JEFFERSON CITY - Missouri Attorney General Jay Nixon wants no more state tax credits given to a St. Louis-area property development he claims has been partly built using undocumented labor.

Nixon, a Democratic candidate to challenge Republican Gov. Matt Blunt for a second term in 2008, announced yesterday his office had written to the Missouri Housing Development Commission (MHDC) over the issue. He termed it "unacceptable" to direct more tax dollars to projects known to employ undocumented workers.

The attorney general's release claimed more than $4 million in extra tax credits had been "secretly" approved in August 2006 for builder/developer Gundaker Commercial Group's suburban-St. Louis O'Fallon Lakes project. It added the use of undocumented labor at the site was known in February 2006.

Gundaker CEO Mike Hejna said the additional tax credits were needed to cover the extra costs of firing the contractor who used the undocumented workers and replacing them with local union labor. Nixon's letter "really smacks more of politics than anything," Hejna told the AP.

MHDC Chairman Richard Baalman appeared to agree. "Things get political awfully fast, and I'm trying to stay out of that," Baalman told the AP. But he also pledged to examine Nixon's allegations, saying they "got my attention".

In 2004 the MHDC approved $7.4 million in federal tax credits and $6 million in state credits for the project over he next 10 years, AP noted.

Republican state Treasurer and former MHDC co-chair Sarah Steelman, who still serves as a commissioner alnogside Nixon, Blunt and GOP Lt. Gov. Peter Kinder, also blames electioneering. "It appears to me that there's politics being played between Nixon and whoever he wants to pull into this," Steelman said.