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The St Louis Contrarian

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

Archive for the tag “historic preservation”

The limits of Historic Preservation

St Louis is a city tied up in historic preservation. Most of the city is in some historic neighbor or another. Is this a good thing?

Well, it depends. If you have a truly historic house the designation brings resources to the table to improve the property. If you have a non historic house in a historic district you could be screwed. That is because rehabbing that property will require historic preservation processes that will add significantly to the cost of rehabbing the house, often more than the value of the property itself. Properties get abandoned and neighborhoods deteriorate.

Alderman and other civic leaders have pushed to designate deteriorated areas as historic in an erroneous effort to create revitalization. If anything these efforts hurt.

What can be done? First develop a reasonable definition of historic. Not every old building meets the standard. Second allow more flexibility in design. We would never have had the modernist architectural style if every neighborhood had to conform to existing styles. Finally use a reasonable definition of historic. The federal register talks about unique. That would be a good starting point.

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Historic Tax Credits and Trump

President Trump has proposed in his tax plan to eliminate the Federal Historic Tax Credits. This would be a disaster for most cities, and most significantly, St. Louis. Federal and state credits have been effectively used in St. Louis for years to rehabilitate and develop housing that is historically significant. The dollar value has to be in the hundreds of millions of dollars. The value to the community is even higher. This for a tax plan that increases the deficit and simply lines the pocket of already very wealthy Americans. Second, this does not even get at the possible cuts in the State of Missouri Historic Tax Credits proposed by Governor Greitens 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.

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