JEFFERSON CITY — A committee of Missouri’s housing commission is recommending that the state expand a pilot program that pays out low-income housing tax credits faster in an effort to boost prices for the credits in a program long criticized for inefficiency.
Missouri Treasurer Scott Fitzpatrick, who sits on the Missouri Housing Development Commission board, announced Tuesday a committee he chairs will push for half of the state’s low-income tax credits to be included in the accelerated redemption program. The committee’s report found that frontloading the tax credits during the 10-year payout period for low-income housing projects increased the credit price to 67.5 cents on the dollar, up 9 cents from regular credit prices last year and up 10 cents from 2017 prices.
“The accelerated redemption pilot program led to a significant increase in pricing for low-income housing tax credits meaning your tax dollars are being spent more efficiently and more low-income housing can be built as a result,” Fitzpatrick, who chaired the study committee, said in a statement.
The state housing commission typically selects rent-controlled developments to receive both state and federal low income tax credits around the end of the year under a vetting process that will begin in the coming months. Big money is at stake: In December, the commission allocated a pool of state and federal tax credits that, over a decade, are worth close to $300 million — $17 million a year from the federal government and $12 million a year from the state.
Despite the Legislature’s failure to make changes, the state commission has a new pilot program designed to boost the credit’s efficiency.
When Missouri restarted its state low-income housing tax program last year — after three years of issuing only federal credits following former Gov. Eric Greitens’ move to kill the state program in 2017 — it included 20% of the projects selected for state credits in the accelerated redemption program.
In an interview, Fitzpatrick said he expected the commission to endorse expanding the pilot program, saying six of its 10 members supported it on the study committee. Fitzpatrick said some resistance to the change from the tax credit investor community has waned because they’ve seen they can achieve the same rate of return under the program.
“The data speaks for itself,” he said of the pilot program.
The state’s low-income housing tax credit program has faced criticism from both Democrats and Republicans over the years because of the low prices for state credits, which are used to raise money to build affordable housing but have some years fetched as little as 25 cents on the dollar.
Among the big winners locally: McCormack Baron Salazar’s rehab of Preservation Square.
Shortening the state credits’ 10-year payout has been one area reformers have long pointed to as an easy fix — the sooner a credit can get into an investors’ hands, the more valuable it is. Out of 19 states with low-income tax credit programs, 10 of them have payouts less than 10 years, according to the Missouri housing committee’s report.
Missouri’s program pays out about 70% of the credits in the first five years. The committee’s report said the higher prices that generates would equate to 63 more housing units a year, based on last year’s average price-per unit of $181,867.
Fitzpatrick, a former legislator from Cassville who chaired the House Budget Committee before Gov. Mike Parson appointed him as treasurer in 2018, said reformers had always tried to change the program through the Legislature. But after the 2019 failure of a reform bill, the commission began to look at changes it could make on its own. He said this was among the first times reform has “been discussed in a serious way at a commission level.”