JEFFERSON CITY, Mo. — Auditor Tom Schweich released an audit today of the state’s low-income housing tax credit program. He credited the program as a force in Missouri economic development, but is encouraging changes to enhance the program as it progresses.
“We’ve been able to give more than 40,000 people homes because of this program,” Schweich said. “As a matter of public policy, that is a very, very good thing.”
Schweich and some lawmakers say the state’s LIHTC program doesn’t create enough economic benefit for its cost, but the program’s defenders say that quantifying the benefits is not always easy.
Many conservative lawmakers are against eliminating the programs, saying eliminating it would allow more money to flow directly to government coffers to foster new state spending.
“There are some very effective tax credits, and we need to keep in mind where this money would flow if we did not have these economic development programs. I believe the state needs vehicles to create more jobs more than we need to fund more Department of Revenue databases or more DNR regulators,” Chuck Gatschenberger, R-St. Charles County, said.
According to the audit, only about 42 cents of every dollar spent actually goes into construction, and among LIHTC programs, Missouri’s is the largest in the country.
“Having our most vulnerable citizens living in quality, affordable housing has a value more than the ROI model,” said Rep. Vicki Englund, D-St. Louis County. “What is the ROI on the Department of Conservation or the Department of Public Safety? These programs all have a benefit to our citizens and I look forward to supporting them under Governor Nixon and in three years under Governor Koster.”
Executive Director of the Missouri Workforce Housing Association and former Missouri State Senator, Jeff Smith, is a vocal proponent of the LIHTC program. He says that the assertion that Missouri’s LIHTC program is the most expensive in the nation is not accurate.
“In New York City, they have the rent subsidization program that, by itself, is almost a billion dollars,” Smith said. “It serves a very similar purpose to Missouri’s LIHTC program, but it’s different. So this audit — and audits in the past — haven’t taken that into account. There are many, many states with programs that far exceed Missouri’s cost.”
Smith went on to say that much of the value created by LIHTC projects is simply never calculated accurately. When neighborhoods see revitalization after new housing projects, or when seniors are given a cheaper alternative than a Medicaid-funded nursing home, local communities see a positive impact that is hard to quantify in an audit, he says.
“It’s about one-quarter of the cost to put a senior citizen in a LIHTC project than in a nursing home,” Smith said. “Kids in LIHTC buildings are far more likely to graduate and, therefore, far less likely to be imprisoned or require taxpayer-funded benefits. And those benefits aren’t easy to calculate on an audit like this, but we are getting a very good return on investment.”
The program, which began under Gov. John Ashcroft and was enhanced by the legislature under Gov. Mel Carnahan in 1997, has been used more than the legislature originally calculated. “The [Missouri Housing Development Commission] has allocated essentially 100 percent of the federal amount since 1998,” according to the audit.
“We wanted lawmakers to have this data in front of them going into break so they would have time to review it,” Schweich said. “There’s going to be a substantial debate about how to make these programs more efficient and we want to contribute to that by providing some data and making some recommendations.”
But not every lawmaker sees a problem with the program.
“If Tom Schweich wants to tell us what laws to pass, he should run for the General Assembly,” Rep. Jeff Roorda, D-Barnhart, said. “Historic and low income [tax credits] have been responsible for tremendous economic growth and job creation in this state for many, many years.”
Previously, Senator John Lamping (R-St. Louis County) told The Missouri Times that “The perfect bill, for me, is a bill dealing strictly with Low-Income Housing and Historic Preservation Tax Credits, and that bill, the perfect bill, would allow us to cap these programs in some way and send that money back into the GR [general revenue] of our state to be put into other services like mental health or education.”
Lamping said the market would eventually self-correct to accommodate historic preservation or low-income housing projects, and that as long as neither program was completely eliminated, there would not be negative effects.
“As long as there is some form of historic preservation credit, then there is still a chance for some developers to take advantage of that, and I’ll take it,” Lamping said. “The fact that other states don’t have these credits, or don’t have them nearly to the same degree as Missouri, speaks volumes to the fact that this kind of development does happen on its own.”
Schweich is planning two more audits to be released in the next month on the historic preservation tax credit and the Brownfield tax credit. Schweich said that he decided to audit the three programs last year when it became evident that the legislature would be debating tax credits during session.
“There are few tax credit programs that are beneficial to the state but LIHTC happens to be one of those programs that spurs investments and helps grow communities,” Rep. Robert Cornejo, R-St. Charles County, said. “Growing communities benefits everyone from improving schools to an educated workforce spurring economic growth.”
Collin Reischman was the Managing Editor for The Missouri Times, and a graduate of Webster University with a Bachelor of Arts in Journalism.
