In late December, the MHDC met to dole out the state’s LIHTCs for 2021, and there was reason to believe some measurable improvements were on the way. As I’ve written multiple times, when Missouri’s program returned from its brief hiatus in 2020, we were told this time it’d be different. The tax credit with a history of dismal performance was receiving reforms that would add accountability and allow each state tax dollar spent to go a little further. A pilot program that increases payout rates was being expanded because of its apparent popularity and supposed success.

Recently, Missouri State Treasurer Scott Fitzpatrick released a statement showing that the average sale price for state LIHTCs increased by nearly $0.10 in 2021. But this increase did not translate to more affordable housing being built. According to the MHDC’s newest project approval data, the number of projects and the number of units in projects approved for LIHTCs in 2021 decreased compared to 2020.

In fact, even the number of applications for LIHTCs declined in 2021. This means that while the recipients of these credits received more money than ever, those gains failed to translate into any improvement for state taxpayers. This new year of data also serves as a cruel reminder of the lessons Missouri should have learned during the program’s recent suspension. For two consecutive years, Missouri saved millions by forgoing the state’s investment in the LIHTC program. The federal program continued in its absence, and the same amount of affordable housing was built each year, but at a lower cost. Now the program’s back and we’re told that the way to improve it is to make it more lucrative for developers. In return, the amount of new housing being built remains the same.

Year after year, Missouri is reminded why the LIHTC program is such a bad deal for state taxpayers. How much more money must be lost before our elected officials start seeing the program for what it is and end it for good?

The post Another LIHTC Letdown appeared first on Show-Me Institute.

As I’ve written before, the LIHTC program awards tax credits to housing developers to offset construction costs. In exchange, the developers are required to rent a fraction of their units to low-income tenants. Missouri’s program is a supplement to the federal LIHTC and has a long history of poor returns on investment. When Missouri’s version of LIHTC was revived last year after a three-year hiatus, LIHTC boosters promised reforms to address some of the program’s much-discussed shortcomings. This pilot program was one of those reforms.

The purpose of the pilot program is to increase the sales price of LIHTCs by allowing housing developers to claim them more quickly. One of the biggest problems with these credits is that they’re awarded to developers over ten years—but upon being rewarded, developers often immediately sell the credits to investors to raise the capital necessary to fund the project’s construction. When something is sold today that can’t be claimed for a decade, it has to be sold at a discount, in part because of the time value of money. In many cases, Missouri’s LIHTCs have sold for as little as forty cents on the dollar. This means is state taxpayers are basically guaranteed a bad return on investment, because the thing they’re paying $1 for is being immediately sold for less.

The new pilot program allowed 20 percent of the state’s approved projects to claim their credits more quickly over the first five years, and more slowly the final five. The total cost to state taxpayers remains the same, the value of the credits for investors is increased because of the time value of money. Initial reports suggest this change worked and increased the market value of each credit by roughly $0.10. However, if credits were previously selling for $0.40 and now are selling for $0.50, that still means taxpayers are still losing half of their investment immediately.

Going into next year, the number of projects eligible for this pilot will be bumped up to 50 percent. And with more projects receiving accelerated redemptions, that should mean more credits are sold for higher prices, which in turn could slightly improve the dismal return on investment for state taxpayers. Supporters of the pilot also say that higher sales prices will allow the MHDC to subsidize more projects, because each developer will request fewer credits. It remains to be seen whether these claims will hold true with additional years of data.

Make no mistake, I still think the LIHTC program is a bad deal for Missouri. It is truly remarkable that such a meager improvement in credit sale price is being celebrated as a big win for the troubled program, when taxpayers are still expected to lose so much of each credit sold.  Much more needs to be done before LIHTC even comes close to being considered a worthwhile investment for our state.

The post LIHTC Pilot Finds Permanence appeared first on Show-Me Institute.

