This morning in the St. Louis Post-Dispatch I read the worst-ever explanation of how the Missouri historic rehabilitation tax credit works:
"Right now, if a building is old and somebody in essence wants to develop that, they automatically get certain amounts of these credits,” [Governor Jay] Nixon said. “We want to have an ability to cap that."
Does that sort of knowing oversimplification even play well out-state any more?
This is no the correct way to describe a program that:
1. Requires buildings to be listed in the National Register of Historic Places -- either individually or in historic districts -- before a tax credit application can be approved. The National Register has strict criteria for listing and many buildings do not make the cut;
2. Requires owners to submit up-front through preliminary application itemized expenditures and detailed work descriptions, and then subjects the developers to review by design professionals working for the State Historic Preservation Office;
3. Has rules that reimburse only for "qualified rehabilitation expenses";
4. That last year was capped at $140 million for projects of $1.1 million or more in qualified rehabilitation expenditures (a cap that Nixon supported without stating that he wanted a more drastic cut);
5. Governor Nixon has supported in previous years, including the year he ran for governor.
Nixon also does not mention that last year he signed the economic development bill that increased Missouri's annual obligation in Distressed Areas Land Assemblage tax credits from $10 to $20 million to allow developer Paul J. McKee, Jr. to receive over $19 million in those credits before the end of 2009. Nixon remains silent on the merits of that particular program while attacking a program used mostly for small-scale neighborhood redevelopment.
Nixon's push to make tax credits available for the most politically connected is problematic, because that's a continuation of the worst aspects of Missouri's tax credit policy. There are other ideas for reform that have merit, such as placing caps on existing programs -- including the special-interest programs -- or independent study of the economic impact of all existing programs and the courage to eliminate the bad programs.