Missouri’s low-income housing tax credit (LIHTC) program was shelved three years by then-Gov. Eric Greitens after criticism from the state government. But last week, the Missouri Housing Development Commission (MHDC) voted to revive it.
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 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.
Missouri Workforce Housing Association (MOWHA) Executive Director Jeff Smith said the rebooted program would be especially beneficial 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 told The Missouri Times. “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.”
Smith said the process ensured tax credits can’t be redeemed until the units meet qualifying standards as evaluated by the state.
The money from the tax credit would go toward housing a wide range of demographics: young adults and seniors, rural and urban individuals, people with disabilities, veterans, and more in need of affordable housing, according to Smith. He said the credits would benefit the state because it would take away from using state funds to house people in Medicaid-funded housing.
Greitens zeroed-out the state’s contribution to the program in 2017, nullifying its use until last week’s vote.
The version approved by the MDHC last week contained a 70 percent matching limit for the state, capping the amount of funds 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.
The total amount of money distributed would remain the same, but the cost to the state will increase over the first five years.
Sen. Dan Hegeman, who sponsored a bill to set the state cap at 72 percent of the federal allotment this legislative session, said the changes were a start in reconciling the concerns the legislature had with the program.
“Now we’ve got a cap on the program, we have a limit on how much we’re willing to put into that program,” Hegeman said. “They also adopted a scoring rubric which I hope they can be transparent with so that Missouri knows what it’s paying for.”
But Hegeman also warned the rebooted program would have an impact on the state budget.
“That acceleration will take more money away from the incoming revenue as it goes forward,” he said. “In a time where we have a lot of pressure on the budget, this adds to it — at least in the first few years. Once it matures, it will even out, but to begin with, it will have an impact.”.
Smith said the deadline for developers to apply for the program is Oct. 31 and credits would be distributed in early December.