Despite having some of the most affordable housing costs in the country, historically Missouri spent the second most of any state on LIHTC, which is consistent with research finding that the LIHTC program is poorly targeted. What’s worse, multiple state audits in Missouri have found that less than $0.42 cents of each dollar are spent on actual construction. It wasn’t until 2017 that Missouri finally faced up to the failures of its LIHTC program and suspended it. But no longer.

After a three-year shutdown, Missouri is now reviving its LIHTC program with grand promises of reform. Specifically, the Missouri Housing Development Commission (MHDC) stated that it will cap the state’s yearly LIHTC awards at 70 percent of the annual federal allotment, and the legislature is considering enshrining the cap into law. The benefit of the cap is that instead of state taxpayers being on the hook for $180 million per year, they might only be out $135 million. However, a smaller loss is still a loss, and good stewardship of taxpayer funds means insisting that programs deliver value and achieve results.

Given the structure of the LIHTC program, even the aforementioned savings are likely to take years to materialize, if ever, assuming that legislators don’t backtrack on reforms. In particular, the LIHTC awards credits not all at once but rather in equal allotments over ten years. As a result, the savings from any reduction in credits will also take a decade to gradually phase-in.

The tendency of the federal allotment to rise each year and the creation of a new MHDC pilot program that increases the payout rate for some state projects both may lead to further backloading of savings. Specifically, the pilot program will allow 20 percent of projects awarded credits to redeem the awards on an accelerated schedule that matches the federal yearly allotment at the full 100 percent in the first five years before evenly spreading out the remaining funds over the final five years.

The table below gives a concrete illustration. Before 2017, a project that was eligible for $1 million in federal credits would also have been eligible for $1 million in state credits with awards distributed over ten years. Under the new cap, the total state credit falls to $700,000, which amounts to $70,000 each year. However, under the pilot, the project could receive $500,000 of the $700,000 in just the first five years—matching the $100,000 per year that it would have received before 2017—and then claim the final $200,000 in the last five years. In short, taxpayers would not see any savings from the cap until after five years, which gives vested interests more time to reverse reforms before they ever take hold. Though the idea behind the pilot program may have some merit, the bottom line for taxpayers is still delayed and potentially uncertain savings.

Spending less on an inefficient LIHTC program is better than spending more, but it will do taxpayers a disservice if lawmakers use this superficial change as an excuse to declare success, move on, and not undertake more fundamental reforms.

The post Capping LIHTC Isn’t Enough appeared first on Show-Me Institute.

Prior to being halted in 2017, the state’s LIHTC program was plagued by several serious problems. As I’ve written many times before, Missouri’s program was one of the biggest in the country and was repeatedly shown to be ineffective, costly, and utterly lacking in accountability. Sufficiently addressing each of the program’s shortcomings has proven to be elusive for the state’s elected officials, with legislative attempts to reform the program failing over the past three years. Absent any legislative action, the governor and MHDC decided to bring the program back on their own terms by administratively implementing changes.

The MHDC’s changes include a yearly cap on state credits, a scoring rubric for project applications, and a new pilot program that allows more credits to be redeemed over the first five years (of ten total) of the project. At first glance, the changes seem to touch on each of the major issues with the program outlined above. But do they make the program worthy of taxpayer expense?

In theory, the yearly cap should make the program less costly because Missouri used to match each federal LIHTC on a dollar-for-dollar basis. A cap would mean that is no longer possible. The scoring rubric could add some accountability by showing how the chosen projects stack up against those that aren’t awarded funding. And the pilot program should make the credits more enticing to investors, and in turn, increase the value for which they can be sold.

After details of the revived program were made public, an optimistic real estate developer was quoted saying he expected the new state LIHTCs to sell for roughly sixty cents on the dollar. It is important to keep in mind what this means: Developers are happy to trade each taxpayer dollar they receive for a little more than half its value. How can LIHTC be a good investment for Missourians if the people who profit off the program believe what they’re receiving is worth much less than what state taxpayers are paying? It will be some time before there are enough data to determine the full effect of these changes, but even if this estimate of improved sale value is proven true, Missourians would still be receiving a very poor return on their investment.

