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JCAR postpones full decision on new DED Historic Preservation Tax Credit rules

JEFFERSON CITY, Mo. — While a General Assembly statutory committee failed to block certain proposed Historic Preservation Tax Credit rules, it agreed to meet again Friday to relook at another provision.  

The regulations from the Department of Economic Development (DED) came under scrutiny Tuesday morning dearing a lengthy — and oftentimes technical — hearing before the Joint Committee on Administrative Rules (JCAR) on its proposed rules for the Historic Preservation Tax Credit application and program. 

The rules stemmed from the passage of SB 590 in 2018, legislation championed by Sen. Dan Hegeman which, in part, lowered the tax cap from $140 million to $90 million for the rehabilitation of historic structures after the 2018 fiscal year. It allowed DED to activate an additional $30 million for the Historic Preservation Tax Credits for projects located in a qualified census tract — an area with at least a 20 percent poverty rate as determined by DED. 

JCAR, a bipartisan committee which reviews state agency rule changes to ensure compliance with Missouri law, was unable to reject the rules Tuesday morning as a majority of the entire committee did not vote to do so; those changes will be able to go into effect this week. 

It did postpone a decision regarding a certain provision related to the definition and list of qualified rehabilitation expenditures (QRE), however. And since JCAR only has 30 days of jurisdiction beginning with the proposal filing, it will hold another meeting on Friday at 11 a.m. in Room 117A in the Capitol building to discuss the provision in question. 

Should the committee decline to approve the provision, it will present resolutions to the House and Senate at the start of next year’s session regarding its disapproval. 

The committee failed to block rule changes related to qualified census tracts, applications for excess credits, phased projects, and developer fees. 

The Joint Committee on Administrative Rules will meet again on Friday to revisit a provision regarding a certain provision related to the definition and list of qualified rehabilitation expenditures (THE MISSOURI TIMES/HUNTER BASSLER).

Michael Lanahan, director of business and community solutions for DED, said his team is “working internally” and discussing JCAR’s concerns with the QRE component. 

“We have this fine balance of really trying to be customer-centric and enabling high-quality HPTC projects across the state and making sure we’re great stewards of taxpayer resources,” Lanahan told The Missouri Times. “If there’s a way we can make it clearer, we’re certainly open to that so we’ll take a good, hard look at that over the next couple of days.” 

Opponents argued certain rule changes were in contradiction with state law or needed further clarification. 

Steven Stogel, a consultant for the nonprofit Historic Revitalization for Missouri (HRM), took umbrage with “two technical points” related to excess credits and phased projects. He argued the DED should clearly allow projects that meet the transition rule “be governed by the law before SB 590” was enacted. He did note HRM was overall supportive of the 2018 Senate bill. 

“The transition rule was designed to protect projects that are underway because projects take a long time,” Stogel told the committee. 

Lanahan argued the excess credit rules pertained to new applications — so transition rules were not applicable, making it a “nonissue.” 

“If there’s a way we can make it clearer, we’re certainly open to that so we’ll take a good, hard look at that over the next couple of days.”

“It’s not unreasonable to see ambiguity in the way the statute is written, and I think it’s not unreasonable to take a closer look at why this department chose to interpret it in one way when I think that members of this committee and certainly members of the entire General Assembly at the time they voted look at it this way,” Rep. Gina Mitten, a Democrat, said during the hearing. “I think arguments can be made on every single one of these points that these rules exceeded the authority of the statute.” 

But Republican Sen. Bill White pushed back, saying the committee wasn’t to make a determination on policy but whether it contradicted the law: “I don’t see how you can say it violates statute.” 

With Republican Rep. Nick Shroer as its chairman and GOP Sen. Wayne Wallingford as its vice chair, JCAR is a bipartisan group of state representatives and senators charged with reviewing rules and regulations filed by state agencies for compliance with Missouri law. It receives, on average, more than 1,800 filings per year to review, The Missouri Times previously reported

Other committee members include: Sens. Jason Holsman, Bob Onder, Scott Sifton, and Bill White along with Reps. Ben Baker, Peter Merideth, Gina Mitten, and Dean Plocher.