One person may qualify for new tax credit
Monday, July 2, 2007
In the great tradition of American entrepreneurism -- rugged individualism, pick yourself up by your own bootstraps and all that -- the Missouri Legislature has decided taxpayers should share the cost of a massive redevelopment of north St. Louis.
A bill sitting on Gov. Matt Blunt's desk includes a program called the "Land Assemblage Tax Credit." The $100 million credit program, to be doled out in $12 million annual amounts, would cover half the costs of buying property and demolishing the buildings along with all the financing costs. And the tax credit isn't just for someone starting a project now. Instead, it includes a provision granting the tax credit for property purchases as many as five years ago.
To be eligible, a project must cover at least 100 acres, and the developer seeking the credits must own at least 75 acres of that area.
So far, only one person -- developer Paul McKee Jr. of St. Louis -- has been identified as coming close to meeting criteria set out in the bill to take advantage of the tax break. McKee, best known for a 1,200-acre planned community in O'Fallon, Mo., known as WingHaven, owns McEagle Properties but has quietly been buying property on the north side of St. Louis for years through affiliated companies.
McKee's companies now own about 500 parcels, according to media reports.
During this year's legislative session, the St. Louis Post-Dispatch reported, McKee enlisted the support of Lt. Gov. Peter Kinder of Cape Girardeau to push the tax credit proposal and made large contributions through his companies to the election committees for Kinder, Blunt and Senate President Pro Tem Michael Gibbons, who is running for attorney general.
An Internet site called Ecology of Absence, which tracks land and preservation issues in north St. Louis, has painstakingly detailed McKee's land purchases. The site also criticizes McKee's methods, noting that in many instances, workers arrive soon after a property is purchased to remove the windows, opening the buildings to the elements for quick deterioration.
To be eligible for the tax credits, a developer must have its redevelopment plan approved by the city where it is located. But on his blog, Mayor Francis Slay defends McKee while acknowledging that he has few details of what McKee intends to do.
One interesting aspect of the tax credit idea is that it must target an area where fewer than 5 percent of the properties are owner-occupied homes. The bill contains nothing, however, to help anyone forced to move as a result of being thrown out of a rental property included in the development project.
The $100 million credit for a single developer is included in an economic development bill with a price tag that is difficult to measure. The measure also expands tax credits for Missouri's Quality Jobs program and increases the tax credits available under the Enterprise Zone program, among others. The official cost estimate? Definitely more than $5.2 million a year and likely more than $100 million annually.
Lawmakers also passed other targeted tax cuts this year, including a phased-in exemption for Social Security benefits.
Lawmakers didn't enact any tax cuts to benefit every resident of Missouri. For example, the combined cost of the two major revenue-reducing bills -- the Social Security cut and the economic development bill -- would be enough to cut the state general revenue sales tax by 10 percent.
For more information on this subject, check out the new Southeast Missourian business blog, Rude Awakening, which begins today. I'll have links to the news reports and blogs about Paul McKee Jr., and I'll do a little more to introduce myself.
Keep watching this spot for details of business developments in Southeast Missouri as well as reports, such as the one above, designed to make readers aware of issues from around the state and nation.
Rudi Keller is the business editor of the Southeast Missourian. Contact him at 301 Broadway, Cape Girardeau, Mo., 63702-0699. email@example.com or 335-6611, extension 126