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 Public Policy

Missouri Senate Committee Votes to Slash Historic Tax Credits

by Michael R. Allen

This week the Missouri Senate Committee on Jobs and Economic Development took aim at Missouri’s successful historic rehabilitation tax credit program. By a 9-1 vote, the committee passed to the full Senate a substitute economic development bill (SCS SB120) that would make the following, troubling changes to Missouri’s historic tax credit:

  • Reduction of the cap on historic tax credits to $75 million from $161 million, with a new cap of $10 million imposed on small projects.
  • Reduction of maximum award of historic tax credits for residential properties by 50%.
  • Prohibition of the combination of 9% low income housing tax credits and historic tax credits.
  • Carry back of historic tax credits reduced from ten years to two years.
Architects JeffVanderLou Metro East Mid-Century Modern Missouri North St. Louis Pruitt Igoe South St. Louis Southwest Garden Wellston

The Mid-Century Modernism of Marcel Boulicault

by Michael R. Allen

St. Louis architect Marcel Boulicault’s name probably is unfamiliar to you, but a few of his works will draw an “ah ha!” or two. Boulicault is a designer whose contributions to Modern architecture in St. Louis are largely unheralded, but that needs to change. Boulicault (1896 – 1961) is best known for an obtrusive and despised addition to the St. Louis State Hospital, the Louis H. Kohler Building, which stood directly in front of William Rumbold’s domed 1869 County Asylum building. Boulicault also designed the building that became St. Louis Fire Department Headquarters, a major state office building on Jefferson City and other prominent works. Then, there is his patented electric tooth brush — which we will discuss in a moment. Boulicault’s buildings were creative, colorful (and a bit jazzy) but also purposeful — the best mid-century combination.

Highly-idealized rendering of the Kohler Building at St. Louis State Hospital — the flip side of what would happen. Source: Missouri State Archives.
Historic Preservation Missouri Public Policy

Federal Historic Tax Credit Led to $3.9 Billion in Investment in Last Two Years

by Michael R. Allen

Congress first authorized the federal historic tax credit for fiscal year 1978 in order to provide a return of 20% of the qualified expenditures of rehabilitating historic buildings to developers whose projects produced income. In creating the program, Congress recognized both the needs of older towns and cities with aging historic buildings — passed over by decades of federal mortgage guarantees that sucked wealth out to suburbs — and the demands of a nation facing high costs of energy and the limits of natural resource depletion, which could turn to its existing buildings.

The Historic Tax Credit Coalition’s Third Annual Report on the Economic Impact of the Federal Historic Tax Credit, released this month, reports that the program has been a success. Between fiscal year 1978 and fiscal year 2011, $99.2 billion has been invested in historic buildings. Over 2,200 jobs have been created due to the program’s stimulation of construction work and materials fabrication — not to mention its sustenance of professions including architecture, finance and law. One of the figures from the report shows the huge, positive impact on the program since its creation and just in the last two fiscal years alone.

The federal historic tax credit’s use provided a boost to Missouri’s economy as well. According to the report, in fiscal year 2011 the program led to $368 million of investment in Missouri. That investment created 2,500 jobs and $163.2 million labor income amid a recession that has seen a slowing of new construction. Coupled with Missouri’s model state historic rehabilitation tax credit, the federal historic tax credit is a jobs leader for the state — and a mechanism that has led to resource conservation, historic preservation and retention of sense of place.

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.

Historic Preservation Missouri Public Policy

A Tax Credit That Works

Deb Sheals, Chair of the Public Policy Committee of Missouri Preservation, sent out the following statistics on Missouri’s state historic rehabilitation tax credit program.
Between creation of the program in 1998 and September 2011, the Department of Economic Development measure the following activity directly created by the program:

  • More than $6 billion in redevelopment
  • 20,833 jobs (not counting construction jobs on $6 billion worth of redevelopment)
  • 21,646 new or rehabilitated housing units
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 Public Policy

What The House Is Voting On

Today the House Committee on Economic Development passed economic development bill HCS SB 8 by 21-4 vote. Included in the bill, to be considered by the full House as soon as tomorrow, would be major and devastating changes to the state’s historic rehabilitation tax credit as well as changes to the low income housing and distressed areas land assemblage tax credits.

Here are excerpts from the official substitute summary.

Historic Rehabilitation Tax Credits

For each fiscal year beginning on or after July 1, 2011, the substitute limits to $80 million the total amount of credits that the Department of Economic Development can approve.

For all applications for credits approved on or after July 1, 2011, no more than $125,000 may be issued for eligible costs and expenses incurred in the rehabilitation of certain eligible owner-occupied residential property.

For each fiscal year beginning on or after July 1, 2011, the substitute limits to $10 million the total amount of credits for projects receiving less than $275,000 that the Department of Economic Development can approve.

For all credits authorized on or after July 1, 2011, the substitute reduces from three years to one year the time period that the credit can be carried back and from 10 years to five years the time period that the credit can be carried forward.

A taxpayer who receives a low-income housing tax credit for a project not financed through tax-exempt bond issuance cannot be eligible for a historic preservation tax credit for the same project.

An application for final approval and issuance of a tax credit must include a cost and expense certification by an independent licensed certified public accountant with any accrued developer fees stated separately. The department will have 120 days from receipt of the application for final approval to determine whether the completed project meets required standards and to issue tax credit certificates equal to 75% of the eligible costs and expenses verified to that date. If a taxpayer receives tax credits that include an amount attributable to accrued developer fees, he or she must submit within six years of completion of the rehabilitation an additional cost and expense certification verifying the total amount of developer fees actually accrued and paid. If the amount of the tax credits issued and attributable to developer fees exceeds the amount of developer fees actually accrued and paid, the taxpayer is liable to repay 25% of the excess. A taxpayer or his or her authorized representative may appeal any official decision on a preliminary or final approval to an independent third party appeals officer designated by the department.

