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Tax Credit Legislation
After a decade of invigorating communities and producing thousands of jobs in Missouri, historic tax credit projects came under threat in the state legislature this session. Ironically, this program, which has created some 40,000 jobs since it started in 1998, was altered as part of the leading economic development bill for this session.
After months of negotiations, the Missouri Legislature passed a bill in May that included changes to the state's historic tax credit program. For the first time ever, the program will have an annual cap on the amount of tax credits that can be authorized. “Luckily, we were able to get a relatively high cap and a small deal exemption, and it looks like the program will continue to work much as it has been, at least for the next few years,” said Deb Sheals, the chair of Missouri Preservation’s Public Policy Committee.
The legislation imposes an annual cap of $140 million for large projects, while small projects (under $275,000 in credits) will not be capped. How do these numbers stack up to last year? In FY2008 there were $161 million in tax credits issued to projects. Small projects made up about $20 million of that amount. So that leaves only $1 million of credits that would have been denied allocation for 2008, and those credits would be first in line for authorization the following fiscal year.
The small deal exemption is critical, as “Mom and Pop” generally do not have the resources to deal with the financial uncertainties of a capped program. It is also very good news for preservation in general, as small projects made up 76 percent of all historic tax credit projects in FY2008. Although the number of small projects has been high, the dollar total in tax credits has been relatively low. The new legislation keeps tax credit awards predictable for the state, while keeping the program user-friendly for Main Street type projects. Peter Noonan of Commerce Bank deserves credit for coming up with this proposal and keeping it alive throughout the contentious session.
Other important details include the following:
Owner-occupied residences will have a per project cap of $250,000 in credits.
Projects currently underway will not be subject to the cap. The cap will apply to projects approved after January 1, 2010.
Legislators found middle ground thanks to the persistence and cooperation of many people. Our members did a great job of letting our legislators know how well this program works!
Missouri Preservation would like to thank the Missouri Coalition for Historic Preservation and Economic Development, Peter Noonan of Commerce Bank, the National Trust for Historic Preservation, and our many members who took the time to make calls, write letters, testify at hearings, and send constant reminders to our legislators how important this program is to Missouri.
Mark your calendar for the Historic Tax Credit Workshop at the Annual Statewide Preservation Conference on Wednesday, November 4, in Independence, when new procedures and guidelines for the historic tax credit program will be reviewed.
- Reprinted from Summer 2009 Newsletter
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