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The St Louis Contrarian

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

Archive for the category “missouri”

Missouri State Tax Credits

www.stltoday.com/business/local/incoming-missouri-governor-has-far-different-view-from-greitens-on/article_6df0ca15-a9e4-58b2-b22a-25b040c44d73.html

The ouster of Greitens may improve the chances of reinstating Missouri credits. Jeff Smith, Executive Director of MOWAHA is quoted in the article saying the credits are efficient and effective. They are neither. Written by Paul Dribin

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The Latest on Missouri Low Income Housing Tax Credits

The Missouri legislature has voted to not reinstate the credits. This means that affordable housing deals in Missouri will be more difficult to do. This is a classic case of killing the goose who lay the golden eggs. The greed of developers and their assorted hangers on caused this to happen. The people being harmed are poor people.

The governance of MHDC the funding agency must be changed to reform the system. Having high level elected officials on the board simply creates a climate of graft. What also is necessary should be a straight forward funding criteria which awards projects on the basis of merit, not who you know. In any case the existing system is rotten and needs to be changed. Written by Paul Dribin

Honest Graft in St. Louis

The St. Louis American wrote an excellent article describing two dubious consulting contracts being awarded by the City of St. Louis. One, picks the higher bidder for the firm picked to be lobbyist for the city. There is also a weird consulting contract regarding privatization of the airport. The consultant would only get paid if the project moves ahead. Guess what there recommendation will be. Attached is the full article. Written by Paul Dribin

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Why did St. Louis hire a more expensive lobbyist with less experience? Jeff Aboussie’s team gets city contract through scarcely public process

By Rebecca Rivas Of The St. Louis American Jan 19, 2018 Updated 5 hrs ago 0


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If St. Louis residents aren’t frequently checking the elevator at City Hall, they may have a hard time finding out that former union leader Jeff Aboussie won the city’s lobbying contract at a December 7 meeting – for an unknown amount.

“Today’s meeting was not posted to the city’s online calendar,” wrote 7th Ward Committeewoman Marie Ceselski on her blog on December 7. “It was taped to an elevator at City Hall. I’m glad Gerry (Connolly) took time out from his busy day to go and get the information for us.”

On December 7, concerned city resident Gerry Connolly was the lone witness to the selection committee awarding Aboussie and his team the contract.

Attending the meeting would have been the only way to find out, other than scouring the Missouri Ethics Commission website for new lobbyists.

The St. Louis American tried to find out more details about the contract on January 17, and the city’s operations director Todd Waelterman said he couldn’t yet say. The American tried to find out who was on Aboussie’s team through Tom Shepard, who was on the selection committee representing his boss, aldermanic President Lewis Reed. Shepard wasn’t sure if he could say yet either, but he did confirm that Aboussie’s new lobbying firm Regional Strategies won the contract. Shepard, Reed’s chief of staff, was the only “no” vote in the 4-1 vote for the contract.

These interactions were odd considering that the meeting where the contract was announced was public – though barely – and the three lobbyists have already registered themselves as representing the city with the Missouri Ethics Commission.

From what The American was able to find out, there were only two applicants to replace former lobbyist, Rodney Boyd, who now lobbies for the City Treasurer’s Office. Aboussie’s proposal was almost $20,000 more than the other bidder, Shepard confirmed, though he couldn’t say the exact amounts. He said it was within the budget. Waelterman said that $96,000 was budgeted for the new lobbyist, and the contract does not have to go before the Board of Estimate and Apportionment. Boyd had been paid $90,000 annually.

Aboussie, who had previously been the executive secretary-treasurer for the St. Louis Building and Construction Trades Council, has only been a registered lobbyist since February 2016. His competition, Richard McIntosh, has been registered since 1996, and his firm, Flotron & McIntosh LLC, has been in business since 2000.

So why go with someone who was more expensive and had less experience?

The rumblings are that billionaire conservative financer Rex Sinquefield is going to push for a statewide referendum for a city-county merger. And, of course, there’s also the privatization of city-owned and -operated St. Louis Lambert International Airport. Some say that those are the city’s two lobbying priorities going forward. Aboussie and his two team members seem prime to support this effort.

One is Tom Dempsey, former president pro tem of the Missouri Senate, a trusted Republican in Jefferson City. On his lobbyist registration for the Missouri Ethics Commission, Dempsey lists his address as Pelopidas LLC – which is Sinquefield’s primary political shop. Dempsey registered as a lobbyist for the City of St. Louis on January 5. His other teammate is Jacqueline Bardgett, a Democrat who works for her father’s firm, John Bardgett & Associates. She registered on January 5 as well.

Interestingly, one of Bardgett’s clients is the St. Louis Police Retirement System.

Until October 16, Aboussie was registered to lobby for Kiel Center Partners, who owns the Scottrade Center. The city is now paying $1.5 million a year for the hockey stadium’s improvements after many months of lawsuits and litigation. Aboussie registered as the city’s lobbyist on December 29. Aboussie also represents Great St. Louis, which paid for the Prop A campaign (the ballot issue that falsely promoted body cams) and Prop B (for changing municipal election dates) last April. He also lobbies for the Kelley Group, which helped put St. Louis County Executive Steve Stenger and St. Louis Mayor Lyda Krewson in office.

