JEFFERSON CITY, Mo. — A bill meant to set a cap on the newly-revived low-income housing tax credits (LIHTC) program is set to be considered in the upper chamber this session.
“This is very similar to a bill that passed unanimously out of committee in 2019 and would mirror the changes adopted by the Missouri Workforce Housing Association [MOWHA] last fall when they returned the program after it sat idly for nearly three years,” sponsor Sen. Dan Hegeman said. “The bill would set this statutory cap to provide more assurance when assessing the financial condition of the state.”
Hegeman’s SB 85 would place a 70 percent cap on the tax credits allocated to the state. Additionally, the limit on tax credits available for projects funded by tax-exempt bonds would decrease from $6 million to $4 million.
Through the program, the MHDC would award a tax credit to an affordable housing developer using federal and state funds. An applicant would then sell the credits to an individual or group who expects to have a tax liability in the future. The cost of the sale would give the developer the money to build a housing project aimed at serving Missourians with lower incomes. The program was revived last year by a vote of the Missouri Housing Development Commission (MHDC) after being nullified in 2017 by then-Gov. Eric Greitens.
One witness, Shannon Cooper, testified in favor of the bill on behalf of the city of Kansas City. Cooper said the program would provide clear boundaries for the program and make the process more sustainable.
“These tax credit programs are valuable to the Kansas City area,” he said before the Senate Economic Development Committee. “Historically, we would be more comfortable with a program where we know what the parameters are and how we can avoid whatever happened to put the whole program in disarray, so we would like to have the security and know exactly what’s going on.”
Hegeman’s bill falls in line with MOWHA’s recommendations. In a previous interview, MOWHA Executive Director Jeff Smith told The Missouri Times the program was needed by Missourians, especially in the wake of the COVID-19 pandemic.
“The program was shut off three years ago, and during that time there’s been a big increase in the number of people on waitlists for affordable housing, and the need has become even greater during the pandemic,” Smith said. “We’re hopeful the revival of this program will begin to make a dent in those waitlists. This will mean thousands of people will get housing that’s safe, well built, and affordable.”
The version approved by the MDHC contained a 70 percent matching limit for the state, capping the amount of funding going to the program. It also included an accelerated pilot program which would allow developers to distribute an equal state and federal amount for the first five years and distribute the remaining state funds equally over the second half of the term. Hegeman said the program would cost more in the future if the cap is not established.