ANALYSIS: Missouri governor delaying tax credits

Monday, June 21, 2010 | 12:01 a.m. CDT; updated 8:17 a.m. CDT, Monday, June 21, 2010

JEFFERSON CITY — While asserting new tax breaks are urgently needed for Ford Motor Co., Missouri Gov. Jay Nixon is delaying tax credits that could help finance tens of millions of dollars of development projects.

Nixon's two-sided approach to tax incentives came to light this past week. He first announced he was cutting $47 million from Missouri's existing portfolio of tax credits. Then Nixon announced he was calling a special legislative session to approve up to $150 million of new tax breaks over the next decade for Ford and other manufacturers.

While some companies will win, others may lose.

That has led to political sniping in the capital city. And it has left some would-be developers confused, frustrated and even near tears.

The raw emotions were on display this past week at a meeting of the Missouri Housing Development Commission, one of the first entities affected by Nixon's tax-credit freeze.

The commission oversees a state agency that functions like a bank, providing financing for housing projects for low- and middle-income income residents through tax-free bonds and tax credits. Most of its 10 members are appointed by the governor. But the governor, lieutenant governor, treasurer and attorney general also are members of the commission.

Over the past couple months, the housing commission has canceled or pared back its meeting agendas to avoid voting on tens of millions of dollars of tax credits for more than a dozen proposed housing developments in St. Louis, Kansas City and St. Joseph.

An e-mail obtained by The Associated Press shows the delay comes at the behest of Nixon's administration.

Nixon's liaison to the housing agency, Rex Burlison, sent a May 6 e-mail to State Treasurer Clint Zweifel, then the chairman of the commission, asking him to postpone meetings until a replacement can be chosen for executive director Pete Ramsel, who resigned March 1.

Zweifel then canceled a May 21 meeting at which tax credit applicants had been expecting a decision. After Lt. Gov. Peter Kinder threatened to force a meeting through a procedural maneuver, the housing commission ultimately met May 26. But the tax credits were not on the agenda. The commission met again Wednesday to approve a budget but again left the pending tax credit applications off the agenda.

New chairman Jeffrey Bay, a Kansas City attorney and recent Nixon appointee, said he wasn't comfortable considering projects without an executive director who could conduct a thorough review of applications.

But few people seem to believe the executive director vacancy is the only — or even primary — reason for the tax-credit delay.

"My understanding is (Nixon) has some concerns about tax credit programs across the state and wants to take a close look at those before they move forward," Zweifel said.

At last week's meeting, Kinder called the lack of an executive director a "flimsy" and "bogus" reason not to consider a financing revision needed for a St. Louis project that had been approved in February. Kinder, a likely challenger to Nixon in the 2012 elections, accused the governor of a strategy of delaying "until the developers are brought to their knees."

Burlison, in turn, accused Kinder of "shilling for" for a St. Louis project being developed by Paul McKee, a contributor to Kinder's campaign committee.

In the audience sat some sad-faced, tax-credit applicants.

Francie Broderick, the executive director of Places for People in St. Louis, was near tears as the commission quit without taking action on her proposal to renovate a building into 23 apartments for people with mental illnesses.

"It's a project that's desperately needed," she said. "We've invested money in putting the plans together for it, and we need to know because we have people who need housing immediately."

Kansas City area developer Tony Krsnich of the Landmark Investment Group was equally frustrated. He's seeking tax credits to renovate an old hotel into 40 apartments for people age 55 and older. While the state delays, the summer construction season slowly passes by.

"Without this MHDC piece, my project — and every project that's being talked about — is dead," Krsnich said. He added: "What this would mean to the economy is quality, affordable housing and jobs today."

Nixon also is focused on jobs — in particular the 3,700 that exist at Ford's assembly plant near Kansas City. He says new tax incentives are essential if Missouri wants to entice Ford to produce its next-generation of vehicles there.

The low-income housing tax credits, meanwhile, are not necessarily the most efficient means of economic development. A 2008 state audit determined that for every $1 of tax credits — which typically are sold by recipients — just 35 cents goes toward actually building the housing.

Nixon said his administration is making sure all tax credits are getting an adequate review before being issued.

"We will be slowing down some of the processes for some of those" tax credits, he said.

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