: The credit creates a $95 million tax credit program that covers 50% of acquisition costs and 100% of maintenance and interest costs on eligible parcels located in census tracts that meet federal and state income-based definitions of distressed areas. No more than $10 million in credits will be issued annually. The tax credit is available to applicants who have assembled at least 50 acres within a 75-acre redevelopment area established by a municipal redevelopment agreement. The 50 acres need not be contiguous, and no parcel acquired by eminent domain is eligible for the credit. The applicant can only redevelop 75% of the project area alone, and must assign redevelopment rights to other developers or create partnerships to redevelop the remaining 25%.

Obviously, the tax credit structure has changed very little since first proposed by Peter Kinder in February 2007 and drafted by Steve Stone, attorney for developer Paul J. McKee, Jr. The whole idea is still predicated on a scale that is unrealistic for urban areas and small towns. The whole idea remains predicated on rewarding McKee for an acquisition project he has already undertaken in north St. Louis. Consequently, the credit fundamentally is a reimbursement for purchases already made rather than an incentive for future development.

However, the legislature made a few changes to the tax credit, at least one of which may be of consequence:

The credits cannot be used to cover fines or bills levied by municipal government.

To be considered eligible, a parcel must have its municipal taxes, fines and bills paid in full.

The redevelopment agreement must be approved by ordinance of the governing body of a municipality.

The redevelopment agreement must include a timeline for redevelopment.

All redevelopment work conducted by the applicant must be done in compliance with Missouri fair labor and wage laws.

The tax credits are considered redevelopment tax credits under state law, requiring an applicant to furnish financial information as well as project cost and completion date.

These are small but welcome improvements to the bill. However, the only ones that alter the state’s expectations of an applicant are those relating to redevelopment timelines. These stipulations encourage actual development planning and construction, two aspects not previously part of the proposal. The two stipulations relating to municipal fines and bills are important on principle, but are of minor consequence to the nature of land assemblage rewarded by DALATCA.

The version of DALATCA headed to Governor Blunt’s desk may require McKee to make his project better, but it won’t enable other people to start new ones. DALATCA remains a gilded albatross designed for one project. The governor should veto the omnibus, but that seems unlikely. Still, the scrutiny that the tax credit act invited may lead to future amendment or scrapping of DALATCA and enactment of a tool of wide and true use to distressed areas in Missouri. After all, most legislators probably weren’t thinking about the scale, form and nature of development before this tax credit act came along. They will take some time to learn the lesson that DALATCA is a huge mistake.

Full text of HB1 is available here; DALATCA is section 99.1205.

by Michael R. Allen

Yesterday the Economic Development Committee of the Missouri Senate passed to the full Senate the economic development bill (HB 1) that includes the Distressed Areas Land Assemblage Tax Credit Act.

Despite the absence of testimony at the hearing from critics of the current version of DALATCA, the committee approved two amendments that were suggested by myself and other critics: a measure requiring that the applicant for the credits host public meetings and a measure that prohibits use of the credit toward fines and bills paid to municipal government.

Read more here.

by Michael R. Allen

The St. Louis American yesterday published an editorial endorsing the idea of a tax credit for private land-banking in low-income areas that does not include any guarantees for actual development.

While wisely suggesting future dialog and compromise among the parties involved in the current debate over the Distressed Areas Land Assemblage Tax Credit Act, the editorial does not address any of the problems in that legislation that make its use in north St. Louis problematic. Furthermore, the American has yet to publish a single news article on the tax credit proposal or on developer Paul J. McKee, Jr.’s plans for the near north side. The paper is squandering the chance to promote the civic dialog that it calls for.

Read the editorial here.

by Michael R. Allen

On the floor of the Missouri House of Representatives today, Rep. Jamilah Nasheed (D-60th) offered two measures that offer a chance to see the consistency in the positions of members of the St. Louis delegation on the Distressed Areas Land Assemblage Tax Credit Act (DALATCA).

Nasheed first offered an amendment wthat ould have removed DALATCA entirely from the economic development bill that is the focus of this special session of the Missouri legislature. That amendment failed by a vote of 62-86. All of the St. Louis city delegation voted “yea”: Mike Daus, T.D. El-Amin, Rodney Hubbard, Connie Johnson, Jeanette Mott Oxford, Rachel Storch, Tom Villa and Robyn Wright-Jones.

Nasheed later called for the vote on DALATCA to be separated from the larger economic development bill. That measure yielded a 106-45 vote in favor of DALATC, which now passes the House. While Daus, Nasheed, Oxford, Storch and Wright-Jones maintained a consistent position and voted against, Hubbard, Johnson, Villa and El-Amin voted in favor. Hubbard declared the proposal palatable because a symbolic local control measure was included; never mind that only one developer in the state will be likely to qualify for the tax credit.

Rep. Jeanette Mott Oxford (D-59th) had intended to offer a comprehensive measure to overhaul DALATCA with the same acreage requirements advanced by Hubbard in committee (maximum project size of 30 acres, minimum acquisition of two acres). However, House Speaker Rod Jetton ruled her amendment out of order because it did not correspond to the detailed call-to-session instructions of Governor Matt Blunt, who stipulated the DALATCA should have an minimum acquisition requirement of 50 acres and minimum project requirement of 75 acres. Without a change in acreage numbers, local control is a moot point.

Whether or not the governor’s stipulation of acreage constitutes legislation by the executive branch should be an interesting question to answer.

by Michael R. Allen

Yesterday, the Special Committee on Job Creation and Economic Development of the Missouri House of Representatives unanimously voted to pass with “do pass” recommendation the economic development omnibus (HB 1). The bill contains the Distressed Areas Land Assemblage Tax Credit Act, the tax credit program for large-scale land assembly targeted at areas with low-income populations.

Although the version passed from committee contained one modification, the tax credit act would still be of dubious benefit to distressed areas like north St. Louis. The committee unanimously agreed to an amendment by Rep. Rodney Hubbard (D-58th) to strengthen the provisions about municipal approval of redevelopment ordinances to stipulate that the municipal governing body must approve the redevelopment plan by ordinance. While the act may have already implied that approval, it was not explicit.

However, without adopting other changes, the committee released an act that will still likely be of use to only one developer, Paul J. McKee, Jr. The committee rejected two other amendments by Hubbard. One would cap the project size at 30 acres while assigning the credit for assembly of anything over two acres within. Another would require the applicant to hold prior to application three public meetings where site plans would be displayed. These were reasonable changes. No one offered any other amendments, despite the fact that without development timetable and recapture provisions even the smallest developer could end up getting the credit without ever developing a single parcel of land.

Hopefully, legislators will consider further changes on the House floor and in the Senate next week. The trouble with the current version is that there are no substantial changes in availability of the credits but there is tighter control by local elected bodies like the Board of Aldermen. That’s not exactly the outcome that critics of the proposal are seeking.

by Michael R. Allen

Yesterday, the Special Committee on Job Creation and Economic Development of the Missouri House of Representatives passed an economic development bill out of committee with a do-pass recommendation. The bill includes a slightly amended version of the Distressed Areas Land Assemblage Tax Credit Act. Here is media coverage from around the state:

St. Louis Post-Dispatch: Proposal requires aldermanic approval for McKee project

Arch City Chronicle: McKee Tax Credit passes House committee

Columbia Daily Tribune: State lawmakers consider economic package

Springfield News-Leader: Business tax credits likely to pass House

Missourinet: House Committee Approves Economic Development Bill