Historic tax credit awards fall sharply in Missouriwww.STLtoday.com
Friday, February 4, 2011
Missouri Gov. Jay Nixon looks to be gaining little traction in his bid to get lawmakers to cut spending on the state's Historic Tax Credit program.
But between the slow economy and, some allege, an administrative slowdown, he appears to be achieving the desired result anyway.
In the first six months of the fiscal year - July 1 through Dec. 31 - the state authorized just $32.6 million worth of historic credits, according to new numbers from the Missouri Department of Revenue. That's less than half of the $86.1 million authorized in the same period last year, and barely one-fourth the $124 million in the first half of fiscal 2009.
It's also on pace to fall well below the $75 million annual cap recommended by the Governor's Tax Credit Review Commission in November - a figure that has met with stiff opposition from the St. Louis historic rehab community.
The credits - which reimburse a developer one-fourth the cost of rehabbing a historic building and which, on large projects, are often paired with a 20 percent federal tax credit - have been the lifeblood of rehabilitation in downtown St. Louis over the last decade. They've been used, too, to rebuild single-family homes and small commercial buildings in neighborhoods around the city.
But they've come at a hefty cost to the state treasury - $186 million in 2009, for instance - prompting Nixon and some budget hawks in the Legislature to try and rein the program in. Last year, for the first time, historic credits were capped at $140 million annually, and there are still many pushing for an even tighter cap, though none has been formally proposed in the Legislature yet this year.
Either way, the credits authorized fell well short of the new cap in fiscal 2010, and appear likely to do so again this year. Credit supporters point to that when they argue that Nixon's concerns will take care of themselves - that while a weaker economy means less money in state coffers, it also means less demand for tax credit-funded real estate projects.
But some tax credit supporters contend that the slowdown isn't entirely market-driven. They point to new rules around the historic program, which are dramatically slowing the administrative process, leading to fewer awards. State officials have said the new rules improve oversight, but that they'll work to ensure they don't needlessly slow things down.
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