Spring 2010 issue of Horizons

Raise Your Expectations CERTIFIED PUBLIC ACCOUNTANTS AND BUSINESS CONSULTANTS

The verdict is still out if any of the bills will have enough support to survive. What is clear is that industry leaders believe any of these bills, if successful, could essentially end historic preservation projects throughout Missouri due to the financial uncertainty it would put on every project. Large HTC projects are long-term capital projects with significant private investment dollars committed upfront. Not being able to count on the tax credit, due to appropriation, in effect kills the state HTC overnight. As Missouri struggles to recover from the greatest economic challenge since the Great Depression, now is not the time to stop one of the most successful tax credit incentives programs ever developed.

“With the downturn in the economy and the difficultly in finding financing for real estate projects these days, many owners are seeking out HUD financing because of favorable interest rates, the ability to lock in for the long term, and the ability to obtain nonrecourse financing. Basically, HUD is one of the only active lenders out there.” Given the difficulty in obtaining financing, Herdlick said, “The timeline to close a deal has been a real challenge for project owners. Projects are taking six months to a year to close, which has created a lot of stress on the industry.” Herdlick has advised clients to focus on locking up financing before shopping for a federal and/or state credit investor and/or buyer. “Most tax credit buyers today have been bombarded with requests for tax credit equity, so having your financing in place can set the project apart.” The experts all agreed that obtaining financing continues to be an issue for building owners. Keller stated that, despite the success of the Missouri historic tax credit program, it continues to face ongoing legislative debate. “The financial crisis and economic downturn have made this program (and all state tax credits) an easy target given the state’s budget concerns.” As we go to press, Missouri senators have introduced three bills seeking to significantly change the Missouri tax credit programs: • Senate Bill 584 — three-year sunset periods for tax credit programs; mandatory review and reauthorization of tax credit programs • Senate Bill 728 — limits amounts of tax credits available for authorization beginning in fiscal year 2012 to amounts allocated by enactment of appropriation bills for public debt • Senate Bill 718 — repeals annual limit bypass provisions of Missouri Development Finance Board infrastructure development fund tax credit program and limits amount of tax credits available for authorization beginning in FY 2012 to amounts allocated by enactment of appropriation bills for public debt

Questions? Contact:

Bryan C. Keller, CPA Partner-in-Charge Real Estate Services Group 314.290.3341 bryan.keller@rubinbrown.com Colleen K. Conrad, CPA Partner Real Estate Services Group 314.290.3210 colleen.conrad@rubinbrown.com David Herdlick, CPA Partner Real Estate Services Group 314.290.3383 dave.herdlick@rubinbrown.com

56 u spring 2010 issue