The existence of the state historic tax credit —unfettered by a cap and at its current credit level is essential to the City’s (and the region’s) progress.
The current structure of the Missouri historic tax credit has encouraged development: developers know, as they begin spend the millions of dollars necessary to plan a major historic rehabilitation, that their efforts and risk will be offset in part by the tax credit if they correctly rehabilitate the property in accordance with historic standards. If developers think the credits will be “used up” due to a cap before they are ready to submit their applications, they will be far less inclined to risk time and predevelopment capital on the project and will seek areas to work — often in states other than Missouri in which the market is better and risk is far less.
As developers seek other projects —in other parts of Missouri, or, more likely, in states other than Missouri the state’s economy will suffer far more if Missouri’s historic tax credit continues to remain available in its present form (or with minor changes that the development market can tolerate).
Most of you probably know that the floor debate of the Missouri General Assembly is live-streamed on the Internet. If you have been following the discussion about the state’s historic tax credit, you have heard the word “predictability” thrown about by opponents of the credits.
That is a red herring.
Economic predictability is an elusive, impossible, contradictory, and even destructive aspiration.
Reducing the desirability of Missouri’s historic tax credit will reduce the income side of Missouri’s operating budget and make that side of the budget less predictable even if it makes the expense side more “predictable.”
Missouri’s economy is altered every day by events and economic circumstances over which state government has no control. By seeking predictability, we are really seeking stagnation, and stifling creativity and growth.
Instead of predictability, we should seek to alter those things we can control for the better and capitalize on Missouri’s advantages. This approach takes more courage than an approach that seeks budgetary predictability at the expense of progress, but it has the potential for far greater rewards.