SEMO WISE TO ABANDON TAX-CREDIT SCHEME

Southeast Missouri State University has faced some uphill battles with its proposed River Campus project. Despite the odds, Southeast has secured initial state funding and has raised considerable private support.

With a price tag of $35.6 million, it should come as no surprise that the university wants to trim whatever dollars it can in transforming the former seminary into an visual and performing arts center.

But that should not come at the expense of taxpayers. The state is already footing half the bill. Wisely, the university has abandoned a plan to shave the overall cost through state tax credits.

Apparently, the idea came from the individual who administers the tax-credit program for the Missouri Department of Economic Development. But now the notion has raised a red flag with the department's legal division. No wonder.

Government and not-for-profit agencies cannot qualify for state tax credits. That's because they don't pay state taxes. But a scheme was brewing to get around that.

The thinking goes like this: The university would sell the River Campus to the contractor during construction work. The contractor would qualify for some $2 million in historic-preservation tax credits. The contractor would then sell the property back to the Southeast Missouri State University Foundation.

Another red flag should have been the fact such a proposed financial arrangement with the contractor would not have been allowed under the federal historic-preservation grant program.

To qualify for the state tax credit, the seminary would also have to earn a place on the National Register of Historic Places. The main seminary building dates back to 1843. The university says it will go ahead with efforts to get the historical designation.

In seeking the tax credit, the university had the right motive: to save dollars. But it shouldn't come through stretching the rules to fit the project. Even if it's not illegal, it's wrong. Too many people bend the rules already, which is why state and federal budgets are ballooning out of control.

Southeast is to be commended for taking the high road on this matter. The university and its foundation should steer clear of any similar schemes and concentrate on moving the project forward with more conventional financing.