JEFFERSON CITY — A bill that would revive and reform the state’s most expensive tax credit program is poised for debate in the Missouri House.
The state has not issued any low-income housing tax credits since fiscal 2017, offering only federal tax credits to developers instead, after former Gov. Eric Greitens packed the Missouri Housing and Development Commission with opponents of the program.
The current version of the bill, as amended last week by the House General Laws Committee, caps the annual amount at $123 million or 72.5 percent of the state’s allocation of federal tax credits. The House Rules Legislative Oversight Committee approved it on Monday, clearing it for debate on the House floor before the legislative session ends next week.
As passed in the Senate, the bill sponsored by state Sen. Dan Hegeman, R-Cosby, set the cap at 72.5 percent of federal credits but had no fixed ceiling if the federal limit was increased.
Hegeman’s original bill set the cap at 50 percent and Hegeman intended to bring the amount down to $115 million, he said in February.
The current version has bipartisan backing of most members of the Boone County House delegation.
Low-income housing tax credit redemptions have ranged between $140 million and $170 million annually over the past five years. They totaled $169.1 million, 28.8 percent of all tax credit redemptions, in fiscal 2018.
Senators expressed concerns on the floor about developers pouring tax credit money into highly profitable housing projects they could not have built without it. The Tribune reported in 2017 that the 10 developers who received the most tax credits over the previous 10 years donated almost $3 million to state and local political committees reporting to the Missouri Ethics Commission.
Along with a firm cap, the General Laws Committee added new requirements reporting how credits are used. It would require developers to report to the Department of Revenue “the amount of credit allocated to each taxpayer owning an interest” in each project.
Taxpayers who want to sell credits would have to report the purchaser, the price received and the face value of the credit. The bill would also create a system for the Missouri Housing Development Commission to score applicants, who must prove they “received competitive bids” for the tax credits.
The Missouri House Conservative Caucus endorsed the reforms in the bill last week in a news release. The reforms “ensure this program operates in an efficient, transparent and accountable way that provides more housing for those in need at a lower price for taxpayers,” said Rep. Jered Taylor, R-Nixa and caucus co-chairman.
Hegeman and Rep. David Gregory, R-Sunset Hills and the bill’s House sponsor, both declined to comment on the bill Monday.
Gov. Mike Parson, a longtime backer of the program, has said he was concerned homeless veterans and rural Missourians might not have access to affordable housing without the credits.
The program’s benefits for veterans makes state Rep. Chuck Basye, R-Rocheport, favor a bill he said he is otherwise “not real crazy about.” Basye is a member of the General Laws Committee and the chairman of the House Veterans Committee.
Welcome Home Inc., a homeless veterans shelter and transitional housing complex in Columbia, has used low-income housing tax credits in the past and is hoping to expand, Basye said.
Boone County Family Resources, which serves people with developmental disabilities, and the Columbia Housing Authority have also used the tax credit program. CHA would not have been able to renovate public housing without the tax credits, said Rep. Kip Kendrick, D-Columbia.
“With meaningful reforms added to the program, I’m confident that we can hopefully get the program back up and going,” he said.
Rep. Martha Stevens, D-Columbia, echoed Kendrick’s support for reforms and said affordable housing is a statewide issue that needs to be addressed.
Rep. Cheri Toalson Reisch, R-Hallsville, said more housing options for low-income citizens would benefit her district.
The only local lawmaker not taking a definite stand was Rep. Sara Walsh, R-Ashland. She said she has not yet read the bill.
Senate Majority Leader Caleb Rowden, R-Columbia, signaled his support for low-income housing tax credits in March.
The question of who benefits most — taxpayers, developers or people with modest means looking for affordable housing — is disputed.
Missouri pays $289,000 annually to use an economic modeling tool called REMI to evaluate economic development projects. An audit of the low-income housing tax credit by the Arizona-based Rounds Consulting Group, underwritten by the Missouri Workforce Housing Association, called the REMI model “inappropriate and incomplete” for gauging economic program success.
Audits from three of the past four state auditors have all said the low-income housing tax credit program is inefficient and that the state Department of Economic Development provides the Legislature with overstated estimates of economic impact. Only 42 cents of every tax credit dollar issued actually funded the construction of low-income housing in 2017, according to the audit from that year.