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The St Louis Contrarian

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

Archive for the tag “eric greitens”

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

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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

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.

Short Sighted Action by State of Missouri

David Nicklaus had a good column today in the Post in which he lamented the loss of state funds that support business startups statewide, but particularly in the St. Louis area. These programs return far more in jobs and revenue than they cost. The St. Louis start up scene has been growing exponentially, we need to keep that up.

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