A Who’s-Who of state legislators for and against Missouri’s Historic Tax Credit program:

The following state senators and representatives are in support of the Historic Tax Credit program:

Senator Jeff Smith (D-4)

Senator Jane Cunningham (R-7)

Senator Tom Dempsey (R-23)

Senator David Pearce (R-31)

Senator Eric Schmitt (R-15)

Senator Wright-Jones (D-5)

Senator Jolie Justus (D-10)

Senator Rita Heard Days (D-14)

Senator Yvonne Wilson (D-9)

Senator Wes Shoemyer (D-18)

Representative Ron Richard (R-129) (Speaker of the House)

The following 6 senators, lead by Senator Lager, constitute the group of legislators who would place limitations on the Historic Tax Credit:

Senator Brad Lager (R-12)

Senator Jim Lembke (R-1)

Senator Jason Crowell (R-27)

Senator Matt Bartle (R-8)

Senator Luann Ridgeway (R-17)

Senator Chuck Purgason (R-33)

The following legislators are on-the-fence regarding the proposed limitations on Historic Tax Credits:

Senator Griesheimer (R-26) (Chair of Senate Economic Development Committee)

Representative Timothy Flook (R-34) (Chair of House Economic Development Committee)

Note: At this time, the majority of the House remains on the fence in relation to this issue.

FYI:

Map: Missouri Senatorial Districts

Map: Missouri House of Representatives Districts

***Find out who your Legislators are!

What are Historic Tax Credits?
Missouri is recognized nationally for its Historic Tax Credit program, which, since its inception in 1998, has spurred $4 billion in private investment (Missouri Preservation) and created 40,000 jobs, according to a 2008 analysis by top economic, Donovan Rypkema. The Historic Tax Credit program allows a tax credit equal to 25% of qualified expenditures associate with a historic redevelopment project. The Historic Tax Credits are available to a project of any size, and can be used for both commercial and residential purposes.

In St. Louis alone, Historic Tax Credits have been responsible for the dramatic redevelopment of the downtown center, as well as the restoration of significant historic properties such as the Chase Park Plaza, the Moolah, and the old Post Office Building. These Tax Credits have also contributed to the revitalization of historic neighborhoods across the city. The Historic Tax Credit program has had similar effects in other Missouri cities, including Springfield, Columbia, and Cape Girardeau, as well as smaller communities statewide.

The Fight over Historic Tax Credits
Missouri’s Historic Tax Credit is currently under fire in the State senate. Headed by  Senator Brad Lager, a group of Republican senators is seeking to set a 2 year sunset and a cap (between $50-100 million) on the state’s Historic Tax Credit program. To put this figure in perspective, two years ago the state awarded more than $171 million in Historic Tax Credits, while last year the amount was $162 million (sbj.net). Several of these so-called “reformers” would also like to subject the Historic Tax Credit to annual appropriations.

With only four weeks remaining in the current legislative session, the debate over Historic Tax Credits is expected to resurface on the Senate floor. St. Louis senator, Jeff Smith, for one, is committed to fighting against the proposed cap. It is his belief that no bill at all would be better than seeing one pass which includes the current proposed “reforms” to the Historic Tax Credit program.

Some Initial Talking Points

Historic Tax Credits create jobs and result in additional income for Missourians. In fiscal year 2007 alone, the historic preservation credit put over 4,900 Missourians to work. And, according to the foremost preservation economist in the United States, Historic Tax Credits have resulted in a total of 40,000 jobs since 1998. With a return to the state of over one dollar for each credit dollar issued, the Historic Tax Credit has resulted in $673 million direct and $700 million indirect additional income for Missouri taxpayers (Rypkema 2008).

Historic Tax Credits result in increased investment. More than $4 billion of investment has been leveraged throughout the state by the historic preservation tax credit. In FY2007 alone, amount leveraged totaled $729,637,669.

Historic tax credits affect the entire state of Missouri. According to the Missouri Coalition for Historic Preservation and Economic Development, between 1998 and 2006, more than 900 historic renovation projects were completed across the state of Missouri in 37 counties and 55 communities.

The vast majority of historic tax credits benefit small homeowners and developers. Since 2000, over 85% of projects have used under $1 million of tax credits, and 92.5% have been issued less than $2 million.

In addition, redevelopment projects that receive Historic Tax Credits employ many laborers from small communities across Missouri.

Historic preservation preserves the historic character of both residential and commercial communities. The biggest beneficiaries of historic preservation are local citizens, who work and live in distinctive, attractive places imbued with a sense of place.

Historic preservation is about stewardship and sustainability. Without the Historic Tax Credit program, buildings in many communities lie in a state disuse, which renders them economically obsolete without an available incentive. Historic preservation utilizes existing structures, and prevents the waste and expenditure that comes with demolition and new construction.