The program’s revival is certainly a good deal for already-wealthy developers. But shouldn’t the governor and MHDC instead ensure that Missourians have an affordable housing policy that’s good for everyone?

The post More to Be Done on LIHTC appeared first on Show-Me Institute.

Of course, our state is in the middle of an unprecedented pandemic, which has been especially hard on low-income Missourians. But the LIHTC program does nothing to make housing more affordable for those who need a place to live right now. Assuming the MHDC starts awarding tax credits this year, the subsidized housing will still need to be built before it can provide any additional relief for Missourians.

Research has shown that, even in normal economic times, LIHTC is not effective at making housing more affordable. Not only does less than fifty cents of each dollar in tax credits go toward the construction of affordable housing, Missouri’s program also doesn’t increase the supply of affordable housing. For years, Missouri had one of the most generous state LIHTC programs in the country, matching each federal dollar on a one-to-one basis. Yet, in the years after the state match was halted, the number of affordable housing projects across the state remained largely unchanged.

Missouri’s state government is also struggling to deal with the pandemic and facing a serious budget crunch. To keep the budget balanced, the governor has already restricted more than $400 million in state spending. This means that there will be hundreds of millions less in funding this year for things such as education and public safety. And the outlook for next year’s budget isn’t any better.

There’s no doubt that many Missourians are facing housing issues during this unprecedented time. But if our elected officials’ goal is to address this problem, shouldn’t they be searching for a solution that is going to help people now instead of reviving a costly and ineffective program?

The post The LIHTC Program Is Back Again appeared first on Show-Me Institute.

In 2018, Missouri lost out on nearly $600 million dollars in state revenues due to its numerous tax credit programs. The worst offender was the Low-Income Housing Tax Credit (LIHTC). As I’ve written before, LIHTC has been a historically bad investment for Missouri taxpayers. Not only does less than half of LIHTC spending go toward building affordable housing, Missouri’s program doesn’t even increase the supply of available housing for low-income residents.

Missouri stopped matching federal LIHTCs after 2017, yet developers are still building affordable housing in Missouri. In the two following years, data from the Missouri Housing Development Commission show the number of affordable housing projects has remained largely unchanged. In other words, housing developers have found ways to build the same amount of housing units with half (Missouri previously matched federal LIHTCs on a one to one basis) the government investment. Despite the many claims that Missouri’s portion of the program was necessary to spur investment, our state’s experience is now the perfect example of how one-size-fits-all economic development policy fails to deliver.

Lessons from Missouri’s LIHTC program should also guide our policymaker’s tough budgetary decisions going forward. Scaling back or ending many of Missouri’s tax credit programs won’t necessarily be easy, and it won’t completely fix the state’s ongoing revenue problems, but it’s the right decision for state taxpayers. Many Missourians are currently finding ways to get by with less, and it’s only reasonable to expect their government to do the same. By leaving LIHTC dormant and reforming Missouri’s tax credit programs today, policymakers can improve our state’s financial outlook for years to come.

The post Missouri Needs Tax Credit Reform Now More than Ever appeared first on Show-Me Institute.

Each year, the federal government allocates funds for the LIHTC program, and historically Missouri has matched each dollar. In 2017, Missouri’s governor halted the state’s portion of the program after multiple reports showed glaring problems. The pause in state credit issuance allows policymakers to look back and determine whether the state’s LIHTC program ever had a meaningful impact. 

According to project approval data from the MHDC, there was little change in federal LIHTC applications in 2018, the first full year without the state’s LIHTC program. Projects can vary in size so it’s important to look at the number of units being subsidized. Last year more than 2,200 units were funded solely by the federal LIHTC program, which exceeds the average over the previous four years (where Missouri was matching each federal dollar) by more than 400. This indicates that project developers still believe there is money to be made on low-income housing. In short, the program was zeroed out and nothing changed.

