Governor Nixon recommends eliminating Historic Tax Credit

[FangKC]

Yes they can--in theory, but it will be much harder to make old building renovations work. But only developers with very deep pockets and philanthropic intentions would be able to do it. Ones that could take huge risks, wait years for a neighborhood to come back, and building property values and rents to return.  

The 45 percent in tax credits (25% federal, 20% state) often make or break a project.  Why be bothered fixing up an old building in the central city when you can spend your time developing raw land in a pasture on the edge?

Why deal with asbestos and mold?

Other things to consider are the social and financial costs to the city of having blighted buildings sitting around other properties with tenants. Many tenants will just leave an area with blighted buildings. So the City loses businesses that pay taxes.  Property values are brought down in good properties by blighted neighbors.

The City also has the cost of demolishing older buildings that sit too long in disrepair and become dangerous, and then hope to collect that cost back later--if ever.

A lot of these older building renovations also create a lot of new low-cost housing, and the there is a real shortage of that--especially low-income housing near mass transit.

Several of our downtown hotels would not be open without these credits. They were used with the Phillips, President, Aladdin, and old Muehlebach hotels.  Thus, the City would have even less hotel rooms in the Loop than it does now.  The Park Lane Hotel (Marriott) on the Plaza was another property that used these credits.

[KC-wildcat]

Yes they can--in theory, but it will be much harder to make old building renovations work. But only developers with very deep pockets and philanthropic intentions would be able to do it. Ones that could take huge risks, wait years for a neighborhood to come back, and building property values and rents to return.  

The 45 percent in tax credits (25% federal, 20% state) often make or break a project.  Why be bothered fixing up an old building in the central city when you can spend your time developing raw land in a pasture on the edge?

Why deal with asbestos and mold?

Other things to consider are the social and financial costs to the city of having blighted buildings sitting around other properties with tenants. Many tenants will just leave an area with blighted buildings. So the City loses businesses that pay taxes.  Property values are brought down in good properties by blighted neighbors.

The City also has the cost of demolishing older buildings that sit too long in disrepair and become dangerous, and then hope to collect that cost back later--if ever.

A lot of these older building renovations also create a lot of new low-cost housing, and the there is a real shortage of that--especially low-income housing near mass transit.

Several of our downtown hotels would not be open without these credits. They were used with the Phillips, President, Aladdin, and old Muehlebach hotels.  Thus, the City would have even less hotel rooms in the Loop than it does now.  The Park Lane Hotel (Marriott) on the Plaza was another property that used these credits.

You're simply listing all of the benefits of tax credits.  This doesn't answer the question.  I agree with the use of credits.  I live downtown.  I have seen firsthand the benefits of these credits.  I understand that it will be more difficult without these credits.  But, face reality, we are living in difficult times.  Difficult decisions need to be made.  With unemployment through the roof, people's homes being foreclosed, rising interest rates, and record budget shortfalls, it's not easy for guys like Nixon to earmark hundreds of millions of $$$ for private developers.  It sucks that our elected officials are forced to make such decisions.  But, come on, it's the hand that Nixon has been dealt.  He's not sitting on a balanced budget over in Jeff City.

[grovester]

It's the same short-sightedness that led to the cancellation of the ToM, some budget savings this year at the expense of jobs, tax reciepts and growth.  It will ultimately make the budget problems worse.

[KC-wildcat]

some budget savings this year

+$200 million. 

Go through the budget and tell me where else we can save money and I'll rethink my stance. 

[KC-wildcat]

And for the record, I would love to agree with you guys.  I would love for the use of these credits to continue.  But, I guess financial solvency is more important to me than rehabbed buildings. 


The real shame is that these two concepts shouldn't be mutually exclusive. 

[FangKC]

Read the report Wildcat.  In the case studies, small investments in rehabbed buildings generated many times the financed amount in tax revenues to the state and economic activity and growth was higher in cities that used historic tax credits than ones that didn't.

[quote="zonk"]
Here's a link to a study done by St. Louis University last year on the impact of Historict Tax Credits:

https://www.mogrowth.com/includes/docum ... %20(2).pdf

Interesting reading on the impact of historic tax credits upon the state.
[/quote

[LenexatoKCMO]

And for the record, I would love to agree with you guys.  I would love for the use of these credits to continue.  But, I guess financial solvency is more important to me than rehabbed buildings. 


The real shame is that these two concepts shouldn't be mutually exclusive. 

Is the governer also backing cutting suburban development subsidies that come in the form of MoDot's sprawl promotion?

[KCMax]

Is the governer also backing cutting suburban development subsidies that come in the form of MoDot's sprawl promotion?

In particular, curtailing the use of TIF in affluent sprawled areas.

[FangKC]

Yeah, I'd like to see Missouri cut all the development and construction costs of new suburban highways, bridges, and interstate loops--that basically are subsidies for wealthy suburban land developers who develop on raw land, and promote urban sprawl.

