Government & Politics

‘Affordable housing crisis’: Future of Missouri low-income tax credit still in flux

Missouri Gov. Parson’s inner circle

Mike Parson's closest advisers includes longtime friends and veterans of state government.
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Mike Parson's closest advisers includes longtime friends and veterans of state government.

Matt Fulson’s company had barely completed a low-income housing development for seniors near 27th Street and Prospect Avenue in Kansas City before it was completely leased.

So the founder and president of Fulson Housing Group began making plans for a second 40-unit project nearby. He wants to build another not far down 27th Street at the site of the former Greenwood Elementary School.

“That area is the oldest population in the city,” Fulson said. “A lot of them are still in single family homes of early 1900s vintage, and they can’t care of those homes anymore. They want something affordable, and they want to stay in the neighborhood.”

“The need,” he said, “is substantial.”

But his plans are on hold, at least for now, because the state hasn’t issued any new tax credits to developers of low-income housing since former Gov. Eric Greitens maneuvered to shut the program down in 2017.

“We’re trying to provide affordable housing, which is something the market will not do,” Fulson said.

The $150 million a year program has long been controversial in Missouri politics.

It’s credited with helping create as many as 2,500 housing units each year for Missouri’s most vulnerable residents, including senior citizens, veterans and the disabled.

Yet detractors argue the program is inefficient at best and a giveaway to deep-pocketed developers at worst.

After he took over following Greitens’ resignation last year, Gov. Mike Parson – a longtime supporter of low-income housing tax credits – said he wouldn’t allow state credits to be issued before lawmakers passed significant reforms.

When it became clear that legislation enacting changes was dead, Parson waffled on that pledge and indicated he was considering turning the tax credit back on without the General Assembly.

Now there’s talk of Parson calling lawmakers back into special session later this year to focus on getting the program up and running again.

“All options are on the table and no approaches have been ruled out,” Kelli Jones, Parson’s press secretary, said in an email to The Star.

State Treasurer Scott Fitzpatrick, a Republican from Shell Knob who sits on the board that oversees the program, said talks are ongoing about the future of the tax credit.

But he doesn’t believe the governor will turn it back on without the legislature.

“If there were a special session, that could change the trajectory,” Fitzpatrick said. “But right now, I don’t see it as likely the state credits get issued this year.”

House Speaker Elijah Haahr, R-Springfield, downplayed the chances of a special session.

“There’s no indication that’s going to happen at this point,” Haahr said, “but it has certainly been discussed.”

Senate Majority Leader Caleb Rowden, R-Columbia, agreed.

“We’ve heard some of the conversation about a special session,” he said. “They haven’t gotten very far.”

Fulson said the uncertainly leaves developers like him and low-income Missourians in need of affordable housing left in difficult straits.

“There is most certainly an affordable housing crisis in Missouri,” Fulson said.

‘Tax credit millionaires’

Congress established the program in 1986, through which each state receives an annual allotment of federal tax credits. Beginning in 1997, Missouri established a 100 percent, dollar-for-dollar match of federal funds.

The Missouri Housing Development Commission (MHDC), a 10-member board of elected officials and gubernatorial appointees, awards the credits to developers through a competitive process. They sell the credits to generate equity for their projects.

The program has been instrumental in several Kansas City ventures , including the St. Michael’s Veterans Center for homeless veterans, Curls Manor and Paseo Gateway.

But it has also come under sharp criticism as lawmakers repeatedly tried and failed for years to cap how much state money was allocated to the program.

During his successful 2016 campaign for governor, Greitens repeatedly targeted the program as a special-interest boondoggle that mainly benefited “rip-off artists.”

“There’s one group that’s been ripping off Missourians for years,” Greitens said regularly during his time as governor. “That’s the tax-credit millionaires.”

Greitens and other critics of the tax credit pointed to a 2009 audit that found only 42 cents of every $1 of credit was used for low-income housing projects.

Once he became governor, Greitens began stacking the MHDC with fellow critics of the program.

By late 2017, he had enough votes to shut it down.

Now, an estimated 100,000 people are on waiting lists for low-income housing in Missouri, said Jeff Smith, the executive director of the Missouri Workforce Housing Association.

“This is the only program, essentially, that helps facilitate the development of decent, safe, affordable housing in the state,” Smith said. “Every month that we go, more people end up on wait list for decent housing.”

Fulson said the idea that he or his colleagues are getting rich and ripping off taxpayers is absurd.

“It’s a plain misunderstanding of how the program works,” he said.

Smith noted that of every tax credit dollar, the developer gets around a dime, which has to cover all the overhead associated with the project. And the 42 cent figure used by critics is outdated, he said, because that was “at the depths of a recession where the demand for credits was kind of in the tank. Now it’s close to 60 cents.”

Tax credits are not redeemed until after all units in the development are filled. And then only one-tenth of the award is issued every year for 10 years.

Greitens attacks

While Greitens’ departure from the governor’s mansion last year may have initially been seen as clearing a path for the program’s return, in reality things remain complicated.

While he was fending off criminal charges and likely impeachment, Greitens accused the low-income housing industry of conspiring to publicize allegations of sexual misconduct that upended his political career.

A month after Greitens orchestrated the demise of the tax credit, newspaper publisher Scott Faughn paid $50,000 in cash to the attorney for the ex-husband of the woman who accused Greitens of coercive and violent sexual misconduct.

Shortly after the payment, the ex-husband shared with a St. Louis television station a secret recording he’d made of his former wife. She detailed how Greitens allegedly tied her up, stripped off her clothes, photographed her naked without her consent and threatened to release the image if she told anyone about their affair.

Faughn would eventually pay the attorney another $70,000 in cash, keeping the transactions secret for months while continuing to cover Greitens both in his newspaper and on his TV show – which is sponsored by Sterling Bank, a Poplar Bluff-based bank that is highly involved in low-income housing tax credits.

When the payments were eventually revealed, Faughn fled the state to avoid a subpoena from Greitens’ lawyers.

The attorney who received the payments testified that he was told the cash came from a GOP donor who wanted to oust Greitens.

Faughn has maintained that the money came from his own bank account and it was paid in order to secure the ex-husband’s secret recordings for a book project.

Greitens’ administration eventually became engulfed in scandal and criminal charges.

He resigned on June 1, 2018, as part of a plea deal with St. Louis Circuit Attorney Kim Gardner, who herself now faces a grand jury investigation over her office’s conduct during the prosecution of Greitens.

The original source of Faughn’s $120,000 remains a point of contention in Jefferson City, even as prominent Missouri elected officials like Parson and Fitzpatrick continue to regularly go on his television program.

The lingering questions about the money, and years of attacks against the program’s integrity by Greitens, have helped hamstring efforts to enact reforms, Rowden said.

“It’s the problem with using that sort of heightened rhetoric,” he said. “You hurt the more meaningful conversation. You demonize the ‘greedy developer,’ but you end up hurting the thousands of people in desperate need of affordable housing.”

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Jason Hancock is The Star’s lead political reporter, providing coverage of government and politics on both sides of the state line. A three-time National Headliner Award winner, he has written about politics for more than a decade for news organizations across the Midwest.