Saturday, July 24, 2010

Discussion with Lieutenant Governor Peter Kinder on Historic Tax Credits

My recent post on the status of the historic tax credit ("HTC") program received some interesting responses, with Jeff Rainford (Chief of Staff to City of St. Louis Mayor Francis Slay) saying that the Department of Economic Development is "trying to curtail the program" but that a governor-appointed commission "hopefully will produce a compromise that everyone can live with."  On Twitter, Lieutenant Governor Peter Kinder described the uncertainty created in the hugely successful program as a "devastating body blow."

Shortly thereafter, Governor Nixon announced the formation of a commission to review state tax credits, including HTCs.  While the Missouri Coalition for Historic Preservation and Economic Develoment quickly denounced the governor's move, Mayor Slay expressed his belief that "the governor's new tax credit panel will consider our issues."

Yesterday, I discussed the status of the HTC program with Lieutenant Governor Kinder, a Republican who has often clashed with Governor Nixon on tax credits (and, of course, many other issues) and has positioned himself as an ally of Mayor Slay on the tax credit issue.  I first noted that use of the HTC program has recently dropped drastically, and asked him the extent to which he attributes that to general economic conditions as opposed to the uncertainty that appears to have been created in the tax credit market.

Lieutenant Governor Kinder: "I’ve not done any detailed studies so I can merely say that the uncertainty and noise coming out of Jefferson City certainly has not helped. And a great deal of that noise has been generated by the executive branch of the office of the governor and his own personal pronouncements on the issue which I think are half-baked and ill-informed. I’m sure that it also involves economic factors and the larger economy, and the real estate market."

The lieutenant governor stated that the "uncertainty and noise" relates not only to HTCs. 

Lieutenant Governor Kinder“And it takes many forms.  That commission (the Missouri Housing Development Commission) I serve on with State Treasurer, Attorney General and Governor, has existed since 1968. We’ve had governors pretty equally of both parties since that time, and no governor has ever attempted to shut down the work of the commission until now. Literally come out and say, as they have, that their intention is to slow down the work of the commission by not holding meetings, by delaying meetings, and canceling meetings. And I’ve been pressing since May, when they canceled the May meeting, to get another meeting and I’m running into a stone wall of opposition and indifference. That’s a big part of this, what Nixon’s shut down.”

I asked the lieutenant governor about the new "expanded review process" that tax credit applicants have recently been subjected to by DED.  In particular, I wanted to know whether he thinks there is a legal basis for this process (and/or the general delay in application approvals), and if the Governor's actions are within the proper scope of his executive/administrative authority.

Lieutenant Governor Kinder:  “God only knows what the expanded review process is.  There needs to be a legal basis for it. Or else we’re down into the realm of political, discretionary issuance of tax credits, which I have called a step toward a Blagojevich-style of politics in Missouri, which we have never had and don’t want.”

Regarding the new commission appointed by Governor Nixon:

Lieutenant Governor Kinder “I do not think that the commission is a good idea. I think it is a usurpation of the elected representatives of the people—the members of the House and the Senate, sitting in the General Assembly.

And I do not accept that it’s a binary choice between this money for tax credits and education.  By the way, let’s assume arguendo that that is a valid point. If you accept that premise, why are the mental health people excluded from the table? Why are the social workers excluded from the table? Why are people that are advocates for correctional reform excluded from the table? If you accept their premise, that this is denying resources to other parts of state government, then everyone should be at the table. But we’ve picked out six representatives of education and said, you have a seat on this commission.

The commission is fundamentally flawed in its concept in my opinion, that these people will deliberate the issue and give us the report we need, when we have elected members of the House and Senate to do that job. And there has been a lively debate about it, and the governor has not been able to get what he wants. So now we’re going to have this commission, which I guess gives him a better chance of getting what he wants.

There is another problem that is pointed out in the [Coalition] press release you referenced that I totally agree with. I’m from small-town Missouri—Cape Girardeau—and I’ve seen the credits do good work in the Fayettes, the Neoshos, the Joplins, the Cape Girardeaus, the Hannibals, and towns all over this state. And no one is representing those Main Street groups that have worked for more than a decade to revitalize their small and medium-sized towns--they don’t have any representation on here.

So I think this commission should be on the defensive. I think their first task is to justify themselves. It is transparent what the governor is up to, and I’d like him to come to the Housing Development Commission sometime—to take one example—and tell us why he’s canceling meetings and delaying meetings. His strategy is to bring developers to his knees by slowing the issuance of tax credits. There are huge, major regional banks that are up in arms about this, who are very alarmed [the lieutenant governor named one such bank, but I have elected not to publish its name here]. The Governor cites the fact that Missouri is #1 in tax credits in the nation, as if that’s a reason to hang our head in shame, when maybe it’s a good thing. And we ought to have that debate. I’m not sure that debate will go on at this commission."

The lieutenant governor shared his thoughts on the effect changes to the HTC program may have on the City of St. Louis, particularly the north side.

Lieutenant Governor Kinder"Here’s another aspect of it. Downtown has benefited greatly [from the HTC program]. Soulard has seen some benefit. The Central West End has seen benefit. You go up on the north side, you talk to some of those aldermen—they’re not in my party but I talk to them on a regular basis, and attend some of their functions, like Alderman Antonio French or Alderman Jeffrey Boyd—and you know what they say? All those areas I just mentioned to you, Downtown, Soulard, Central West End , other parts of town, they benefited—but now, just when the groups on the north side get ready to line up for their credits, the governor wants to yank the rug out from under them. It makes it that much more difficult, if not impossible, for them to access these credits that work so well.” He also said that the north side can take off “if it’s not strangled in the cradle.”

The lieutenant governor concluded by saying that, for now, the HTC program should be kept in its current form.

Lieutenant Governor Kinder:  “There was already a $140 million cap imposed last year. They no sooner got that than they started making all these other demands. And by the way, the market is right below the cap, so it’s sort of a fictional issue. We’re not bumping up against that cap this year, nor are we likely to anytime soon.  For now, yes [leave the program as-is]. Now, can we have a debate? Sure we can have a debate. Nobody should fear this ongoing discussion."

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