The House Committee on Economic Development did not hold an executive session on HB 665 (Low-Income Housing Tax Credits). There is a chance they will not hold one this Monday as well.
Rep. Derek Grier, who has done extensive research on the issue, most notably through review of most, if not all of the reports from the State Auditor relating to those credits, is approaching the issue in a very deliberative manner. The major issue is proposed change in the tax credit stream from 10 years, consistent with the federal credit, to six years. According to the Auditor’s reports that would make the credits more efficient, that is put more money into building. However, there is a problem. Nearly everyone I’ve spoken to who is involved in the LIHTC program; developers, syndicators, compliance professionals and those who purchase the credits, believe that changing the stream will introduce significant risk into the program. The result of this uncertainty may very well be less money into the building and a greater discount attached to the purchase of the credit.
The real problem is uncertainty. There are very few other states who have adopted a credit stream that is different than the federal ten-year stream; only Colorado and Massachusetts have been identified.
Rep. Grier asked me to explain why the six-year stream was potentially a problem. I asked a colleague to help in finding some experts to meet with Rep. Grier and explain their concerns. On Thursday, April 4, two partners from BKD, a major accounting firm headquartered in Springfield MO., as well as the St. Louis market president of one of the largest U.S. financial companies, met with both Rep. Grier and Rep. Cody Smith in Rep. Smith’s office. I opened the discussion then shut my mouth. To say the least, I learned a lot in that meeting.
Clearly, these experts were significantly concerned about the prospect of the change from ten to six so much that they were willing to drive to Jefferson City, taking up most of their day, to explain their doubts.
In absolute fairness, were they able to point to a specific ruling by the IRS that the change created a problem? No... Were they able to state categorically that the change would not be more efficient? No… But remember, these are professionals and are loath to make statements that cannot be footnoted and backed up by lots and lots of data. The fact that these people who deal with these issues on a regular basis were concerned is enough for me, though it may not be enough for everyone.
There was no clear resolution but both Representatives had good questions and left the meeting better informed on the issue.
In other news, HB 215, additional regulation of PACE lending, has been voted out of the Rules Committee. HB 106, immunity for real estate licensees in dealing with area and square footage issues has been placed on the House Calendar.
What will happen this coming week? I hope some reasonable resolution on LIHTC and perhaps a vote on HB 106.
Chief Lobbyist, Missouri REALTORS®