Preserving the state historic tax credits

[dangerboy]

The state tax credits for rehabbing historic buildings have been a critical tool for the redevelopment of Downtown. Unfortunately they are in a precarious position in Jeff City and have to be defended every year.

http://www.bizjournals.com/stlouis/stor ... rial2.html


This year will be worse then others. First, Baby Blunt wants to do a full review of all tax credits to find hard data that they are providing a return on the investment. Second, the governor and General Assembly will try increase school funding without raising taxes - that means cutting from elsewhere. Third, they still have to find money to cover the millions moved to MoDOT by Amendment 3.

So, now would be a good time write your state reps and express support for keeping them. Especially if you live and/or work in a building has benefited from the program.

http://www.senate.mo.gov/04info/leg_lookup.htm

[staubio]

Argh, Blunt is already screwing everything up!

This is a hard sell. It probably doesn't provide a hard ROI because you can't really attach a value to saving an amazing, historic building, and I wouldn't expect baby Blunt to understand.

Sorry, I don't want to make this go political -- but this is relevant to development.

In any case, the historic tax credit probably isn't garnering a great return, but it is a good way to use tax policy to drive GOOD behavior in the public interest.

[dangerboy]

I'm no fan of Baby Blunt, but I think it's a good idea to review the entire economic development program. And I do think there should be some hard numbers for the historic tax credits... They should be able to count the number of businesses, residents, and employees in the buildings that received the credits.

[staubio]

I'm no fan of Baby Blunt, but I think it's a good idea to review the entire economic development program. And I do think there should be some hard numbers for the historic tax credits... They should be able to count the number of businesses, residents, and employees in the buildings that received the credits.

But put that number up against the same developments in new buildings and it won't hold.

[DiggityDawg]

Yikes...I live in the Ellison, which was renovated under this type of plan.

[dangerboy]

More info and web site at http://www.savehistorictaxcredit.org in St. Louis. Go send them some KC love.

There are two specific bills at the moment. One would limit the tax credits to residential buildings already on the National Register, leaving no support for buildings that either aren't on the Register or are being converted from industrial or office uses. This would be devastating for Kansas City.

The other would set a yearly cap of $125 million statewide, and leave the cities to fight over a limited supply.

[FangKC]

State Task Force Proposes Major Cuts and Restrictions to Historic Tax Credit Program

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, said Elizabeth Rosin.

The task force also is recommending a $2 million historic tax credit cap for each project.

https://cityscenekc.com/state-task-forc ... t-program/

[earthling]

At least many buildings downtown have already received it, would be worse if downtown momentum just getting started. Are there many other building candidates downtown that may request?

[FangKC]

Off the top of my head, these buildings could be affected:

Kemper Arena repurposing.
Mark Twain conversion.
Any renovation of the Board of Education building at 12th and McGee.
Conversion of the Midland Office Tower at 13th and Baltimore.
Boone Theater restoration in the Jazz District.
Restoration of the Water Department & Public Works buildings on Vine.
Renovation of numerous retail buildings along Troost.
Hawthorne Plaza Apartment Building at 39th and Main.
The retail building on the SW corner of 27th and Troost.
Many apartment buildings east of Troost along Linwood and Armour need renovation.
Various former KCPSD schools that still need repurposing.

Keep in mind that if the credits program is capped even more, we are competing with every municipality in the state with historic buildings that need renovation (but mostly St. Louis).

[FangKC]

Mayor James Defends Missouri Historic Tax Credit Program, Says Jeff City: “Doesn’t Like Cities”

https://cityscenekc.com/mayor-james-def ... ke-cities/

[FangKC]

Posted on Facebook by Rosin Preservation


Over the past several years we have been deeply involved with efforts to improve the Missouri Historic Tax Credit. After a frustrating end of session last year, we are thrilled to share both administrative and legislative changes to the program. The administrative changes go in to effect July 1, while the legislative changes go into effect on August 28.
These are game changers! Let us know if you have questions - or a project - we can help you with.
-----------------
DED Rules Changes – effective 1 July 2024

• Open (rolling) application cycle
o All applications scoring over 70 points will be forwarded to SHPO.
• Location points awarded to projects within a locally designated Enhanced Enterprise Zone (EEZ).
• Pre-application stabilization costs (up to 10% of QRE) eligible for HTCs up to one year prior to application.
• Allocation with conditional Part 2 approval.
• QCT projects awarded from QCT cap until exhausted, then from general cap.
• Cap on overhead and profit combined to a maximum of 10% of QRE.
• Excess credits applications are not rescored if the original application was scored.
• All credits authorized in the order received per electronic time stamp (via Submittable).