The LIHTC program essentially functions as a way to help finance construction. Eliminating Missouri’s contribution may have simply changed the way developers choose to make their profits. For example, the MHDC data show a large increase in approved LIHTC rehabilitation projects for 2018, but a small decline for new construction. There is also a sharp increase in the estimated average cost per unit of approved new construction projects. The point being, as long as a project remains profitable, developers will find a way to make it happen, no matter what they tell Missouri policymakers.

Despite the overblown claims of the negative consequences from eliminating Missouri’s LIHTC program, the state’s affordable housing landscape appears to be moving in the right direction. If policymakers want to save Missouri taxpayers millions of dollars and strike a blow against crony capitalism, it appears there is no greater opportunity than leaving LIHTC behind.

The post More Proof that Missouri’s LIHTC Doesn’t Work appeared first on Show-Me Institute.

Some were quick to argue last year that the greatest threat to affordable housing is the ending of low- income housing tax credits (LIHTC). This is demonstrably wrong. The program was fully funded up through the end of 2017; any current affordable housing shortage in Kansas City has nothing to do with a lack of state tax credits. And the data from the Missouri Housing Development Commission show that the number of housing units in the construction pipeline has not decreased since state funding for LIHTC was zeroed-out.

The simple problem in Kansas City, St. Louis and elsewhere is in part due to the high cost of housing regulations and city bureaucracy; it is simply too expensive to build so-called affordable housing.

A 2018 paper issued by the National Association of Homebuilders (NAHB) and National Multifamily Housing Council (NMHC) concludes that:

Regulation imposed by all levels of government accounts for an average of 32.1 percent of multifamily development costs, according to new research released today by the National Association of Home Builders (NAHB) and the National Multifamily Housing Council (NMHC). In fact, in a quarter of cases, that number can reach as high as 42.6 percent.

The table at the top of this post shows the impact on housing costs of several types of government-imposed costs such as changes in building codes or requirements over and above common standards. The NAHB paper goes on to say: “Over 90 percent of multifamily developers also incur costs of delays caused by sometimes lengthy approval processes.”

A study released in 2016 concluded: “. . . on average, regulations imposed by government at all levels account for 24.3 percent of the final price of a new single-family home built for sale.”

Sometimes, exactly because the government is trying to help solve a problem, the problem becomes worse. Seattle for Growth, née Smart Growth Seattle, published in 2015:

Affordable housing projects have many unique costs, and often cost more because of financing, construction, and labor requirements. Affordable housing projects can be more expensive than market-rate due to some of these unique costs.

Regulations regarding health and safety are necessary, and one does not need to argue that housing construction should go unregulated to suggest that some obstacles are not worth the expense. Some of these obstacles, such as time spent waiting on permits and approvals may simply be due to city offices being overworked and understaffed. Cities ought to understand the barriers to housing construction and the additional costs of regulation before they act to add even more regulation or spend limited tax dollars on subsidies.

The post Want More Housing? Get out of the Way appeared first on Show-Me Institute.

First, you need to develop a plan for the project and estimate how much it will cost. For simplicity, let’s assume you want to build a new apartment complex for low-income individuals, and it will cost an estimated $1.25 million. Of those costs, only $1.11 million are eligible for tax credits because land and several other expenses aren’t eligible.  In this case, the project would be eligible for the new construction credit, which means that up to 90% of all projected costs could be covered. So if approved, you could receive nearly $1 million in state and federal credits over ten years.

To start the process, you have to get your project approved by the Missouri Housing Development Commission (MHDC), the state’s housing agency. This complex approval process includes filling out a slew of forms, completing audits of your finances, hosting inspections of the property, and paying a variety of fees.

Once you jump through the required hoops and get your project approved, you will likely need to sell the tax credits to begin development. (This is because many firms need the startup capital to fund construction; the credits are paid out over several years) To do this, most developers find a tax syndicator, which is simply a business that helps find investors willing to buy credits in exchange for financing the project. This process can be difficult because Missouri’s tax credits are non-transferrable, which means they cannot be transferred or sold to any investor that isn’t part of the development group. Thus, new legal partnerships are formed for most projects that include the developers and investors to allow them to buy and use the credits.

