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MHDC: Housing Agency Gets New Rules

Columbia Daily Tribune

By: Henry J. Waters III

Saturday, September 26, 2009

Soon after Missouri Treasurer Clint Zweifel became chairman of the Missouri Housing Development Commission, he proposed conflict-of-interest reforms. Soon enough, the entire commission agreed.

The reforms were obviously needed, not because egregious fraud had occurred but because it was possible for commissioners to do undetected business with developers seeking tax benefits approved by the commission, posing obvious dangers. The issue came to the fore over an incident involving local developer Jeff Smith, who has built a number of low-income housing units with the tax-subsidized program.

Eyebrows elevated when it was revealed Smith had paid Commissioner Bill Luetkenhaus $1.7 million for a property costing Luetkenhaus only $932,000 only two months earlier. Subsequent examination indicated no wrongdoing, but the very fact such a transaction could occur without prior notice revealed a flaw in commission rules. Everyone quickly agreed reform was needed, but no formal action was taken until Zweifel came to town and pushed the matter. New rules forbid a commissioner from participating in any present or future decision concerning a developer who has any relationship with the commissioner. Disclosure is required.

Since the housing commission hands out millions in tax benefits and its members are politically selected, questions have arisen about its operations. For projects approved by the commission, developers receive credits redeemable for state income tax credit. Usually, these credits are sold to investors at a discount, providing a quick source of cash for completing the project.

Critics say a million dollars in future state income tax cost might produce only $600,000 in low-income housing. Defenders of the system say investors bid for the credits and private capital is quickly raised for needed public projects.

Smith, for one, is proud of his projects, which by all accounts and from personal observation are well built and efficiently run, filled with happy tenants. The funding mechanism does result in higher tax subsidies per square foot than simple legislative subsidies, but such subsidies are out of the question politically and the current arrangement does result in project development.

Larger questions aside, the new conflict-of-interest rules pushed by Zweifel make perfect sense. Some time ago he said next he would like to take a look at campaign contributions by developers to public officials involved in the housing program. Our energetic new treasurer is making a good start.

HJW III

It's better to have one person working with you
than three working for you.

This article was published on page A4 of the Saturday, September 26, 2009 edition of The Columbia Daily Tribune.

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