I hope this can be the first of as many dialogues as you would like.

No, these days I’m just Thomas Duda of SMI. I graduated in 2008 from Carleton College and attended graduate school in urban planning at Cornell University, before withdrawing prior to the completion of my master’s degree. I am a lifelong St. Louisan, former employee of the Landmarks Association, former employee of the American Institute of Architects and definite critic of tax credits as a mechanism for public finance.

From a public budgetary standpoint, a dollar issued in tax credits is equivalent to a direct fiscal outlay by the state. Could you help me to understand precisely why a tax credit is the preferred funding mechanism as opposed to a direct expenditure? Transferability often results in a loss to the state as best that I can discern. If the state spends $1, but the credit is transferred for $0.91, then $0.09 of our money is not supporting direct preservation activities.

I recognize that preservation may be costly; however, I think it imperative that we recognize that our conception of what constitutes an historical rehabilitation is a socio-political construction. In other states, easing code regulation of historic properties undergoing rehabilitation arguably resulted in additional preservation activity.

There are a multitude of policy approaches that our state can take to ensure the continued productive use of historic property.

I think that we need to consider the structure of the Missouri Historic Preservation Tax Credit to determine whether it A.) does what many say it does and B.) whether there are alternative approaches and/or changes in public policy that could result in additional preservation activities at a lower cost to the public.

I think that reform of Missouri’s HP Credit could be the impetus for the development of even better policies that will yield even more preservation activity in our state.

As for your remark “It either doesn’t work well enough or it is working too well,” I simply respond by saying that there is no substantive quantitative evidence to show that 25% is the level at which the subsidy encourages additional desired rehabilitation work that would otherwise not occur. How are these incentives priced?

I would support lowering barriers for accessing the credit, namely by eliminating the “substantial rehabilitation” requirement. I think that more projects would occur at lower costs to the state if the 50% expenditure threshold were lowered.

But then again, these are nothing more than my garbled musings on the subject.

I think that we would both be kidding ourselves if we believed that there weren’t alternative means of accomplishing a desired public policy end–historic preservation.

One on hand, you say this incentive doesn’t cause development, on the other hand you imply it is too rich. Choose one or the other. It either doesn’t work well enough or it is working too well.

There is nothing wrong with developers developing using economic incentives. If you are a developer and have a choice between building a strip center on a green field in the suburbs or renovating an environtmental and structural trainwreck in the dense urban core, and there are no incentives for preservation, your choice is obvious. With incentives, you actually may prefer to take the choice the state policy favors.

By the way, are you the Tom Duda of RGSZ? Suprised if so.

You conveniently ignore how “transferability” of the historic preservation tax credit actually allows their conversion into developer equity well before construction commences.

Furthermore, you are going to have to do a lot more to convince me that you aren’t conflating correlation with causation in regard to how the “credit program works” in downtown St. Louis.

In the absence of the credit program, “painters, drywallers, etc.” would likely seek work from those who deploy capital through private streams instead of through the public trough.

Do you suggest that the historic preservation tax credit exists solely to promote construction? Why is construction more deserving of promotion than food production? Art? Music? Accounting? Biology?

Should the state support every industry, or should the state limit the breadth of its economic influence?

I have my answer.

Do you find it at all curious that “developers” may combine the Missouri Historic Preservation Tax Credit with the Federal Historic Preservation Tax Credit to receive up to a total of 45% of certified project costs for income-producing properties?

Should taxpayers pay for each project twice–at both the federal and state levels?

I would enjoy hearing your response. I always say the more substantive debate about tax credits, the better!

And right now, it is about all that is working. The article states that “for every public job [created by a tax credit project]…a job has been destroyed in the private sector.” False. These are private jobs! And frankly, these are about the only private construction jobs in the entire private real estate sector. Were it not for these tax credits, the painters, drywallers, etc. would probably be sitting at home collecting unemployment.

Lastly, the article discounts the fact that other states are choosing to enhance state tax credit programs by simply asking “If all of the other states jump off a bridge, should Missouri jump, too?” What an interesting argument coming from the same policy group that constantly compares MO to states without an income tax and says we should eliminate our income tax. Guess you favor jumping?

There are many benefits to historic and other state tax credits that are intentionally ignored by this article. Here’s one: Hundreds of millions in Missouri development happen each year as a result of state tax credits, but Missouri doesn’t shell out any tax credits until well after the construction workers have collected their checks, gone home and paid income taxes. How many other investments give you a return before you spend a dime?