Low Income Housing Tax Credit

For each fiscal year beginning on or after July 1, 2011, the substitute limits the total amount of low income housing tax credits that can be authorized for projects not financed through tax exempt bond issuance to $110 million, authorizes the tax credit to be carried forward for five years, and reduces from three years to two years the time period that a low income housing tax credit can be carried back.

Beginning July 1, 2011, the substitute limits the total amount of low income housing tax credits that can be authorized annually for projects financed through tax exempt bond issuance to $20 million.

Distressed Areas Land Assemblage Tax Credit

This substitute expands the definition of “eligible project area” for purposes of the distressed land assemblage tax credit program to include a “redevelopment area” as defined in the real property tax increment allocation development act that contains at least 300 acres in 80 or more parcels, includes or previously included in excess of 10 million square feet of commercial building space, and is located within a “low income community” as defined in 26 U.S.C. Section 45D.

The five year restriction during which an applicant can receive a tax credit for all interest costs under the act is removed. Engineering costs, attorney=s fees, and architectural and planning costs are now authorized “acquisition costs”, and the allowable tax credit for demolition costs is increased from 50% to 100%. An applicant can file for the tax credit quarterly rather than annually.

The annual program cap is increased from $20 million to $30 million, although the aggregate program cap remains at $95 million. A process is established for allocating the annual $30 million in tax credits, depending upon the number of eligible applicants, provided however that if there are more than two applicants, no single applicant can receive more than 50% of the available tax credits. The sunset date is extended from August 28, 2013, to August 28, 2016.

Hyde Park Missouri North St. Louis O'Fallon Penrose Public Policy St. Louis Place The Ville

Capping Neighborhood Revitalization

by Michael R. Allen

In the past few weeks, proponents of the possibly impending economic development deal crafted between leaders in the Missouri House and Senate have made excuses for proposed cuts to the historic rehabilitation tax credit: “it was going to be cut anyway.” This rationale has led many St. Louis political leaders, developers and even usually-opinionated bloggers to concede that the state’s proven revitalization tool will have to be lopped to make way for a brave new future of subsidies for new cargo warehouses.

The corner building at 1530 Salisbury Avenue in the Hyde Park Historic District is now vacant.

We’ve heard that the “big buildings are done,” a statement that one could not safely make at the corner of 8th and Olive streets in downtown St. Louis, or in the railyard industrial areas of Kansas City. We have hard that it’s time for “new money” and new economics, a line that fails to mention that the cargo warehouse credits as written would only go to new construction, and that warehouses are not know for either welcoming pedestrian flanks or for innovative architecture. Worst, we have heard that a $10 million limit on historic tax credit awards of $275,000 or less is somehow protection of neighborhood microdevelopment.

The LRA-owned building at 2037 Adelaide Avenue is within the proposed O'Fallon Historic District.

To be sure, having some nod toward small projects is better than none, but what we have on the table is an annual $90 million issuance of historic tax credits in which small projects will only get $10 million – not a penny more. The $80 million majority of credits will go to the big projects – the ones that some proponents have claimed are “mostly done.” This skewed ratio prevents small developers and property owners from direct competition with large development operations, but it represents a move to cut small projects to over half of activity we saw in Fiscal Year 2011.

The vacant house at 2609 Rauschenbach Avenue in the newly-designated St. Louis Place Historic District.

According to data from the Missouri department of Economic Development (DED), in Fiscal Year 2011, the state issued around $21.5 million in historic rehabilitation tax credits to projects that received $275,000 or less in tax credits. This activity represents 165 of the 385 projects to which DED issued historic tax credits. Of course, the total issuance was $116.2 million, so the small projects were far from the majority. Yet they account for around 43% of all projects that used the historic tax credit.

A formula based on caps of $10 million for small projects and $80 million for large projects will end up slowing the pace at which neighborhood revitalization can take place, in small towns and big cities. In St. Louis, the effects could be most harmful in distressed neighborhoods across north St. Louis where new historic districts are being created or have been created in St. Louis Place, the Ville, Penrose, O’Fallon and the Wellston Loop. Literally thousands of north St. Louis buildings will be eligible for the Missouri historic rehabilitation tax credit by the end of the next year, in addition to buildings in the rest of the city. Will these buildings have fair access to an incentive designed to bring them back to productive use?

The answer to that questions rests with the General Assembly, as well as to backers of the tax credits for the cargo warehouses. Those who advocate for neighborhood revitalization can fight for a mechanism that may bring us more jobs, which the region does need, but they should not let their guard down when it comes to the mechanism that often is what stands between a rehabilitated, human-scaled building and a vacant lot or gas station.

The building at 4210 W. Cote Brilliante Avenue is in the Cote Brilliante Avenue in The Ville Historic District, which goes for state approval in November.

This is no either-or proposition – St. Louis will not be an attractive place for new investment if it neighborhoods aren’t improving. Missouri can’t give us unlimited money, but we can make sure that what we get doesn’t rob resources from neighborhoods that can’t afford lobbyists in the Capitol this week. A $10 million cap is too low. At least the cap should be based on last year’s activity of $21 million, so we don’t lose the momentum that is transforming tough blocks into great places to live.