Krewson’s office has not yet responded to The American’s request for comment.

Bardgett also has a part to play in the looming city-county merger or reentry, said Ceselski.

“The lobbying team is really about coming up with a chunk of money to pay pension liabilities, so we can be forced into the county by the [Missouri Legislature],” she said, “so I can see how that is one of her connections that she brings to table.”

The Missouri Constitution is clear that county does not acquire the city’s liabilities with re-entry, Ceselski said. Re-entry means the city would become the 91st municipality in St. Louis County.

“Police will go along with re-entry and being county police funded by a special tax district if their old pension system is secure,” she said.

Currently the Missouri Constitution states that city and county residents would be the ones to vote on any merger or reentry referendum. But it’s no secret that some state legislative leaders are aiming to change that, allowing the issue to be voted on statewide. Sinquefield has been making hefty campaign contributions to those who would support this cause.

‘Leasing’ the airport

Sinquefield is also bankrolling the privatization process for the airport. Just weeks before then-Mayor Francis G. Slay left office, Slay initiated the application process for the Federal Aviation Administration’s airport privatization pilot program.

The application process is being paid for entirely by Sinquefield’s nonprofit Grow Missouri Inc.

Going forward would require a city ordinance, approved by the Board of Aldermen, or a City Charter amendment, which would require 60 percent voter approval.

Grow Missouri has also launched “Fly314,” its outreach project to gain support for privatizing Lambert. If the deal is successful, Grow Missouri will be reimbursed for the application fee and its promotion efforts. Slay’s former chief of staff Jeff Rainford is a lobbyist for one of the potential bidders.

On January 17, a selection committee met to review proposals for a consultant firm that would advise the city on whether or not it should “lease” the airport. About seven city aldermen showed up to the meeting to ask questions.

Deputy City Counselor Michael Garvin explained that the Request For Proposals (RFP) went out in October, and they have received 11 proposals.

However, he said there are only two full proposals. And only one of them truly meets the requirements, though they are flexible and could make the other work through negotiations, he said.

Alderwoman Carol Howard (D-14th Ward) asked about the wording in the RFP that states the consultant will not get paid unless a deal is cut in leasing the airport.

“That’s strange,” Howard said. “That’s very strange.”

Deputy Mayor for Development Linda Martinez said it is a very typical approach to financial transactions.

“But this is not a financial transaction,” said Alderwoman Cara Spencer of the 20th Ward. “This is an agreement to hire a consultant to tell the city whether or not we should privatize. So we are setting up a situation to hire a consultant to consult us on whether or not we should move forward, and only agreeing to pay them if we do move forward.”

Garvin responded, “We all understand that the analysis we receive could be affected by the financial interest of the … It’s like a realtor telling you to sell your house.”

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On January 16, St. Louis Post-Dispatch’sTony Messenger wrote a column about the city’s airport privatization process through the eyes of a nonprofit think tank that studies the privatization of public assets.

Donald Cohen, executive director of In The Public Interest, said that going forward with the consulting contract wasn’t a good move.

“If this contract gets executed, it really puts the finger on the scale,” Cohen said. “It gets harder and harder to say no because there is momentum.”

Cohen also said that the closed nature of the process is not normal – along with the fact that Sinquefield is paying for it.

The aldermen agreed.

Alderwoman Christine Ingrassia of the 6th Ward said she and her colleagues feel like the public has been left in the dark.

“When we go to the chair of transportation and commerce, who should be able to answer those things, she is not able to either,” Ingrassia said. “I understand that there is a process and some of this information is closed for a reason. But I find it very troublesome that we just have had zero proactive communication on this.”

The mayor went to the Airport Commission two months ago, Martinez said. In June, they had a half-dozen briefings on what the process would be, he said.

When asked how many other airports are privatized, he said that a few cities, including Kansas City, are looking into it.

(The Muñoz Marín International Airport in San Juan, Puerto Rico, is the only airport currently operated privately under the FAA program, which began in 1997.)

“Bottom line is there are zero private airports in the United States,” Spencer said. And St. Louis is one of the few cities that get considerable amount of income from their airports, she said.

“But we are looking to see if there is a way to make more,” Martinez said.

The aldermen asked to hear from Comptroller Darlene Green, and her deputy of finance, Jim Garavaglia, told the aldermen, “We believe that there is an opportunity to answer the question of whether it is something we should consider doing.”

The selection committee consists of representatives from the offices of the mayor, comptroller and President of the Board of Aldermen. The committee did not take a vote on the proposals on Wednesday.

Reed released a statement on January 18 that the city needs to “carefully and diligently” examine the idea.

He said, “Communication needs to be a key part of this process.”

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Effect of Changes to Tax Law on Affordable Housing in St. Louis

The new tax law certainly is controversial and I am certainly not qualified to offer a detailed analysis. One area that I am knowledgeable about are Low Income Housing Tax Credits (LIHTC). This is the main program for developing affordable housing in the United States.

