Greitens holds all the cards in embargo of state low-income housing tax credit

Feb 2, 2018
Originally published on February 2, 2018 7:03 am

Missouri Gov. Eric Greitens upset a bipartisan contingent of legislators when his interim appointees made major public policy decisions.

That includes how the Republican governor and his appointees in December 2017 helped halt state low-income housing tax credits, an incentive that encourages developers to produce affordable housing for the working poor and elderly.

In response, the Senate sought to prevent Greitens’ appointees from ever serving on the commission that approves state low-income housing tax credits. Those three, Craig Porter, Alan Simpson and John Scariot, ended up resigning from the Missouri Housing Development Commission on Thursday.

Yet in many respects, how the Senate acted makes no difference: Greitens still possesses all the leverage to block the tax credits as long as he’s governor.

Here’s why: Regardless of whether the Senate voted down Greitens’ nominees or if they voluntarily resigned, the commission only has six out of 10 members — which is the exact number required to have a quorum under state law. But that threshold is only reached if Greitens shows up to meetings, which is a fairly rare occurrence.

Even if the governor did regularly show up, it’s highly unlikely his presence would prompt state low-income tax credits from being issued again. That’s because state law says that “no action shall be taken by the commission except upon the affirmative vote of at least six of the members.” Four out of the six current commission members, including Greitens, voted for the tax credit embargo.

Jason Crowell was one of Greitens’ appointees who helped halt state low-income tax credits. In his view, the whole question of whether the commission would start issuing tax credits again was “settled in December.” 

“This game’s already over,” said Crowell, who left the commission soon after the tax credit decision become final.

Crowell and other critics of the low-income housing tax credit program contend the incentive is inefficient — and is a financial boon for bankers, syndicators and developers. But proponents say the tax credit is critical to developing high-quality housing for vulnerable Missouri residents. They’ve also disputed claims, including from Republican and Democratic state auditors, that the program is as wasteful as detractors alleged.

In any case, Crowell said the onus is on the General Assembly to make changes to the low-income housing tax credit program. If the legislature doesn’t act to Greitens’ liking, the governor could indefinitely block those incentives from being issued, which could continue as long as three to seven years, depending on whether he gets re-elected.

“It’s insane what goes on to benefit these tax credit takers,” Crowell said. “And the governor in his leadership is going to fix this. So, members that are beholden to the tax credit takers, members that put campaign donations from these people above driving efficiency in the program can complain all they want. But they’re not going to change the reality of the situation that happened in December of 2017.”

One of the senators looking to reject Greitens’ three commision nominees, Sen. Rob Schaaf, R-St. Joseph, acknowledged that the governor had the upper hand in this dispute.

“The bottom line of it is the governor always wins,” Schaaf said. “He’ll replace all these members of these boards and commissions eventually. He’ll get his way. There won’t be any more low-income tax credits. There will be a new commissioner of education. All of the boards will eventually be stacked with his people. But what we —  the Senate is saying is if we see you railroading the process, we’re going to put a stop to it.

“We’ll win an occasional battle like we did today,” he added. “We know we’re not going to win the ultimate war.”

Tax credit issue looms large

Lt. Gov. Mike Parson was one of two commission members to vote against the low-income housing tax credit freeze. This policy divergence is one of the reasons longtime observers of the program were carefully monitoring whether Greitens would resign after he admitted last month to having an extramarital affair before he was governor.  

That’s because if Parson would have become governor, he could make the appointments needed to reverse the tax credit blockade. This could also require appointing a replacement lieutenant governor who aligns with Parson on the tax credit issue. (Even though governors have appointed lieutenant governors in the past, there’s nothing in statute that spells out whether such an appointment is allowed. The legislature may need to pass a bill allowing a governor to fill a lieutenant governor vacancy.)

Crowell said there’s little doubt that some elected officials’ desire to see Greitens resign is linked to disagreement with the low-income housing tax credit situation.

“They’re spending my money the way they would never, ever, ever, ever spend their own money," Crowell said.  "And they’re doing that as politicians that don’t give a rip about the people that employ people back home and pay taxes. And it fires me up. That’s why I’m glad to have a kindred spirit in Gov. Greitens. I think as long as he’s on the second floor and the governor of Missouri, that philosophy’s not going to change.”

House Minority Leader Gail McCann Beatty said it’s “probably true” that some elected officials wanted Greitens to step aside because they would get more favorable policy outcomes from Parson. But the Kansas City Democrat added the incentive is crucial for housing development in urban parts of the state.

“Losing those tax credits is a big deal,” she said.

Chris Krehmeyer, Beyond Housing CEO and president, says the program can be changed to increase efficiency. But if the tax credit freeze stretches on for years, Krehmeyer said there will be a large impact on housing.  Beyond Housing has used low-income housing tax credits for housing developments throughout the St. Louis area.

“There would be a significant reduction in the projects that get done,” Krehmeyer said. “I think it will harm the quality of the projects. That means there’s fewer units of affordable housing available and fewer places for people to live. Neighborhoods have fewer investments in capital dollars.”

St. Louis Public Radio’s Marshall Griffin contributed information to this story.

On the Trail, a weekly column, weaves together some of the intriguing threads from the world of Missouri politics.

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