by Michael R. Allen
My latest commentary for KWMU is online here.
Category: Public Policy
by Michael R. Allen
While debate went until well after 3:00 a.m. in the Missouri Senate this morning, the chamber did not pass an economic development bill that included a $75 million cap on the state’s historic rehabilitation tax credit program. Senator Jeff Smith (D-4th) deserves a lot of credit for his strong advocacy for the credits. Smith is a master of using an inquiry to block negative changes to the program, and his spirited efforts are helping grow support for the credit in the Senate.
by Michael R. Allen
Rick Bonasch at STL Rising wrote a post today asking for more information on a proposed state historic rehabilitation tax credit in Illinois.
Representative Jay Hoffman (D-Collinsville) filed HB 469 on February 4, Representative Greg Harris (D-Chicago) filed HB 586 on February 6 and Senator Dan Kotoski (D-Park Ridge) filed SB 1366 on February 10. The similar bills would enact a state historic rehabilitation tax credit modeled on Missouri’s tax credit. All bills have had a first reading and remain in committee.
While Missouri inexplicably debates the future of its model tax credit, other states are looking at copying ours. What a strange reversal of regional dynamics if Illinois had an uncapped historic rehab tax credit and Missouri did not. The tax credit would be a boon to Alton, Belleville, Granite City and other east side communities that are interested in downtown revitalization.
by Michael R. Allen
According to the Post-Dispatch, Missouri House Speaker Ron Richard (R) won’t accept a cap on the historic rehabilitation tax credits less than $150 million. That’s great news. As Democratic Governor Jay Nixon maintains his silence, we have a prominent Republican come forward with some support for one of the state’s most effective and democratically available economic development tools. Former Governor Matt Blunt (R) was a strong supporter of the historic tax credit, as is Lieutenant Governor Peter Kinder (R). While the attack on the program is coming mainly from Republicans using typical conservative anti-city rhetoric, other prominent conservative Republicans support the program (and, admittedly, some others of dubious utility).
While a $150 million cap could still cause a competitive environment in which big developers will have an advantage over homeowners, it’s a better stance than silence. State Senator Jeff Smith (D) has raised the stakes by calling for a cap no less than $170 million, the amount of credits issued in 2008, and Speaker Richard says that there is room to negotiate with his figure and Smith’s. That is an encouraging dialogue, although the need for any cap has not been adequately justified by its proponents, whose arguments are more arguments against the historic tax credit itself.
Speaker Richard told reporters that “I will have the last word on tax credits.” I wish that were true, but the last word comes at the desk of the governor when he decides whether to veto or approve an economic development bill sent to him by the legislature. What will the last word on historic tax credits be? Nixon has provided few clues.
by Michael R. Allen
Yesterday, the Missouri State Senate took a few steps toward passage of the Quality Jobs bill favored by Governor Jay Nixon. The new version of the bill, which stalled but indicates the direction the Senate is heading, includes a $100 million cap on the state’s historic rehabilitation tax credit, an amount $70 million less than the figure for credits issued in 2008.
Floor debate lasted until well after 11:00 p.m., with several amendments offered. Two good amendments adopted were one by Sen. John Griesheimer (R) to remove language that would subject tax credits to appropriation by the General Assembly and another offered by Sen. Brad Lager (R) to remove prohibitions on layering different tax credits. Lager had written that prohibition but offered the removal as a compromise.
Lager, one of the most ardent opponents of the historic rehabilitation tax credit, stated yesterday that $100 million was the highest cap on the historic tax credits that he would accept.
Keep calling and writing your senators, representatives and governor. Governor Nixon has yet to make any promise to support the historic tax credit. Nixon’s influence could prevent a cap from being included in the final version of the bill.
by Michael R. Allen
The last time that I drove back from Jefferson City on Highway 94, I snapped this photograph of a historic store building in Tebbetts, Missouri. Who wants to be that this building will still be standing in ten years if Missouri greatly caps the state historic rehabilitation tax credit?
The real reason that Missouri senators should oppose the cap on historic tax credits proposed by Senator Brad Lager (R) is not because St. Louis’ “tall hogs” are hungry. The reason is because small towns across this state have only started figuring out how to use the tax credit to save their heritage and bring economic development to Main Street. In the past five years there has been a spate of tax credit activity outside of St. Louis and Kansas City. It’s not nearly as much as the activity in those big cities, but it will never grow if the credit is capped.
If the credit is capped, and the credit run through an appropriations process, issuance of the credit will become a political process. Currently, all one needs is a completed project and the right forms filled out — do the work, get the credit. A cap and appropriation will benefit the big developers who can afford to gain influence and work at getting credits full time. The Lager cap would end up benefiting those who are already good at using the credit (big cities) and stunt the growth of tax credit activity in small towns across Missouri.
I am a St. Louisan who knows this building in Tebbetts needs the historic tax credit just as much as the Mullanphy Emigrant Home, or houses in Benton Park. We can’t write off the rest of the state. Ironically, Lager’s proposal might do just that. Rural areas are always at a disadvantage when it comes to economic development. The historic tax credit is the antidote, and with time and training — would Lager support a state-funded tax credit training program? — the small towns will use this credit to remake themselves. All of the Lager changes work against small towns trying to survive, and play right into the hands of politically-connected developers.
by Michael R. Allen
At around 4:30 p.m., Senator Brad Lager (R) introduced a substitute to SB 45 that would cap the Missouri historic rehab tax credit at $75 million. Floor debate is proceeding with Senators Jeff Smith and Rita Days on the floor now speaking about the success of the program.
