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TAX CREDIT
CORNER
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Center
for Emerging Technologies
By Scott Hall
The State of Missouri has multiple tax credit programs to provide
incentives for investments and charitable contributions to approved
projects. This regular column features examples of how the various
Missouri state tax credit programs benefit the State, generally,
and St. Louis in particular.
Few would have guessed in the early 1760s that Pierre Laclede’s
small trading post along the banks of the Mississippi River would
become the “Gateway to the West.” First populated for its ideal
trading location along the Western frontier, St. Louis boomed upon
recognizing the power of American business, building the first railway
across the Mississippi River and creating the major thoroughfare
for westward traffic. As industry changed, so did the needs of the
great American city and local business leaders adapted by exploring
the automotive and airline industries. Now, area leaders are again
trying to capitalize on the changing face of American business by
expanding the Center for Emerging Technologies, a St. Louis small
business incubator that specializes in bio-medical and life science
companies. Funding this expansion will be an array of public and
private resources, most notably four Missouri state and federal
tax credit programs.
The Center
for Emerging Technologies,
created in 1998 to offer services to
start-up business, quickly outgrew
its space and is now expanding. |
The Center for Emerging Technologies (“CET”) was created in 1998
to provide infrastructure in support of local development of potentially
high-growth technology companies. By offering critical services
to start-up businesses, particularly those in the bio-medical and
life sciences industries, CET is hoping to harness the power of
the next wave in business technology. However, as an anchor for
the St. Louis Technopolis, an urban plan that will use historic
buildings to house technology-based redevelopment in the neighborhoods
between Washington University Medical Center and St. Louis University,
CET hopes to generate more than just cutting edge industry. “This
is more than just business development, it is urban redevelopment,”
Barbara Enneking says, consultant for CET and St. Louis Technopolis.
When CET quickly filled its initial space and decided on a plan
for expansion, it did not have to look far. Sitting next door was
a building with both proximity and history. Built in 1907, the Dorris
Motor Car Building housed St. Louis’ first automobile manufacturer,
an equally hi-tech business in its day. Since the building carried
with it such historical significance, it qualified for Missouri
Certified Historic Tax Credits. This program offers credits of 25%
of qualified costs against Missouri State income tax liability for
rehabilitation of certified historic buildings or buildings within
certified historic districts. More importantly though, these credits
are transferable. Thus, to the extent that CET could not use these
credits against their own liability, they sold them to Firstar Bank’s
Missouri Tax Credit Clearinghouse. The Clearinghouse then can sell
these credits to other qualified Missouri tax payers. One other
unique aspect of the Missouri State historic credits, is that they
can be used in conjunction with the Federal Historic Tax Credits,
which offer an additional 20% for rehabilitation of historic buildings.
“The ability to use both the Missouri state and federal historic
tax credits allows for the dynamic redevelopment of our most sacred
neighborhoods,” notes Kathy Bader, president of the Missouri Tax
Credit Clearinghouse.
The old
Dorris Motor Car Building, built in 1907,
is now being renovated to house the expansion
of the Center for Emerging Technologies as
pictured in the artist's rendering above. |
Like many older buildings, the Dorris Motor Car Building was contaminated
with hazardous materials. Such materials often get in the way of
redevelopment. To encourage development of such buildings, Missouri
lawmakers created the Brownfield-Remediation Tax Credit Program,
which offers the lesser of 100% of all capital and operating costs
necessary to remove hazardous substances or the total “net state
economic benefit” of the project. This program has proved to be
an effective way for St. Louis and other Missouri cities to maintain
much of their historic character.
The fourth tax credit program used in the CET expansion was designed
specifically for organizations like CET. The Small Business Incubator
Tax Credit Program authorizes the Missouri Department of Economic
Development to grant a credit equal to fifty percent of any qualifying
donation to certain business incubator projects. Hopefully, with
help from this particular program, St. Louis will again be blossoming
with high-tech buildings.
In addition to the use of the state and federal tax credits, the
CET also benefited from additional financing in the forms of a Department
of Housing and Urban Development grant, city involvement in the
form of Tax Increment Financing, and a Program Related Investment
loan from the Danforth Foundation. Also, Ralph Korte, of St. Louis-based
Korte Construction, became an instrumental private investor in the
project.
Maintaining a state-of-the-art city isn’t easy. The constantly evolving
needs of today’s municipalities have community leaders continually
strategizing. Throughout its history, St. Louis has successfully
adapted to changes in business, capitalizing on trends that have
made it one of America’s greatest cities. With the help of Firstar
Bank’s Missouri Tax Credit Clearinghouse and several Missouri State
and Federal tax credits programs as well as many other public and
private investors, the Center for Emerging Technologies will continue
to bring high-tech businesses to St. Louis, ushering the city into
the 21st century.
Scott Hall is an associate of DFC Group, Inc., tax credit consultants
to the Firstar Tax Credit Clearinghouse. |
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