KANSAS CITY, Mo. — Developers say Missouri’s historic tax credit is responsible for a lively and active downtown Kansas City that didn't exist two decades ago.
Developer John Bennett, Vice President of KC Loft Central, is in the process of developing the historic Bray hotel building. The apartment project is set to be completed by May.
"This building was actually constructed in 1915 by The Hotel Bray. It's commonly known as Kansas City's skinniest skyscraper,” said Bennett.
Bennett said if it weren't for the tax credit, this project and many others he’s been involved in over the years, wouldn't be possible.
"Our company was one of the pioneering companies that saw a lot of the vacant buildings downtown and had the experience and the tools to make it all happen,” said Bennett.
The developer said both state and federal historic tax credits are the only way these projects could happen.
"Generally speaking the historic rehabilitation projects are much more expensive to do than a traditional project so that helps cover that gap,” said Bennett.
The state credit is 25 cents on the dollar for qualifying expenses with a fiscal year cap of $140 million.
Elizabeth Rosin, Principal of Rosin Preservation, said that cap has been met the last two years.
That $140 million is an amount that some Missouri lawmakers say should be capped, citing other priorities like restoring funding to education.
Senate Bill 590 would cap the tax credit at $50 million a year. It’s one of several bills introduced this session concerning the historic tax credit.
Rosin says the proposed legislation is already impacting future development.
"We're already hearing about developers and investors who are looking in other states rather than Missouri because so much is in limbo,” said Rosin.
Rosin said projects already queuing for 2019 could be in jeopardy.
“If the credit gets cut back significantly you are going to see all of that development activity come to an abrupt and screeching halt,” said Rosin.
Bennett said there is probably some room to tighten the tax credit to be sure other priorities are covered, but he said the credit is vital for people using the program correctly.
Along with the state credit, developers also receive a federal credit. However with the new tax bill that federal credit of 20 cents on the dollar for qualifying expenses is distributed differently. Prior to the new tax bill developers would be paid out in a lump sum at the end of the project they completed, now the money will be distributed over a period of 5 years.