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Missouri is among a handful of states that match federal tax credits for low-income housing. The credits are designed to finance construction of affordable housing for low-income Missourians. But less than half of every dollar allocated by the state to the program goes to housing construction. Here’s how it works:

STEP 1

The federal government gives the state an allotment of tax credits. Under state law, Missouri can match the federal credits. This year, Missouri could issue $145.3 million in federal credits and $145.3 million in state credits.

STEP 2

The 10-member Missouri Housing Development Commission takes applications from developers and chooses who gets credits. This year, 30 projects out of 92 were recommended for approval. The commission delayed releasing the credits until its next meeting March 14.

STEP 3

The project developers sell the credits to syndicators at a discount. The average price is 43 cents on the dollar.

STEP 4

Syndicators sell them to investors — insurance companies, corporations and wealthy individuals — who must own a stake in the housing project. The investors use the credits to offset tax obligations to the state of Missouri. But investors receive the credits only after the project is completed. Then, they are parceled out over a 10-year period. The syndicator guarantees the credit stream and must keep the housing units rented.

RESULT

If the state issues $100 million in state tax credits, about $43 million ends up building housing for low-income people. The rest is lost in an accounting haze or goes to federal taxes, investors and middlemen.

Virginia Young

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Virginia Young is the Jefferson City bureau chief for the St. Louis Post-Dispatch.