Tax Reform Would Be ‘Devastating’ For St. Louis Developers

By on November 14, 2017

From St. Louis Business Journal:  Since 2002, no American city has gotten more out of federal historic tax credits than St. Louis, putting redevelopment in the city at risk if lawmakers in Washington, D.C., pass a tax reform proposal that’s being discussed.

House Republicans have proposed eliminating that and other programs as a way of helping pay for corporate and individual income tax cuts, which they say will spur increased economic growth. The U.S. Senate is currently drafting its own plan, which could be far different, and any discrepancies would have to be reconciled.

Developers from 2002 to 2015 leveraged $536 million in federal historic tax credits to spur more than $3.2 billion in historic redevelopment in the city of St. Louis, according to the National Trust for Historic Preservation (NTHP), a Washington, D.C., nonprofit. It said those projects have created more than 51,000 jobs and generated about $659 million in new tax revenue. Marquee projects such as the $250 million Mercantile Exchange entertainment district, the $118 million redevelopment of the 18-story Arcade Building and the $73 million renovation of the Heritage building (now called the @4240 building in Cortex) have all utilized the historic tax credits.

Future projects, such as the $104 million overhaul of the Jefferson Arms building and a $250 million rehab of the Railway Exchange Building, are counting on the program, too.

If the historic tax credit program goes away, “it would be devastating,” said Shaw Sprague, policy director for the NTHP. “Without the credits, many rehabilitation projects don’t financially make sense and I think you’d see developers turn away from those types of projects.”

In a move that has further upset developers, Missouri officials have talked of scaling back the state’s historic tax credit program.

St. Louis developers and officials said they’re cautiously monitoring the tax reform discussions in Washington, D.C., and Jefferson City.

“We’re very concerned about all the credits that could be lost — not just historics, but low-income, New Markets, private activity bonds,” said Otis Williams, executive director of St. Louis Development Corp.

Losing the credits, he said, “would definitely change the landscape of development here because many of the capital stacks we’ve seen recently include a number of these programs.”

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