HB2062 Legislative Changes – effect 28 August 2024

• Credit boosted to 35% for projects in counties outside City of St. Louis and Kansas City.
• Non-profits can apply for MO HTCs.
• Rehabilitation of all historic schools and theaters would fall under the small project exemption regardless of proposed use.
• MO HTC application can be submitted after submittal of draft NR or Federal Part 1.
• SHPO review period is limited to 60 days with no recourse for additional review/comment after that period.
• All pre-application costs for stabilization and investigative assessments (up to 10% of QRE) eligible for HTCs for 35% projects.
• Proof of financing must be submitted within 120 days after allocation (up from 60 days).
• Begin physical work and incur 10% of QRE within 24 months from allocation (up from 9 months).
• DED must issue 75% of credits within 75 days after receipt of complete Final application. Complete application includes review by SHPO.
• Creates an appeals process.

https://www.facebook.com/RosinPreservat ... 6xHsWEg8Yl

[FangKC]

The tax credit appears to have gone from 25 to 35 percent in Missouri outside the municipalities of St. Louis and Kansas City. When added to the federal historic tax credit of 20 percent, that would be a 55 percent tax credit on eligible projects. This is great news for smaller cities and towns that probably can't give some local subsidy to help restore structures.

The other thing I'm curious about is the change regarding the rehabilitation of all historic schools and theaters would fall under the small project exemption regardless of the proposed use. Can anyone tell us more about this?

Re: Non-profits can apply for MO HTCs. I'm assuming non-profits pay no taxes, so how would they claim tax credits? Would the state just reimburse them directly for restoration expenses once they have provided documentation and filled out the proper forms?

Re: Pre-application stabilization costs (up to 10% of QRE) eligible for HTCs up to one year prior to application. Does this mean developers and non-profit entities can be reimbursed for emergency stabilization expenses for buildings not listed on the National Register? Is this change to make it easier to save buildings facing demolition that aren't listed buildings, but would likely be eligible and approved later? Examples would be situations like what happened with the Cosby Hotel and Seiden's Fur building.

[taxi]

The tax credit appears to have gone from 25 to 35 percent in Missouri outside the municipalities of St. Louis and Kansas City. When added to the federal historic tax credit of 20 percent, that would be a 55 percent tax credit on eligible projects. This is great news for smaller cities and towns that probably can't give some local subsidy to help restore structures.

Indeed. Not all certified historic rehabs use the federal credits and many will sell the state credits, so this is a big deal.

The other thing I'm curious about is the change regarding the rehabilitation of all historic schools and theaters would fall under the small project exemption regardless of the proposed use. Can anyone tell us more about this?

Not sure, but those structures are challenging to rehab under some of the current restrictions, so it sounds like this might make it easier to get credits for these projects.

Re: Non-profits can apply for MO HTCs. I'm assuming non-profits pay no taxes, so how would they claim tax credits? Would the state just reimburse them directly for restoration expenses once they have provided documentation and filled out the proper forms?

Bigger projects are usually syndicated by banks, which use the federal credits themselves and that makes it easier for them to finance those projects. And again, the non-profits most likely sell the state credits. When I did mine in 2003 and 2010, they sold for $0.89 per credit.

Re: Pre-application stabilization costs (up to 10% of QRE) eligible for HTCs up to one year prior to application. Does this mean developers and non-profit entities can be reimbursed for emergency stabilization expenses for buildings not listed on the National Register? Is this change to make it easier to save buildings facing demolition that aren't listed buildings, but would likely be eligible and approved later? Examples would be situations like what happened with the Cosby Hotel and Seiden's Fur building.

Yes, I think so. Previously, nothing was allowed until all was approved by the SHPO. And/or you might have to fight tooth and nail to get those expenses qualified.

While the MO HTC is a generous program, the administration of the process has been exceedingly difficult and tedious. During my rehabs, I was told by a reliable source that the MO DED was instructed to delay issuing the credits as long as possible and diminish them as much as possible. I recall fighting over tiny receipts and being continuously asked for mundane details.

[FangKC]

This is common in programs when Republicans control state government, or when legislation is passed when the GOP controls Congress. The goal is to make accessing programs so difficult that citizens won't apply. It also benefits large developers who can afford to employ attorneys and firms like Rosin Preservation to get the tax credits approved.

It's too bad because many historic structures in small towns in these legislators' districts would benefit from the program, and help revitalize their downtowns and main streets. Hopefully, the changes will help that happen more often.