At least historic tax credits are an attempt to rebuild urban land where infastructure already exists.

For example, The new Harley-Davidson plant in the Northland. Why are we building factories there when we have older industrial areas in need of new economic activity?   What if it would have been placed in the former GM Leeds plant. It's near I-435 and I-70 and has railroad access. It's also near thousands of poor people needing jobs on the East Side of KCMO.

Or what if the Harley plant had been build at the former Sheffeld Steel Complex at Independence Avenue and Hardesty? It's near 435 as well and has rail access.

Both of those sites could have handled the square footage and parking needs of the Harley plant, and been in the central city.

Much of the decline of the East Side has come as a result of manufacturing jobs that have been lost there that used to exist in abundance.

Many East Side leaders frequently cite that a major contributing factor to problems in their neighborhoods are lack of nearby employment.

[taxi]

TIFF and HTC's are not the same. Fang is correct, as is the report, of the economic impact. But all that aside, once you tear down a historic structure, you lose that forever. And I have absolutely no doubt that many of these old and important buildings that are part of our cultural fabric will not get developed without the credits. They are too expensive, too risky and too difficult to finance.

But only developers with very deep pockets and philanthropic intentions would be able to do it. Ones that could take huge risks, wait years for a neighborhood to come back, and building property values and rents to return. 

Unfortunately, there is only 1 Shirley.

I ain't no politician and I sure as hell don't know how to balance the budget (not even my own), but common sense and data backed up by research show that this is a bonehead move.

[loftguy]

The federal legislation for Historic Tax Credits remains in place and this will likely allow some projects to be completed, but most likely only by entities like DST, who typically have an overriding need for facilities and an underlying opportunity for profitability that will allow such ventures.  Or philanthropic activists like Shirley Helzberg.

However, the removal of a reasonable expectation of access to Missouri State Historic credits and the legislated inability to combine with Low/Moderate tax credits will bring to an end housing development in historic buildings of downtown Kansas City.

On this forum, it is often discussed in one form or another, that the most desirable residents (young, well educated, entrepreneurial) are being attracted to living downtown.  They are the future of our city and state economy.  We are at 95%+ occupancy in our downtown housing now, in all levels from luxury to subsidized.  That kind of figure indicates that people who want to be here are already being turned away.  Where do those people go?..... and they take their taxes, spending and often their jobs with them.

This is like GM or Ford closing their production to save money.

By the way, last year the state of Kansas removed their existing cap on Historic Tax Credits.

[KCMax]

On this forum, it is often discussed in one form or another, that the most desirable residents (young, well educated, entrepreneurial) are being attracted to living downtown.  They are the future of our city and state economy.  We are at 95%+ occupancy in our downtown housing now, in all levels from luxury to subsidized.  That kind of figure indicates that people who want to be here are already being turned away.  Where do those people go?..... and they take their taxes, spending and often their jobs with them.

Wow, is this true?  I'm not doubting you, I just find it incredible. This recession really came at the worst possible time for downtown KC.

[loftguy]

Wow, is this true? I don't suppose you have a cite? I'm not doubting you, I just find it incredible. This recession really came at the worst possible time for downtown KC.

Here's data posted by Ignatius on Nov.22nd.  It's from the Downtown Council.  Have to point out that something was flawed in their census.  Specifically the Single family home percentages Westside, Crown Center, Union Hill, Columbus Park, Hospital Hill, etc....
I am very familiar with single family in these areas and something is way out of wack.  Single family house rentals in each of these areas are in acute demand and are near impossible to find.  Their For Sale statistics leave me scratching my head too.

I'm also referencing the data collected by Boveri Realty Group in August, of all rentals, River to 31st/Woodland to State Line, which showed near 97% occupancy, other than Market Station in the River Market (then at 71%) and some rentals near 18th and Vine which were in the mid 80's percentile.  (There was also one low/mod building, Waltower?, which showed in the mid 80's)

http://forum.kcrag.com/index.php?topic=14453.60

[KCMax]

Group organizing in KC to support historic tax credits in Missouri

A kickoff meeting for what organizers hope will become a statewide voice for their cause is set for Friday at the Terrace on Grand, 1520 Grand Blvd. It?s called the Alliance for Investment, Jobs & Preservation.

[dangerboy]

Huh.  There has been a state-wide voice for historic tax credits for years, but they have never been able to get any significant participation from the KC area.

[KCMax]

The MO legislature has adjourned for the year and efforts to eliminate tax credits - including historic tax credits - have failed.

[KCMax]

MO House and Senate agree on a large economic incentives. While it should give KC more tools to combat KS poaching, it will close some historic tax credits and credits for low income housing.

http://www.kmbc.com/news/28611969/detail.html