Once you have people willing to buy your credits, how much can you expect them to pay? The first hurdle is the federal tax implication for each investor. Paying less in state taxes (because they’re using credits) reduces the claimable portion of the federal tax deduction that comes from state taxes paid. In other words, using state tax credits can increase their federal tax liability. As a result, the value of the state credit to each investor drops by the federal tax rate they would have to pay on those funds—typically around 35% of the credit’s value.

In addition, getting money for tax credits today requires selling them at a discount, because the tax credits are issued over ten years. Selling all your credits today, adjusted for net present value, and including all fees for the syndicator’s efforts, you can expect to receive around 65% of the remaining value. After all is said and done, your $1 million in LIHTCs results in around $420,000 cash for project construction. These figures are in line with the analysis completed by Missouri’s State Auditor’s Office.

The rest of the project’s financing has to come from the developer, other investors, or mortgages. No matter the amount MDHC awards in tax credits, the end result is the same; there will typically only be around $0.42 of each dollar in tax credits available for actual construction. More than half the state’s investment in your project is lost by the time the construction can begin. This is a big reason why the program is such an inefficient use of taxpayer dollars.

For the next post in this series, I’ll look into the LIHTC program’s measurable impact (or lack thereof) on the supply of affordable housing in Missouri.

The post LIHTC 101: How Does it Work? appeared first on Show-Me Institute.

That’s why I reached out to the state agency in charge of allocating the tax credits, the Missouri Housing Development Commission (MHDC). The MHDC charged $122.76 for a list of projects and costs from the last 19 years of LIHTC allocation. (I also requested similar data from the 14 other states that have a state LIHTC program; they all provided the information free of charge.)

Missourians now can find where these LIHTC projects are located and how much they receive in subsidies from state and federal governments. The link below has a map displaying data on LIHTC projects since 2000:

LIHTC Interactive Map

The census tracts are colored by poverty rate, with the red and blue diverging at the statewide poverty rate of 14.6 %. The black dots represent every LIHTC project awarded since 2000. When hovering over a dot, the project’s name, address, city, county, owner, year awarded, and federal and state annual LIHTC allocation are shown.

Having this data is a good first step in analyzing and ultimately proposing solutions to the complex, problematic system that is Missouri LITHC.

The post Here Is Where LIHTCs Go appeared first on Show-Me Institute.

Prior to 2017, Missouri’s LIHTC program was one of the most generous in the country. The LIHTC program is federally created and funded, but in an effort to increase affordable housing development across the state, Missouri agreed to match up to 100% of the federal funds allocated to the state. The problem was that report after report showed the tax credit wasn’t an effective use of state funds. For example, a state auditor’s report showed that only 42 cents of each dollar allocated to LIHTCs was spent on the development of low-income housing. That was why the state’s portion of the program was halted in 2017.

But those who profit from the tax credits have always had a well-organized lobby, so it was only a matter of time until legislative efforts were made to restore Missouri’s funding. The measure approved last week returns Missouri’s funding for LIHTCs to 72.5% of the federally allocated funds.  Unsurprisingly, a St. Louis Post Dispatch article chronicling the negotiations notes the original “reform” proposal was to only return 50% of the funds, but developers felt that number was too low and as such eventually got the amount increased 77%, before eventually reaching the compromise number of 72.5%.

Just to summarize this backwards process: a program that currently receives zero state dollars was offered a return of 50% of their funding (over $100 million annually), supporters of that program claimed 50% was an inadequate number, and then the funding increase was bumped up north of 70% while no structural changes were made to the program that would actually ensure more dollars are spent on the original purpose of the tax credit (low income housing). If any dollars are going to be restored for the LIHTC program, there needs to be serious structural reform first. Anything else is just window dressing.

The post Low-Income Housing Tax Credits Are Being Reformed? Not So Fast appeared first on Show-Me Institute.

