Historic Tax Credit in Crosshairs After Governor’s Call for Reform

By on July 17, 2017

From St. Louis Post-Dispatch:  Once again, tax credit reform is back on the agenda in Jefferson City.

And that means the industry that has sprung up around the state subsidies over the years — developers, syndicators, bankers and lawyers — is gearing up for another battle over the state’s increasingly expensive development tool.

“I believe the threat’s never been greater,” said Jim Farrell, who has lobbied for years on behalf of the Missouri Historic Tax Credit, one of the biggest such programs.

It’s becoming a semiannual fight in the Legislature, with fiscal hawks and libertarian-types arguing that the programs distort the market and cost the state too much without enough return. Defenders maintain that the credits catalyze affordable housing, urban redevelopment and business expansion.

Two of the state’s most expensive programs, the low-income housing tax credit and the historic preservation tax credit, appear to be in the crosshairs. Developers use those credits to raise cash for projects, selling them to banks and other financiers at a discount, who then resell them to businesses and individuals looking to offset their state taxes.

As a result, only a fraction of the credits’ value actually goes into projects, which 2014 state audits estimated at 42 cents on the dollar for the low-income housing program, the state’s most expensive, and between 49 and 85 cents for historic tax credits.

A special committee formed by Republican Gov. Eric Greitens released a report two weeks ago that called for major changes to those programs. Developers, financiers and local leaders say the recommended changes will cripple them.

“I think the governor is going to have some strong interest in moving this forward,” said Sen. Andrew Koenig, R-Manchester, a member of the committee who says he plans to introduce legislation next session curtailing the credits. “We’re spending hundreds of millions of dollars on government trying to manage the private sector, and I don’t think the government does a very good job trying to manipulate the market.”

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One Comment

  1. James Praprotnik

    07/17/2017 at 10:28 PM

    I had worked with the former owner, Paul Lashley preparing architectural plans / tenant space layout B Dalton Book Store. I would be interested in developing plans with the new owner.

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