Category: Public Policy

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

by Michael R. Allen

Here is an extended version of testimony I provided yesterday at a hearing on the economic development bill (HB 1) currently being considered in a special session of the Missouri legislature called by Governor Matt Blunt. The Special Committee on Job Creation and Economic Development of the Missouri House of Representatives conducted the hearing.

Pub Def has a video of the testimony as delivered as well as my questioning by Rep. Rodney Hubbard; watch it here.

….

Good afternoon. I am Michael Allen, Research Associate for Landmarks Association of St. Louis and a resident of north St. Louis. Landmarks’ mission since its founding in 1959 is to preserve, promote and enhance the architecture of St. Louis. We have a deep interest in promoting good urban planning practices that solve the complicated challenges of our city.

We are supportive of the concept of creating an economic incentive program of benefit urban areas deprived of investment, like north St. Louis. However, we oppose the current version of the Distressed Areas Land Assemblage Tax Credit Act. The act encourages a size of development both inappropriate and unfeasible in urban areas where its use could be highly desirable. A much lower threshold for assemblage would enable more flexible use of the tax credit. Inserting requirements for development completion, public input and historic preservation would ensure good results. The current version is of little use to the majority of developers in places where its use is likely.

The numbers are simply too high to be realistic. In the city of St. Louis, the average city block is about one acre or less. We haven’t seen anyone put together a 75-acre redevelopment project in a distressed area of St. Louis; a recent attempt seems to be failing. What we have seen recently are projects of 25 and 30 acres in size that create remarkable transformation and gain community support.

Sometimes, however, a 75-acre project may be necessary. Other times, a ten-acre project may be more desirable. These choices can only be made at the community level. What the state legislature can do is create an incentive that hands the question over to those people who know best what is needed at a local level. This would leave many options open. Fundamentally, the size of a project depends on the size of the problem at hand. A credit that truly could be used statewide should not apply a standard that promotes one type of development with no proven track record.

The preponderance of city-owned land in north St. Louis has created a major development crisis that requires a solution. This tax credit needs to enable that solution. Applicants should be allowed to count city-owned land toward the total acreage acquired within a project area.

There is no guarantee that this incentive program will actually lead to development. As written, the tax credit would apply only to acquiring large amounts of property in distressed areas. Without required development timetables, rewarding acquisition in distressed areas could in fact lead to further blight rather than investment. These credits should be issued only upon completion of development. Also, a recapture provision would provide a final safeguard.

The requirements for the municipal approval process here are too vague. We need to make sure that the redevelopment agreement required under the act be approved by a municipal legislative body that represents affected residents.

The act lacks needed requirements for historic preservation planning. One of the most likely areas for use of this tax credit is in north St. Louis. Even in the most depopulated parts of north St. Louis, there are few areas of even one acre where there are no historic buildings. In an urban area, any project of 75 acres will include hundreds of potentially significant buildings. A preservation plan is essential to ensure careful choices about these resources. Rehabilitation of historic neighborhoods is the one of the few proven redevelopment strategies for urban areas.

As written, an applicant could use the tax credits to pay for fines and bills levied by municipal government for code violations. State law should not provide any incentive for violating municipal health and safety codes.

In conclusion, the current version of the Distressed Areas Land Assemblage Tax Credit Act might end of being of little use in encouraging development of the most economically distressed areas of the state. Binding ourselves to a flawed proposal could result in continued stagnation of areas like north St. Louis. Fortunately, we still have the chance to make useful changes, and I urge the committee to do so. Thank you.