Missouri’s tax credit program is a bloated mess. Whether they are intended to support low-income housing or sports complexes, tax credits are often awarded based on good public relations rather than good policy. Former and present state auditors—Democrats and Republicans alike—have for years argued that tax credits such as the LIHTC have been a bad deal.

Expect localities to rail against even a temporary halt to the LIHTC program, seeking to place blame for their own lack of affordable housing stock on Jefferson City. For example, Flatland—Kansas City Public Television’s digital magazine—recently released a short video on the LIHTC program. In it, Bill Dietrich, the president and CEO of the Downtown Council of Kansas City, Missouri, said (starts at 4:28):

The greatest threat we have right now to being able to add to the affordable housing inventory is the state of Missouri’s ill-conceived policy of no longer allocating for low income housing tax credits.

Really? The greatest threat? The program was fully funded up through the end of 2017. Any current shortage Kansas City has with affordable housing has nothing to do with a lack of state tax credits. In fact, Missouri’s LIHTC program is one of the most generous in the country, according to a previous auditor report (see pages 11 and 19). Most states don’t even have such a tax credit program.

Maybe the actual “greatest threat” to affordable housing in Kansas City is inaction from the Council and city leadership. It is just now, in 2018, addressing the issue. Up to this point, Kansas City leaders, including members of the Downtown Council, appear to have been more interested in subsidizing the construction of luxury housing.  Consider this: in 2017, 91 percent of new apartment buildings in Kansas City were considered luxury. So far in 2018, 100 percent are luxury. 100 percent! (All of St. Louis’ apartment construction in 2017 was luxury, and 81 percent so far in 2018.)

If our municipal goal is to support the construction of affordable housing, we can do better than the LIHTC. But any serious program must start with an actual policy, and it should probably stop subsidizing luxury housing, too.

The post Missouri Tax Credit Program Halted for Now appeared first on Show-Me Institute.

It is difficult to describe how important, and courageous, the MHDC’s decision is. Those who profit from tax credits make up a powerful and well-organized lobby that has been successful in protecting its interests in the past, even when the evidence against a given corporate handout is overwhelming. That most members of the MHDC stood firm in protecting the interests of taxpayers is a leap forward for the tax credit reform movement—and a credit to those who took a hard vote on behalf of the public interest. Tax money saved from a program like the LIHTC can be used to better fund existing state services and to cut taxes more generally, but so long as a program like the LIHTC was taking tax dollars and depositing them back with special interests, advancement on those two fronts was always going to be more difficult. Instead, the MHDC’s decision primes the pump for wider and substantive tax reforms in 2018, should the Legislature choose to capitalize on the opportunity.

We’ll talk more about this, and at greater depth, later. In the meantime, congratulations to the committee members, and congratulations to taxpayers. Today is a very good day for policy reform.

The post Political Courage: LIHTC Program Cut to Zero by MHDC appeared first on Show-Me Institute.

Of course, as the executive director of the Missouri Workforce Housing Association, Smith certainly has an interest in pumping up the program. According to the MOWHA website (emphasis mine):

The mission of the Missouri Workforce Housing Association (MOWHA) is to have a sustained effort influencing positive workforce housing policy at the federal, state, and local levels. We work with the Missouri Housing Development Commission (MHDC), the Affordable Housing Assistance Program (AHAP), Low Income Housing Tax Credits (LIHTC) . . .

The concern about tax credits such as the LIHTC is not just their potential for growth, but their costs and benefits. The LIHTC regularly clears more than $100 million from the state’s budget each year. The taxpayer benefit? Eleven cents on the dollar — a massive net loss to the state with every LIHTC project it subsidizes. If that is a “solid investment,” what isn’t?

Missourians would be better served with state policies that benefit all businesses through low, stable tax rates. It would be best served by the elimination of taxes on businesses entirely, a reform other states are already pursuing. That is a solid investment worth pursuing.

The post Could The Tax Credit Bar For A ‘Solid Investment’ Be Any Lower? appeared first on Show-Me Institute.

