SEMO'S TAX-CREDIT PLAN FACES LEGAL SNAG

Southeast Missouri State University's proposal to use state tax credits in developing the River Campus may not pass legal muster.

Missouri Department of Economic Development officials are exploring the legality of the proposal. Kristi Jamison, a spokeswoman for the state's Economic Development Department, said the proposal raises a "red flag."

"Basically, we are still looking at a lot of policy and legal issues because the university is a state entity," she said Wednesday.

Government agencies and not-for-profit organizations don't qualify for state tax credits for renovation of historic buildings because they don't pay taxes, she said.

The River Campus project would set a precedent if approved by economic development officials, Jamison said.

Southeast is seeking to get around the law by allowing the contractor to "buy" or otherwise take over ownership of the riverfront property during the duration of the construction work. The contractor then would have to resell or transfer the old St. Vincent's Seminary property back to the Southeast Missouri State University Foundation.

The university is exploring the possibility of using state credits for historic buildings to lower construction costs in renovating old St. Vincent's Seminary. The main seminary building dates to 1843.

The work is part of the university's plan to spend $35.6 million to turn the former Catholic seminary in Cape Girardeau into a school for the visual and performing arts.

Dr. Ken Dobbins, Southeast's executive vice president, said the state tax credits would go to the contractor, who then would pass on the savings to the university through lower construction charges. The tax-credit arrangement would be spelled out in the construction contract, he explained.

It could save the university an estimated $2 million in construction costs, said Dobbins.

The tax credit would amount to 25 percent of the total cost of renovating the seminary building. Dobbins said the renovation work could total as much as $7 million or $8 million.

That's a small part of the overall cost of the River Campus project. Much of the project involves new construction, including the building of a large performance hall.

Dobbins said the tax credit could only apply to renovation of the historic building.

To qualify for the tax credits, Southeast would first have to get the seminary placed on the National Register of Historic Places.

The university has spent some $11,000 for a Kansas City historic preservation firm to put together an application to place the former seminary on the National Register.

But the university won't proceed with the application unless it believes the seminary qualifies for the National Register and the state tax credits.

Dobbins said the university isn't looking to put the former seminary on the National Register for historic preservation purposes. "It is just strictly for tax purposes," he said.

Dobbins, who will become the university's new president on July 1, said the proposal is just in the preliminary stage. He said university officials likely will discuss the idea with state Economic Development officials in August or September.

Dobbins said Southeast isn't eligible for federal tax credits. The proposed financial arrangement with a contractor wouldn't be acceptable under the federal program, he said.

Dobbins said the tax credit plan was suggested by Ann Perry, who administers the program for the Missouri Department of Economic Development.

The state's tax credit program was established in January 1998. Since then, the state has issued about $10 million in tax credits for 20 residential and commercial projects in the state.

Perry said many of the commercial ventures are housing projects.

"We wait until the project is completed before the credits are issued," said Perry.

None of the tax credits has gone to state universities.

Dobbins said the university just wants to save money. It is up to the Economic Development Department to decide the legal issues.

"If we can do it, that is fine. If we can't, that is fine too," he said.