As a result of the Historic Tax Credit, Missouri leads the nation in historic preservation. The Historic Tax Credit has been so successful that several states, including Iowa, Massachusetts, Tennessee, North Carolina, Wisconsin and Maryland have made efforts to imitate the credit.

Capping the Historic Tax Credit will halt redevelopment and destroy the program. Renovated buildings must be completed and certified prior to the tax credit being issued. If developers/owners are not certain that a credit will be available, they will not make the initial investment. The credit is essential to making the project work.

Capping the Historic Tax Credit will benefit big developers and limit the availability of tax credits in small communities across Missouri. “If the credit is capped, and the credit run through an appropriations process, issuance of the credit will become a political process… A cap and appropriation will benefit the big developers who can afford to gain influence and work at getting credits full time (ecoabsence.blogspot.com).”

“Each year, the benefits of the Historic Tax Credit far exceed direct cost, boosting Missouri’s economy by more than one billion dollars per year (Rutgers 2001).”

HTCs create jobs and result in additional income for Missouri taxpayers. In fiscal year 2007, the historic preservation credit put over 4,900 Missourians to work – that’s more than double the jobs created over the past four years by the Quality Jobs Act. And, according to the foremost preservation economist in the United States, historic preservation credits have resulted in a total of 40,000 jobs since 1998. With a return to the state of over one dollar for each credit dollar issued, the HTC has result in $673 million direct and $700 million indirect additional income for Missouri taxpayers (Rypkema 2008). For every one million dollars of spending on historic rehabilitation, local income increases by $704,000 and 20.2 jobs are created. Those results significantly exceed payback from other types of state investment (e.g. one million dollars of manufacturing output adds an average of $470,000 to local household incomes and creates 13.9 jobs) (Rypkema 2008).

HTCs increase industry. The historic preservation credit program has enabled an entire industry of historic redevelopment to emerge throughout the state. Architects, engineers, consultants, lawyers, contractors, sub-contractors, accountants, and highly skilled construction laborers are employed as a direct result of historic tax credits. These jobs cannot be shipped overseas; they are done right here in Missouri. A prime example of this is Quaker Windows, which was founded in 1949 by Marge and Harold “Bud” Knoll, and now employs over 400 workers in Freeburg, Missouri. The company supplies custom windows for historic projects throughout the country – in the states of Missouri, New York, and others. Quaker Windows is just one of many Missouri small businesses that continue to exist as a direct result of the specialized historic supply industry.

HTC result in increased investment. More than $4 billion of investment has been leveraged throughout the state by the historic preservation tax credit. In FY2007 alone, amount leveraged totaled $729,637,669. The Southeast Missourian reports on the case of the Missourian in Cape Girardeau, which spent millions of dollars on improvements: “dollars, which it would not have spent otherwise, hiring local contractors and workers, buying new mechanicals, contracting for state-based expertise (much local) in design, architecture and historic preservation (semissourian).”

HTCs increase both state and local tax revenues. One million dollars of rehabilitation investment results in an $110,000 increase in state taxes and $92,000 in local taxes (Rypkema 2008).

Historic preservation results in revenue from heritage tourism. According to a recent study by the Center for Urban Policy Research at Rutgers University, historic preservation in Missouri results in $660 million annual revenue from heritage tourism. Again, annually, that’s 20,0777 jobs, $325 million in income, $574 million in gross state product, and $79 million in state and local taxes and in-state wealth creation of $506 million.

Historic buildings are natural incubators for small businesses. 90% of all businesses in the U.S. employ fewer than 20 people; 60% fewer than 5. One of the biggest costs for business of this size is rent. In downtowns and neighborhood commercial districts “a major contribution to the local economy is the relative affordability of older buildlings” (Rypkema 2008).

Historic buildings create opportunities for affordable housing. “For a long time affordability was a social service issue-how do we house the least fortunate among us. Today it has become a central economic development issue” (Rypkema 2008).

Historic communities provide proximity to daily needs for people of modest means. “People of modest means need more then just low rent. They also need proximity–to schools, shopping, work, and transportation. Where are those daily needs always nearby? In our older and historic neighborhoods” (Rypkema 2008)

According to Rypkema, historic preservation should be a central strategy of every community. Any way you look at it, historic preservation adds value.

There is legislation being debated today in the Missouri State Legislature that would put a cap on a program, that more than any other state program, has contributed to the revitalization of the City of St. Louis over the past decade. The attacks on the state’s Historic Tax Credit program are short-sighted and threaten to put the brakes on development activities in neighborhoods and downtowns all over the state.