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The St Louis Contrarian

Providing Independent and Intelligent Insight on St. Louis Public Policy Issues

Archive for the category “historic preservation”

Historic Tax Credits for Residential Use

The St. Louis Business Journal had a poll today which appeared critical of State Historic Tax Credits being used on residential properties. These credits are part of the state program which is used primarily on apartments and commercial buildings.

If used properly, the credits can help rejuvenate historic neighborhoods and preserve housing. The criticism seems to be that sometimes people who use these credits don’t need them. A simple solution would be to means test the program so that only households who need the credits will use them. Written by Paul Dribin

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State tax credits

The post had a good article yesterday about the issues surrounding state tax credits.   Nothing new was really covered. The credits are too expensive but they are the only tool for doing affordable housing. The article correctly demonstrated that investors will not participate in programs with high levels of uncertainty.   It also shows that development in St. Louis is very difficult and requires government supports. 

Possible Effects of Tax Reform in Missouri on Affordable Housing and Community Development

Governor Greitens has tasked a committee with looking at Missouri’s tax structure and making recommendations for change. Of particular interest to the committee and the state tax credit incentives. Here is a quick summary of recommendations as they effect housing related tax credits:

1. Low Income Housing Tax Credits- Missouri has a state affordable housing tax credits that supplements the federal credits. The credits once allocated can be used for 10 years and can be used for acquisition and new construction, or acquisition and rehabilitation. The committee recommended 1) A restructuring of the credit as a soft loan. These loans could be repaid, extended, or forgiven. 2)A $50 million annual cap which would cut funding by over 50%. 3)Creation of a tax credit clearing house to buy up existing credits. 4)The funding would be subject to annual appropriations.

Comment. Obviously utilizing a lower cap would limit the number of deals that can be supported. In addition,because the annual appropriations process is so crazy in Missouri, there would be no predictability about funding. Investors would either choose not to participate or significantly increase their fees.

2. Historic Preservation Tax Credits-These credits provide incentives to developers to maintain and rehabilitate historic buildings and neighborhoods. The recommendations are: 1)Combining the Historic Preservation Credits with the Brownfield credits. 2)The combined program would have a $50 million cap. Presently the Cap for the two programs is $150 million. 3)The funding would be subject to annual appropriations.

Comment-Once again the annual appropriations process provides for a high level of uncertainty. Lowering the Cap would also limit the number of deals.

Final Comment- These programs are critical to redevelopment and housing, particularly in St Louis. They have provided huge amounts of economic development to cities and built large numbers of affordable housing units. The trouble is they are very expensive. The development community needs to come up with alternative methods for doing community development that does not break the bank.

St. Louis Development Guidelines

The City of St. Louis has issued draft development guidelines for the use of incentives. This material is very important and perhaps controversial. Here is the link:

https://www.stlouis-mo.gov/government/departments/sldc/documents/upload/Development_Incentives_Input_Session_FINAL_06-08-17.pdf

Used of CDBG Funds in St. Louis

The Community Development Block Grant is a program devised by HUD to provide flexible funds to community to meet broad based urban development needs. Cities of over 50,000 people receive the funds on a categorical basis based upon poverty etc. St. Louis is of course one of these cities receiving funds by formula. The use of the funds is to address community development, housing, economic development in a way that the local community plans. The city receives an allocation of millions of dollars a year. The amount has declined but is substantial.

The city has misused much of this funding. Instead of concentrating funding on the areas of greatest need, the funds are divided equally among the 28 wards. This of course waters down the effect and provides the aldermen a slush fund for pet projects, which may have nothing to do with broader priorities of the city. When I worked for the St.Louis Housing Authority we needed city wide targeting of block grant funds to get $28 million from HUD for the Darst-Webbe demolition and redevelopment. This commitment was tough to get. Funds have been used to over rehab houses in very poor locations, or to create non profits which accomplish little. HUD shares in the blame because they have lacked the courage to challenge the city on these policies. I intend to do some detailed reporting on this subject in the future.

Jerry Schlicter

This is the second in my series about local good guys. Jerry is a personal injury attorney who has been quite successful. He is now going after employer based 401-k accounts for overly high administrative fees and too low rates of return

Jerry has accomplished two major things for the city of St Louis and State of Missouri. First he took the lead in getting the State historic Tax Credit program approved. This program has resulted in the preservation of thousands of historical buildings and the generation of the investment of Hugh sums of money in our communities.

Second he started and chairs the St Louis Arch Grants which provide startup funds for promising new businesses. 

What impressed me the most about Jerry is that both these endeavors do not benefit him directly. He is just a civic minded citizen

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