The new tax law would have a detrimental effect on LIHTC which relies on selling tax credits to corporate entities and using the proceeds of those sales as equity for the construction and rehabilitation of affordable housing. Since the new law significantly lowers corporate taxes, it will also lower what corporations are willing to pay for tax credits, thereby making affordable housing more difficult to complete. Missouri suffers a double whammy with the elimination of the State of Missouri Affordable Housing Tax Credit by Governor Greitens and the MHDC board. This with the addition of potential cuts in the Missouri Historic Tax Credits will have dire effects on the City of St. Louis. Written by Paul Dribin

Two Contradictory and Yet Similar Views of Missouri

I take the lists of best and worst to not be worth very much. Nevertheless in the competitive world of travel and jobs maybe they do play a role.

First, a list I just saw ranks St. Louis as the very best place for a young person to move. The report cites the low cost of housing and cultural amenities. I think we all know that, the question is how do we harness it to bring more young people here and retain the ones we have. I would suggest offering a free weekend trip to St. Louis for anyone who wants it who live a certain distance away. Paying for this would of course be an issue but maybe the Regional Chamber can tighten up on some of their salaries to do this. Our cultural amenities are on a par with the greatest cities in the world

On the extremely negative side, Fodor’s published a list of where not to travel in the world, Missouri was listed right up there with Myanmar and Cuba( actually you would be safer in Cuba for sure). I don’t know why Missouri is worse than some other redneck states but we are. Much of it goes back to the NAACP report from awhile ago. Written by Paul Dribin

Greitens and MHDC Board Vote to Eliminate State Low Income Housing Tax Credits

The MHDC board met Friday and voted to eliminate the state credits. This will result in a significant loss of affordable housing in Missouri which is a tragedy. Reforms needed to be made in the program, but I don’t think Greitens is really interested in reform, simply grandstanding. Nevertheless, a big part of the reason the program was eliminated was the greed of the industry supported by the credits. MHDC never had an open application process with clear standards for judging and eliminating applications. The board made of high level political appointees was subject to legal and illegal graft. The program was run as a political fiefdom and returned far too little of the funds to actual low income recipients.

Still the program should not have been eliminated unless something better was around with which to replace it. As always low income people are the ones who suffer the most. Written by Paul Dribin

More About Housing Tax Credits

Much is being written and discussed about the Governor’s decision to terminate Missouri State Affordable Housing Tax Credits. The loss of these credits will make affordable housing difficult to do and adversely affect a certain category of poor person. I am not in favor of eliminating these credits simply because there is really nothing else to work with in the affordable housing arena.

Nevertheless, the greed of some members of the affordable housing industry made this decision by the Governor inevitable. There are many developers, syndicators, attorneys, and consultants who have gotten rich off the program. Too much of a dollar of tax credits does not go for actual housing expenses. Many in the industry do not really care about poor people.

In addition, the Low Income Housing Tax Credit Program is both inefficient and ineffective. Inefficient for the reasons cited above plus a hugely complicated program. Ineffective because the program does not house poor people who need it the most. Tenants still must pay a $400-$600 monthly rent. Homeless people need not apply.

If the traditional public housing program was allowed the same per unit expenditures and site location it would have been a more efficient and effective housing program. Unfortunately, anything that smacks of public involvement is frowned upon these days. Written by Paul Dribin

The Beneficial Effects of Low Income Housing Tax Credits

I read some “scholarly” research today on the effect of Low Income Housing Tax Credit (LIHTC) on neighborhood stability. Some earlier research had suggested that LIHTC projects had a negative effect on low income communities. This study showed a very slight positive effect. This to me is faint praise. Affordable housing has been billed as transformative. Lives are clearly not being transformed by these programs, at best they are somewhat stabilized. Maybe that is all they can accomplish. They should not however be oversold. Written by Paul Dribin

State of Missouri Low Income Housing Tax Credits

Well the hammer has dropped. The Missouri Housing Development Commission. (MHDC) board voted today to eliminate the State Affordable Housing Tax Credits. These credits have been used in conjunction with federal affordable credits, historic credits, and other forms of subsidy and equity to build and rehabilitate affordable housing in Missouri. Governor Grietens has been pushing to eliminate these credits since he has taken office.

This action will make affordable housing in Missouri more difficult to accomplish. There will be fewer deals and less affordable rents. The state credit appears expensive in a simplistic way, but in terms of jobs creation and long term housing affordability it is critical.

There has been significant criticism of the multitude of state tax credits in Missouri. The reason for this is the unreliability of the state legislative process an the subsequent uncertainty to housing investors. My mild criticism of the industry for a long time has been that we are too reliant on tax credits and need to develop alternative sources of funding. Written by Paul Dribin

HUD to Defund Fair Housing Grants in Missouri

Missouri passed a law about six months ago which made filing a discrimination or fair housing complaint more difficult. Many in the know advised against it primarily for moral reasons, but also because of the potential for lawsuits and possibility of listing federal funding. Well, the predictions have come true. HUD has written that if the law is not changed by March 2018 federal funding for fair housing enforcement will be terminated. That is because the state law is no longer “substantially equivalent” to the federal law. It would be just deserts if Amazon opted not to come here due to our redneck ways. Written by Paul Dribin

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