Greitens Pounces on LIHTC
On Friday, Governor Eric Greitens all but rappelled into a meeting of the Missouri Housing Development Commission at Columbia's Holiday Inn Exec Center. He phoned in to cast the decisive vote which, if it stands, will zero out low-income housing tax credits for 2018. "AYEEEEE," bellowed Greitens as he cast his vote, startling the audience with his volume and intensity. Some observers recalled his widely-mocked “I can't wait to see you in person, John” vow to 2016 opponent John Brunner.
What It Means
If the decision sticks, it puts real pressure on the affordable housing community to pass compromise legislation that can restart the now-stalled flow of credits.
Q&A #2: How Did We Get Here?
There were many people and factors that led us to this point. First and foremost is Greitens’ victory over Chris Koster, who was generally a supporter of the LIHTC program. But there are many other factors. Two largely unnoticed ones involve the Democratic officials who enabled Greitens to make his move on Friday.
First was Jay Nixon’s failure to fill several vacant seats on the Commission – seats to which Greitens appointed Jason Crowell and a Todd Graves law partner sure to follow the party line. “Jay Nixon - he's the gift that keeps on giving,” one affordable housing advocate noted bitterly after MHDC's action on Friday.
A second factor was the complicity of Democratic state auditors in this outcome. Auditors Susan Montee and Nicole Galloway both published audits citing the “43 cents on the dollar” number which made it seem as if 57 cents went to waste, fraud, or profiteering. In truth, both auditors (as CPAs) likely understood that while these numbers would help their audits get headlines, they were misleading.
The credits don’t pay out for roughly 13-14 years. They can’t be redeemed until a building is completed and all units are leased to qualifying tenants, after which 1/10 of the credit award can be redeemed annually for 10 years. The length of the payoff is the main reason that credits don’t sell for a higher price. This is easily grasped by anyone with a mortgage who realizes that you pay $400K over 30 years to buy a $200K. Or just as the state itself gets about 52 cents on the dollar when it goes to the bond market for major capital projects. In other words, money ain’t free.
One proposed fix is to pay out the credits instantly. But this has never gained traction because affordable housing advocates note the extended credit period and recapture provisions ensure long-term compliance and proper management of housing stock. Also the 10-year payout keeps the state from having to absorb a huge general revenue hit up front.
Q&A #1: What’s Next?
Short answer: war.
The affordable housing coalition – a mix of private-sector developers and contractors, non-profit community development groups who use the credits, and residents themselves – won’t take this lying down. How exactly they move forward remains to be seen, but one place they’ll likely aim: legislators who on balance already dislike Greitens and likely aren’t too pleased about his effective seizure of $150M provided for in statute.
We’re heading into uncharted water for Missouri to rely on only the federal low-income credits. There are three potential negative side effects.
First, this could bring big low-income projects to halt. (See an example from downtown KC here.) The lack of construction starts could hurt the state economy in the next 18 months.
Second, this will hit especially hard in rural areas (the Republican base), where it’s even harder to make the numbers work on any deal without state credits.
Third, the low-income units that won’t get built are disproportionately elderly developments that help divert seniors from expensive nursing home units, which could further exacerbate the state’s Medicaid problems.
The broader story is how this impacts Greitens’ store of political capital. He was able to take credit this past session for all the pent-up legislation the Legislature couldn’t get Nixon to sign. Next year and beyond, he'll likely need to build stronger relationships if he's to pass more complex legislation and create lasting reform.
One observer thinks he’s been hurting his prospects… “I believe the Governor has done quite a bit in the interim to give his critics quite a lot of things to talk about; thus, potentially preventing the passage of his agenda.”
Driving Tomorrow: SBOE Meeting
I’ve been trying to suss out what exactly the plan is from the governor’s team. A special State Board of Education meeting is scheduled for tomorrow. The assumed reason for the meeting is to force an exit of DESE topper Margie Vandeven. However when recent appointee Tim Sumners indicated publicly his misgivings about the ousting I thought they might postpone tomorrow’s meeting.
That does not appear to be the case.
The best guess now is that Sumner gets the hook (ala Melissa Gelner) with a quick appointment of a new anti-Vandeven nominee in his place.
There are two potential snags with this course of action though. Recently the case has been made that the governor can’t yank members off without cause. That means they’re leaning on Sumners to resign or willing to risk a showdown with Board President Charlie Shields over separation of powers.
The other potential problem is whether swearing in a new member is within the order of business of the special meeting.
Greitens supporters were suddenly vocal on social media giving the governor some much needed support.
Aaron Baker: Not all kids are lucky enough to go to a quality school like my kids. That’s why I appreciate Gov. Eric Greitens’ efforts to change the odds for kids in failing school districts.
Rep. Phil Christofanelli: .@EricGreitens is fighting the status quo in education and working to deliver on our promise to deliver to every kid an education that can unlock their true potential. The special interest establishment continues to malign any effort towards reform. #moleg
Rep. Paul Curtman: Status quo bureaucrats an insiders don't like reform because it threatens their control. Glad we have a governor who leads. "If you want different do different."- @EricGreitens
On Casenet (307955 - ST V Jeffrey L Pogue) it looks like Rep. Jeff Pogue has a misdemeanor charge stemming from a November 11 violation of the Missouri Conservation code (07431001) which is to “take, attempt to take, and/or possess deer without deer permit – MO resident.”
St. Louis County Republican Committeeman Mark Dunn hosted a funder for State Auditor candidate David Wasinger last Thursday at his office. No word whether his wife, St. Louis County Councilwoman Colleen Wasinger, will seek re-election but David is all in and traveling the state and meeting with donors. He’s touting his rural roots and professional creds as a CPA and JD. Look for a strong number to report before filing opens….
Joplin Globe reports: “Construction is also set to begin even sooner on Nixon Hall, a 20,000-square-foot addition built into the south hill behind Reynolds Hall. The addition, to be connected to Reynolds via a glass walkway, will hold math classes, alleviating some of the pressure from Reynolds, which houses math and science classes, Yust said. The $8 million project is funded by the state with money that was previously allocated by lawmakers. Construction is set to begin in December, Yust said. A groundbreaking ceremony for Nixon Hall was held in November 2016 and attended by then-Gov. Jay Nixon, for whom the building is named. The building is projected to open in spring 2019.”
Rebecca Corson added Lombardo Homes of St. Louis LLC.
CLEAN Missouri - $50,000 from CHIPP Political Account.
We Are Missouri - $15,075 from Laborers' International Union of N.A. Local No. 42 General Fund.
Raise Up Missouri - $50,000 from CHIPP Political Account.
Happy birthdays to Matt Blunt, Rep. Dan Houx, and former Reps. Michael Vogt, Sharon Pace, and Myron Neth.