Missouri's state historic
tax credit program has put us at the cutting edge of the building preservation movement. Essentially, individuals and developers can receive state tax credits of 25% of all eligible renovation costs on qualifying buildings. This serves to stimulate renovation work and revitalization and make possible projects that would not otherwise get completed. The Missouri state historic tax credit program is administered by the Department of Natural Resources and the Department of Economic Development.
Unfortunately, this wildly successful program is under constant attack in the Missouri legislature. As of the posting of this article, the most recent attack comes from Senate Bill 406, sponsored by Senator Chuck Gross. This bill seeks to cap state tax credits to 3% of the state budget, effectively scuttling the state historic tax credit as a redevelopment tool. This is a poor approach for two primary reasons:
- Historic numbers show that the state has brought in $1.25 in tax revenue, directly attributable to historic tax credit projects, for every dollar given in tax credits. This is a net gain of 25% return on investment, excluding the unmeasureable benefits of community redevelopment and historic preservation. We should be looking to expand the program, not limit it.
- The credit is not issued until after the project is complete - there is no risk to the state. However, homeowners and developers would be much less likely to risk their own dollars without a guarantee that the tax credit would be available at the conclusion of their projects.
Recently, the legislature passed a bill allowing the DED to impose a fee of up to 2.5% of the credits requested. This amounts to a "back door" decrease of the tax credits.
Let's do the math on a sample project:
$200,000 in qualified renovation costs X 25% = $50,000 potential HTC
2.5% fee x $50,000 HTC = $1,250
$50,000 HTC - $1,250 fee = $48,750 net Historic Tax Credit
If, as proponents claim, over the history of the program, each dollar that the state grants in historic tax credits has generated $1.25 in direct state revenue, then this fee will actually result in a net loss of state revenue.
(Source: http://www.savehistorictaxcredit.org/HTC.pdf)
Then again, a fee is easier to measure than net economic impact. Your legislators at work....
For more frequent updates on this issue and more in-depth discussion, visit savehistorictaxcredit.org)