The city has issued an average of $35.4 million in permits per month since the tornado. Before the tornado, the city averaged just over $2.1 million a month in building permits.

Despite this evidence of a robust private market, the Missouri Housing Development Commission has:

. . . committed about $100 million in tax credits and loans over the coming decade to spark the construction of low-to-moderate income rental units and single-family, owner-occupied homes in the Joplin area.

[A] Sept. 30 revision of the federal wage rules significantly increased those amounts. For example, the federal prevailing wage for a carpenter in the Joplin area rose from $7.98 an hour to $21.47 an hour plus $12.65 in benefits. The federal prevailing wage for a roofer in the Joplin area rose from $7.25 an hour, which matches the general federal minimum wage, to $21.30 an hour plus $8.08 in benefits.

The post Special Interests Inhibiting Joplin’s Recovery? appeared first on Show-Me Institute.

Under the new program, eligible Missouri families who enter into a contract to buy a new or existing Missouri home after Jan. 1 would have their property tax for the year paid, up to $1,250. In addition, to support the creation of “green jobs” in Missouri, families would be eligible for an additional $500 in tax relief if they buy an energy-efficient home or items to make the home more energy-efficient, such as Energy Star appliances.

Home ownership — just like any other investment — involves significant risks and costs. I’m worried that Missouri could help provoke another housing crisis by encouraging home ownership amongst those who wouldn’t otherwise select it.

In an op-ed in the Springfield News-Leader, to which David Stokes previously linked, Paul Hamby presents an alternative means than government subsidies to increasing home ownership:

If the goal is to get more Missourians into housing, there is a simple proven formula for that: Good paying jobs for Missourians. A business climate to create more jobs is where the governor should be focusing. That means less government regulation, fewer taxes on small businesses and families and fewer federal mandates. When government starts meddling, fairness goes out the window.

The post It’s As If the Housing Bubble Never Happened! appeared first on Show-Me Institute.

Young focused on a $4 million housing project in Springfield that
was financed with $11 million in state and federal tax credits for
historic buildings and low-income housing.
After doing the math, Young concluded taxpayers were providing more
than $300,000 for each of the 32 apartments in the rental housing
project.

Young saw this as a waste of tax dollars and looked into why the MHDC was appropriating so much money. He discovered that the state does not audit much of the money received by housing developers, outside of independent audits paid for by developers.

Young has begun studying economics on his own, and requesting MHDC documents through the Sunshine Law. He goes to their meetings and asks questions about why the commission’s ineffective largesse. The state could use more of this type of active citizenship.

State Treasurer Sarah Steelman, an MHDC member, appreiciates what he is doing:

He is a citizen who has taken an interest in the commission and who
hopefully wants to make it a better program, said state Treasurer
Sarah Steelman, who was MHDC chairwoman when Young made his statement. I’ve always had the opinion you never want to deter people from taking
an interest in what government is doing.

There should be more citizens like Young, Steelman said.

The political system needs people like Greg Young. Taxpayers often don’t know where their money is being spent, and even when they do, many just complain and move on. Young went a step further and decided to take action. If more citizens did that, government would be more responsive to citizens’ needs. I congratulate Mr. Young and hope he keeps up the good fight.

The post A Taxpayer Fights for Answers appeared first on Show-Me Institute.

A recent study ordered by the housing commission found the system does produce beneficial low-cost housing but at a high cost to the state because the tax credits usually are sold to third party investors by developers at steep discounts.

At the end of the day, the full tax credit is not going toward the stated purpose:

Investors buy the credits, providing discounted front money so developers can proceed with projects, then redeem the credits for 100 percent state tax reduction. For every dollar the state gives in tax discounts, only 35 or 40 cents subsidizes housing.

Again it’s shown that while tax credit programs may sound beneficial and good, at the end of the day they aren’t used for their stated purposes. The taxpayers are picking up the bill for investments that should be covered by private investors’ own money.

The post Housing Tax Credits Are Not Providing Housing appeared first on Show-Me Institute.