A task force established by Gov. Greitens to examine state tax credit policy has returned with recommendations that preservationists say would substantially cut the historic tax credit program and make it much more difficult to utilize.
The task force is recommending the historic tax credit program be lumped together with the brownfield tax credit program and both capped at $50 million annually. The current yearly cap on the historic tax credit program is $140 million, and the brownfield program generally runs $6 to $10 million annually, according to Kansas City architectural historian and preservationist Elizabeth Rosin.
The task force also is recommending a $2 million cap for each historic tax credit project.
Rosin describes the potential damage to the historic tax credit program, should the Missouri General Assembly choose to accept the panel’s recommendation, as “huge.”
“We’re doing a lot of work in the off season to educate legislators about the programs and how it helps their communities,” Rosin says.
The program, enacted in 1998, provides state tax credits for 25 percent of the eligible cost of renovating buildings certified as historic by federal and state officials. Those credits then can be sold or transferred by developers to raise cash to help finance projects.
When combined with a similar federal historic tax credit program that provides a 20 percent credit, the tools have been used to renovate dozens of historic buildings, making it a major force in the revitalization of downtown Kansas City in recent years.
Scores of older office buildings that had been vacant or underused in downtown have been redeveloped as residential projects and hotels in recent years. The conversions also have helped drive down the downtown office vacancy rate and prompted speculation that new office construction may occur as a result.
On July 21, the historic Pickwick complex, a former hotel, bus terminal and office building at 933 McGee will have its grand opening as the 260-unit East 9 at Pickwick Plaza, a $65 million project that relied on historic tax credits to complete its financing.
Other current downtown projects using the state historic tax credit program include the redevelopment of the historic Savoy Hotel; the conversion of the former Flashcube office building into apartments; the conversion of the former Brookfield office building into apartments and a hotel; and the renovation of the New England building into apartments.
Rosin said other recommendations by the governor’s task force would make the historic tax credit program much more unpredictable for developers to utilize. It would require lawmakers to appropriate funding annually, and establish a five-year sunset, after which, the entire program would have to be reauthorized.
“This creates a lot of uncertainty in the development world,” Rosin says. “If I need to pull together financing over a year’s time and I’m not sure the program will be there, I’ll look at another state.”
Rosin says Missouri Historic Revitalization Alliance, a pro-tax credit lobbying group, estimates each dollar in tax credits stimulates $4 to $6 in construction costs.
An Oklahoma report on that state’s program, which is similar to Missouri, estimated that state gained 50 cents in tax revenues for every $1 in credit before the credits were even claimed.
But Missouri's program, along with other tax credit programs, has been a perennial target for lawmakers seeking more revenue. And with Missouri facing a potential $456 million budget shortfall next year, those programs are facing renewed scrutiny by the legislature and Gov. Greitens.
This post originally appeared on CityScene KC. Kevin Collison is a freelance contributor to KCUR 89.3.