"The Low Income Housing Tax Credit Program needs to be restructured" Montee said. "Credits issued and redeemed are skyrocketing past all earlier projections and just 35% of the money is actually spent on building quality housing for Missourians."

(JEFFERSON CITY, MO) – Today State Auditor Susan Montee released an audit of Missouri's Low Income Housing Tax Credit Program (LIHTC), which evaluated the Missouri Housing Development Commission's (MHDC) administration and the cost-effectiveness of the LIHTC program. These credits along with other financing sources provide financing for new housing construction or rehabilitation of existing properties. Approximately 37,000 low income housing units have been approved for construction using the state LIHTC from 1998 to 2008.

For every $1 in housing tax credits authorized and issued, the current tax credit model provides only about $.35 towards the development of housing. The remaining $.65 goes to investors, syndication firms, and to the federal government in the form of increased taxes resulting from the use of state tax credits. For fiscal year 2007, Missouri ranked second in per capita state funding of all states with state LIHTC programs, and was one of only three states with a per capita rate exceeding $20.

Through fiscal year 2007, a total of $1.6 billion in state low income housing tax credits have been authorized, and $329 million have been redeemed, resulting in $1.27 billion in credits which remain outstanding or pending issuance. The credits issued and redeemed are significantly exceeding the projections MHDC provided the General Assembly in 1997. At its current pace, auditors project a total of $4.2 billion in credits will be authorized and $1.9 billion will be redeemed by 2020, leaving an estimated $2.3 billion in credits outstanding or pending issuance, with annual redemptions exceeding $100 million.

The allowable project cost limits used during the project evaluation process exceed cost limits recommended by the National Council of State Housing Agencies. In addition, MHDC staff does not create detailed documentation to disclose how projects are selected to receive tax credits and weaknesses exist in procedures to recapture tax credits on noncompliant projects.

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