HCS HB 780 -- ECONOMIC DEVELOPMENT

SPONSOR:  Rizzo (Scheve)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Commerce
and Economic Development by a vote of 19 to 1.

This substitute does the following:

(1)  Allows Caldwell County to impose a sales tax on all retail
sales;

(2)  Allows the residents of Newton County to impose a
hotel/motel sales tax in addition to any transient guest tax
currently in effect;

(3)  Expands the definition of a "revenue-producing enterprise,"
as it relates to enterprise zones, to include hotel and motel
activities in the City of Salem;

(4)  Designates the following cities in St. Louis County as
enterprise zones:  Berkeley, Cool Valley, Beverley Hills,
Ferguson, Jennings, Kinloch, Northwoods, and Pine Lawn;

(5)  Requires the Director of the Department of Economic
Development to reallocate very specific tax credits into other
related tax credit programs;

(6)  Allows any employee of a new business facility with the
North American Industry Classification System Number 336991 to
be considered a resident of an enterprise zone, even if the
employee ceases to live in an enterprise zone, as long as the
following conditions are met:  (1)  The individual was a
resident of an enterprise zone for one calendar month prior to
his employment with the new NAICS 336991 business facility; (2)
The individual remains employed with the new NAICS 336991
business facility, and; (3)  The individual continues to reside
in Missouri.  An NAICS 336991 business relates to motorcycles,
bicycles, and parts;

(7)  States that the amount of the qualified investment made in
a Missouri small business must remain in that business for a
minimum of 5 years and, if the business is in a distressed
community, it must remain in the distressed community for 5
years;

(8)  Revises two tax credit programs.  Under current law, of the
$16 million in community improvement tax credits allowed, $8
million are to be allocated for "eligible residence" programs
and $8 million for "qualifying residence" programs.  The
substitute states that if, by October 1 of the calendar year,
the Director of the Department of Economic Development has
issued all $8 million of the credits allowed for one of these
programs and not the entire $8 million allowance for the other
program, the director is required to reallocate 70% of any
unused tax credits from the program which has not reached its $8
million cap to the one which has.  The reallocated credits will
be given to taxpayers who have applied for, but have not
received, tax credits in that same year and who are engaged in
projects in the area where the tax credit cap has been met for
that same year.  The maximum reallocated tax credit for any
project cannot exceed $560,000;

(9)  Changes the definition of "capital in a qualified Missouri
business" to include "capital in a qualified Missouri business
or a qualified Missouri agricultural business," and requires
that, of the certified capital raised after August 28, 2001, at
least 25% of the dollar amount must be invested in qualified
Missouri agricultural businesses;

(10)  Changes the cap on the total amount of certified capital
for which earned and vested credits against state premium tax
liability are allowed for 1998, 2000, and the years after 2000.
For calendar years 1998 and 2000, the bill sets the cap at an
amount which would entitle all Missouri certified capital
company investors, on an aggregate basis, to take an additional
$5 million in tax credits.  After calendar year 2000, the cap
may not exceed an amount equal to 10% of the cumulative credits
earned in respect of certified capital invested in previous
years;

(11)  States that any certified capital which is controlled
totally by a Missouri certified capital company can now be
invested with an investor of the Missouri certified capital
company or an affiliate or subsidiary which is providing a
guaranteed payment in favor of the investors that have invested
certified capital in the company;

(12)  Expands the definition of a "distressed community" to
include specific areas of Kansas City and St. Louis County;

(13)  Reduces the limit on tax credits relating to the Family
Development Account Program from $4 million to no more than $2
million per year; and

(14)  Reduces the limit on tax credits relating to the
Individual Training Account Program from $6 million to no more
than $1 million annually.

FISCAL NOTE:  Estimated Net Cost to the General Revenue Fund of
$864,749 to Unknown in FY 2002, $865,749 to Unknown in FY 2003,
and $867,032 to Unknown in FY 2004.

PROPONENTS:  Supporters say that the Certified Capital (CAPCO)
program has been very successful thus far and that if the bill
is passed, it will provide even more capital investment for
Missouri businesses.  Others testified that without the CAPCO
program they would not have been able to start their businesses,
since "start up" companies dealing with intellectual property
(e.g., computer programming) are not generally eligible for
traditional forms of financing.

Testifying for the bill were Representative Scheve; Stifel,
Nicolaus and Company, Inc.; Advantage Capital; Capital for
Business; Advantage Capital Partners; and St. Louis Regional
Chamber and Growth Association.

OPPONENTS:  There was no opposition voiced to the committee.

Alice Hurley, Legislative Analyst

Missouri House of Representatives
Last Updated November 26, 2001 at 11:45 am