UPDATE at 5:50 p.m.: The Senate has moved on to the education bill. The majority pulled SB 45 from further consideration.
Listen to floor debate here here.
by Michael R. Allen
Here’s what some Missouri state senators are saying about the successful state historic rehabilitation tax credit that they are trying to destroy (the Senate will take up one proposal today):
“Tall hogs don’t like to move off the trough. This process will move the tall hogs off the trough.” –Senator Matt Bartle (R) quoted in the Columbia Tribune (March 12, 2009)
“Why is it that tax credits only benefit big businesses when most Missourians work for small businesses?” –Senator Jason Crowell (R) quoted in the Kansas City Star (March 24, 2009)
Do they think we have short memories in Missouri?
The economic development bill (SB1) passed during the special session of the Missouri General Assembly in August 2007 contained many provisions. One of the most publicized new tax credit programs created by that bill was the Distressed Areas Land Assemblage Tax Credit (DALATC), a $95 million program with annual appropriations of no more than $12.5 million. DALATC is available to developers in economically depressed areas of the state who are assembling projects of more than 75 acres — i.e., big developers. The credit can be issued before development has started, and in fact contains few provisions to guarantee development would occur. The DALATC idea isn’t bad but the version that passed is weak public policy.
Senator Frank Barnitz (D) proposed an amendment to eliminate DALATC from HB1, and his amendment failed 8-25. Those supporting the amendment were Senators Barnitz, Maida Coleman (D), Joan Bray (D), Wes Shoemeyer (D), Chuck Purgason (R), Brad Lager (R), Matt Bartle (R) and Yvonne Wilson (D). All other Senators voted to retain the new program with an annual cost to the state of at least $12.5 million and provisions that all but state that the program would only benefit the city of St. Louis.
Among those who voted against removing this section were Senator Luann Ridgeway (R) and Sen. Jason Crowell (R), who are leading the current charge against the state historic rehabilitation tax credit along with their more consistent colleagues Lager, Bartle and Purgason. When Ridgeway and Crowell lecture us on the historic tax credit costing too much, benefiting the big cities and not producing enough economic return they aren’t explaining why less than two years ago they voted to create a new development tax credit with no guarantee for job creation that probably will be used exclusively in St. Louis and Kansas City.
When the final vote on HB 1 was taken, Bartle was the only member of the current gang pushing to cut the state historic rehab tax credit who voted “nay.” A lot of “tall hogs” were served up a big meal by HB 1, and Crowell, Purgason, Crowell, Ridgeway and Lager helped feed them. These senators voted in favor of a bill that dramatically increased the cost of tax credit programs to the state. Now they want us to forget that?
by Michael R. Allen
In this time of Missouri state budget crunching, the state historic rehabilitation tax credits are again under fire. While the threat to cap, eliminate or modify the credits returns every year and is usually soundly defeated, this year is different. Missouri has hard choices to make about the state budget, and Governor Jay Nixon is under pressure from members of both parties to overcome a massive revenue shortfall.
An Associated Press article published February 12 details the renewed hostility toward the tax credits from Republican Senators Brad Lager, a perennial foe of the credits, and Jason Crowell. This week, Lager placed a $150 million cap on the program in a substitute version of economic development bill SB 45, but the substitute seems defeated after lobbying from developers and legislators who understand the benefits of the tax credit. The big threat now seems to be a counter-proposal to reduce the coverage of the credits from 25% of qualified costs to 20%, the percentage of federal historic rehab tax credit. That change would be disastrous to projects already underway that have not yet collected credits, and it is needless.
Of all of the state’s many tax credit programs, the historic rehab tax credit is one of the most successful and most popular. The best part about it is that its use is wide — from big developers to homeowners in north St. Louis to inn keepers in Augusta, the users are a diverse group. The other undeniable good is that the credit is a sure bet for continuing to create skilled, well-paid construction jobs in Missouri. Historic rehab work requires specialized labor that does not come cheaply, and the stimulus for such work in Missouri has not only kept many tradesmen employed but has created new jobs in fields like plastering, masonry and finish carpentry. Workers who were paid entry-level wages to hang drywall have gone on to work on tax credit-financed projects where they gain skills that land them solid pay. In this downturn, we can’t afford to let these skilled workers out of a job.
Meanwhile, the National Trust for Historic Preservation lauds the Missouri rehab tax credit as a model in stimulating small development projects and in creating skilled construction jobs. (The Trust’s page inexplicably features a photograph of the James Clemens, Jr. House in St. Louis in a line-up of otherwise rehabbed Missouri buildings.)
Keep up on the latest news in the Missouri historic rehab tax credit struggle at the Save the Historic Tax Credit website. Contact your legislators immediately and urge them to support the historic rehab tax credit the way it is now — working for Missouri!
by Michael R. Allen
On September 11, 2008, noted preservation economist Donovan Rypkema delivered a rousing keynote speech on “The Economics of Historic Preservation” at the Missouri Statewide Preservation Conference in St. Charles. Rypkema’s talk focused on Missouri, where he told the room of nearly 200 people that over $2 billion has been invested in historic preservation since the passage of the state historic rehabilitation tax credit in 1998. The news got even better as Rykema showed that Missouri historic preservation activity has grown at a faster rate than the state and national gross domestic products every year since the tax credit was created. The full text of the speech with its useful accompanying graphs and figures is now online, courtesy of Missouri Preservation. Read the speech here in PDF format.