Despite difficult financial times, Missouri
legislators worked diligently to craft a balanced 2003 state budget. One
proposal that received consideration during the 2002 session was a change
to Missouris Historic Structures Rehabilitation Tax Credit to provide
needed flexibility to control its growth. The credit was designed to stimulate
economic growth through the rehabilitation of existing historic structures
by providing a financial incentive of up to 25 percent of qualified costs
and expenses made for historic property rehabilitations.
In 1998, the programs first year, $2.9 million in these historic
preservation credits were redeemed. However, utilization of these credits
has so vastly expanded that the Missouri Department of Economic Development
has projected $94 million in credits will be redeemed in 2003an
increase of more than 3,100 percent in six years. While the department
also indicates that every state dollar invested in this program generates
$1.10 in Missouris economy, tenuous economic circumstances have
led to speculation whether our state can continue to afford this program
at its current level without hindering vital state services.
When faced with prosperous times, tax credit programs provide an extraordinary
boost to an expanding economy. In financial times like these, however,
the state must focus available resources for vital programs and mandatory
spending before providing economic expansion opportunities through historic
preservation. State statutes regarding the redemption of Historic Structures
Tax Credits provide lawmakers with no tools to control this extraordinary
level of growth. Rather, these credits are treated as an entitlement to
anyone that qualifies and chooses to redeem them. With more difficult
fiscal years in sight, Missouri would be well served through a well-reasoned,
long-term change in state statutes to allow legislators needed flexibility
to control future growth in historic preservation tax credits.
Shannon Cooper is the representative from the 120th District to the
Missouri House of Representatives. He may be reached by phone at 573.751.1484
or by e-mail at email@example.com.
Real estate expert Donovan D. Rypkema notes
that "the history of the preservation movement has been one that
was largely the preservation of historic structures as an end in itself.
Today the cutting edge of preservation isnt as an end in itself,
but as a vehicle for economic development." With Kansas Citys
focus on revitalization of the urban core, Missouris 25-percent
preservation tax credit, particularly when coupled with the 20-percent
federal rehabilitation tax credit, provides the answer to the challenge
"reuse or demolish."
The Historic Preservation Tax Credit enacted by the Missouri legislature
in 1998 endorsed the concept that many historic buildings retain a marketable
value. Those supporting the legislation believed a structure in use generated
more revenue than as a vacant lot or surface parking lot. A recent study
of the Missouri historic tax credit by the Center for Urban Policy Research
at Rutgers University affirms this.
The study indicates that from 1998 through August 2001, redeemed Missouri
tax credits of $74 million generated $346 million in rehabilitation expenditures.
This translated to multiple benefits for the state:
$212 million in income
$283 million in gross state product
$25 million in state and local taxes
$249 million in in-state wealth
Without the tax credits, Kansas City would never have seen the rebirth
of Garment District, River Market or Crosstown lofts; the Hotel Phillips;
Crossroads District buildings; or the new Downtown Public Library building
Until recently, tax-credit projects have been focused in distressed areas
with higher population densities, significant minority presence, lower
household incomes, older housing stock, higher vacancy rates and lower
owner occupancy than the state as a whole. Suburban and rural communities,
however, are beginning to use the credits as well. Statistics tell that
the continued use of the preservation tax credits will prove one of the
best tools for revitalization of Missouris urban and rural communities.
Jane Fifield Flynn is a preservation curmudgeon and immediate
past president of the Historic Kansas City Foundation. She may be reached