JEFFERSON CITY — It was September 2021, and developer Steve Smith had finally finished the over $200 million rehab of the abandoned Federal Mogul factory into the City Foundry food hall and entertainment complex in Midtown.
He and his firm submitted their application to redeem the $20 million in state historic tax credits they had been approved to receive for the project and which they had borrowed against.
Then they waited. For eight months. The delay ended up costing Smith’s company $875,000 in interest while the state reviewed his paperwork to obtain the tax credits he needed to pay off some of his debt.
After years of delays like that and review backlogs for the popular state tax credit, Smith and others in the development industry want lawmakers to simplify a program whose requirements they say have grown duplicative and unnecessarily burdensome.
People are also reading…
“We’re looking to streamline the regulatory overreach that has occurred over the last four or five years,†said Jim Farrell, president of Historic Revitalization for Missouri, which advocates on behalf of the tax credit.
The push for changes to a program that covers up to 25% of the cost of expensive renovations to historic buildings has been in the works for years. A backlog in the state historic preservation office was pushing review times to over a year as far back as 2018. Many suspected it was an attempt by former Gov. Eric Greitens, who made an issue of railing against Missouri’s tax credit programs, to torpedo the state program administratively.
While Gov. Mike Parson’s administration has a friendlier view of tax credits as an economic development tool, the state has struggled to catch up with applications after the Greitens years.
“We’re trying to create an easier process for developers and entrepreneurs to thrive using this tool,†said the House sponsor, Rep. Travis Wilson, R-St. Charles.
The program has been an important one for ºüÀêÊÓƵ, which is full of buildings more than a century old. When the state first implemented the program in the late ’90s, it helped turn around areas such as Washington Avenue and finance hundreds of millions in historic rehabs across the city. Backers, including regional economic development group Greater ºüÀêÊÓƵ Inc., argue ºüÀêÊÓƵ is unique in the number of historic buildings still standing here, and policymakers should help protect the architectural asset as the region looks for ways to stand out in the competition for talent with other cities.
Without subsidies, supporters say, the cost of adapting century-old buildings to modern uses would be cost-prohibitive.
The trade-off is a fixed-up building that maintains its historic aesthetic. Reviewers in the state historic preservation office make sure developers who are seeking the tax credits don’t stray too far from that historic character in their rehabs.
But developers and historic consultants complain that some of the program’s state reviewers — one in particular who has recently left to take a job in another state — were too stringent in their interpretation of architectural standards, causing delays for many projects.
“That was kind of a wake-up,†said Deb Sheals, whose Columbia-based firm Building Preservation LLC has worked with the historic tax credit program for decade. “Let’s get some guardrails in place.â€
The Landmarks Association of ºüÀêÊÓƵ, which advocates for preservation of historic buildings, said it has heard from many developers and consultants about delays and problems with the program in recent years.
“Landmarks Association is supportive of any changes that will facilitate the revitalization of historic buildings statewide,†Executive Director Andrew Weil said in a statement. “We hope that the Legislature will listen to the voices of the people that do the difficult work of redeveloping historic buildings when considering how to make what is already an incredibly effective program even better.â€
Proposed changes
Among the changes in the legislation is a provision allowing nonprofits to qualify for the credits and new rules limiting review at the state historic preservation office to 60 days. It would also require state approval if the National Parks Service, which also reviews developer applications and remodels for historic accuracy, signs off.
Smith, the City Foundry developer, said the state historic preservation office took three times as long to sign off on his project than the federal parks service.
“So 122 days at the state, 39 days at the federal government to review the same project under the same guidelines,†Smith told the committee during a hearing on the bill Jan. 24.
One of the provisions would move some approval functions to the Department of Economic Development, which already oversees the tax credit issuance part of the program. Part of the program’s issue, Sheals said, is that two state offices have oversight as well as the federal parks service.
“Sometimes states want to take more power than they need, and that’s where you get into this kind of mess,†she said.
Deputy Director of Missouri State Parks Brian Stith, who oversees the state historic preservation office, acknowledged that review times stretched to eight months or so a year ago, but he said the department has added a staff position and cut review times to about 60 days.
“We’ve managed to do a lot of catch-up,†Stith said in an interview.
He also said the department is in the midst of a rulemaking change that will allow it to grant conditional approvals if there are changes developers need to make to meet its criteria, allowing them to move forward while they implement fixes.
Sheals agreed wait times have improved, but she’d still like to see some deadlines put in place to prevent future backlogs.
Other changes target specific areas of the state. While the cap on large projects over $1 million will remain at $90 million annually, the legislation exempts downtown ºüÀêÊÓƵ’ two massive empty buildings — the AT&T tower and the Railway Exchange Building — from that cap in hopes of luring a developer to the daunting projects.
But potentially galvanizing support for the legislation among out-state Republicans who hold big sway in Jefferson City, the legislation increases to 35% the amount of a project the credits will reimburse outside of ºüÀêÊÓƵ and Kansas City.
The legislation received bipartisan support and passed the House last year but was among the legislation that died due to infighting among Republicans in the Senate. Those divisions between hard-right Republicans and the more mainstream faction of the GOP in the Senate are again threatening to upend the session and keep bills from becoming law.
The legislation’s sponsor in the upper chamber, Sen. Steve Roberts, D-ºüÀêÊÓƵ, said he is encouraged at the support his bill has received. But it has already had hearings cancelled due to filibusters and Republican infighting in that body.
“If the Senate is able to function,†Roberts said, “then this legislation will get done.â€
The legislation is in the House and in the Senate.