Nixon's tax credit commission criticized

A pair of tax coalitions wasted little time criticizing Gov. Jay Nixon’s new Tax Credit Review Commission.

The Missouri Coalition for Historic Preservation and Economic Development and the Missouri Budget Project were critical of the commission one day after the commission was formed
July 21.

The Missouri Budget Project said Nixon has been unsuccessful at cutting tax-credit costs in the past, and the coalition’s top concern is lack of representation from those familiar with historic tax credits. However, Mark Gardner, president and general counsel of Gardner Capital Inc., a tax credit broker for affordable housing projects, and Springfield’s lone representative on the commission, believes he fairly can represent both sides’ needs.

At Gardner Capital, he is an attorney for developers in the tax credit process; a developer of tax credit projects; president of a property management company that managed his tax
credit portfolio; and a state and federal syndicator of tax credit projects.

Nixon named 25 business, community and legislative leaders to serve on the commission, charging them to review the state’s 61 tax credit programs and recommend ways to enhance the state’s return on investment. Other notables on the commission include: Alan Marble, president of Crowder College in Neosho; Sen. Matt Bartle, R-Lee’s Summit; and Bill Hall, of Hallmark in Kansas City.

“The argument that’s made by people who support historic tax credits is that while in a point in time when the state’s economy is suffering, the state tax credit’s an economic development tool and perhaps we should be supporting programs that support economic development,” said Gardner.

Most recently, Gardner Capital purchased the tax credits tied to Carthage’s Colonial Apartments in August 2009.

Since 2000, historic tax credits have generated more than $669 million in revenue for state and local governments and created 43,150 jobs, according to MCHPED.

Gardner said he expects opposition, but believes the historic tax credit program is an effective economic development tool.

“I also realize that we have certain realities we have to deal with. There’s a limit to how much the state can afford, particularly when state revenues are down,” Gardner said.
The program’s growth led to an unhealthy increase in the redemption of the credits when compared to the growth of Missouri’s general revenue, according to a 2009 Truman State University study. The average 2009 tax credit issued in the program was $482,340.

According to the study, the Missouri Department of Economic Development authorized $170 million in tax credits under the program in fiscal 2008, compared to $20 million in tax credits authorized in fiscal 1999.  

Gardner said the state is examining all programs, including the tax credit review program, to determine which can be run more efficiently, reduced or cut entirely.

Developers of Springfield projects that have benefited from historic tax credits could have seen their projects stall without the credits, according to Bob McCroskey, a commercial real estate agent who has served as listing agent for several developments using tax credits, including a current historic project at 203–205 W. Commercial St.

The applications are reviewed by the Department of Economic Development, but should the commission decide that an additional layer of review is necessary, McCroskey fears it will create another point where the process can stall.

“It clouds the deal and what’s going to happen is, especially in these times when banks aren’t as willing to loan money as they were, they’re more conservative, a lot of deals just aren’t going to happen,” McCroskey said.

Jerome Schlichter, St. Louis attorney, is hopeful that MCHPED’s efforts will keep that from happening. Schlichter helped with the effort to pass the credit program 12 years ago.

“We want to be sure that the commission has the information that’s been generated by studies that tax credits generate revenue,” Schlichter said.[[In-content Ad]]