2009 Missouri Preservation Conference | Tax Credit Archives | Informative Articles | Missouri Tax Credits

On November 4, 2009 the Missouri Preservation conference kicked off with an all day workshop on Advanced Missouri Tax credit workshop. The session was intended for experienced Missouri tax credit and financial professionals.

Ann Perry, the director the of the Missouri DED, and Bryan Keller, head of the real estate practice at RubinBrown opened the conference with a review of the recent legislative and administrative changes to the Missouri historic tax credit program. A lot their discussion focused on the new cap on Missouri historic tax credits enacted by the Missouri legislature last year. Ann warned that Missouri historic tax credit applications currently under review by her office may not be completed by January 1, 2010, and would be subject to the $70 million cap for approved credits from January 1 to June 30, 2010.

They also spent a lot of time discussing the more stringent rules that apply to the cost certification process for Missouri historic tax credits. The DED will require that the development fee agreement be submitted up front. The fee is limited to 20% of the total development costs, less adjustments for nonqualifying items, acquisition costs, etc. In order to receive Missouri historic tax credits for the developer fee it must be paid in full within 6 years of project completion. Failure to do so will have negative consequences to the developer, but will not adversely impact those who have purchased the Missouri historic tax credit.

There will also be much greater scrutiny of related party transactions. All related parties must be identified. Related party contractor will be subject a separate audit requirement. Also, there are limits and documentation requirements for general conditions, overhead and profit that must be met in order for the costs to be qualify for Missouri historic tax credits.

Many of us were surprised to learn that cost certifications must be submitted within 180 days of completing a project and the related credits must be issued within 12 months of project completion. Failure to do so will result in the permanent loss of the Missouri historic tax credits. Because the Governor signed this as emergency legislation, there is no grandfathering period. Be sure to get your Missouri historic tax credit certifications turned in!

We then heard from other experts about changes to the alternative minimum tax with respect to federal historic tax credits. The recent changes allow more taxpayers to make use of the federal historic tax credit. However, the passive activity laws continue to be a significant impediment for many taxpayers. It was exciting to learn that the passive activity laws are expected to be amended in the 2010 tax act. If such changes occur, all taxpayers would be able to utilize federal historic tax credits and federal low income tax credits.

The afternoon concluded with a presentation of some financial models illustrating live cases. We were shown the after-tax benefit of using federal and Missouri historic tax credits. Subsequent examples showed the additional after-tax benefit of utilizing Missouri Brownfield credits, federal and Missouri low income housing tax credits, Missouri Neighborhood preservation tax credits, etc. to further enhance the benefit of using historic tax credits.

Throughout the session it was emphasized that the dire economic conditions for the state of Missouri make it a virtual certainty that the legislature will tinker with the Missouri Historic tax credit program again. Senator Crowell has been pushing to include historic tax credits and all other Missouri tax credits within the annual appropriations process. It was pointed out that this would not help the current budget crisis as credits being redeemed over the next few years are related to earlier historic tax credit approvals. Introducing the appropriations process would add uncertainty for investors and banks and would reduce the number of Missouri historic tax credit projects that get financing.