HCS HB 294 & 58 -- ECONOMIC DEVELOPMENT PROJECTS

SPONSOR:  Johnson, 47

COMMITTEE ACTION:  Voted "do pass" by the Committee on Local
Government by a vote of 17 to 0.

This substitute allows Springfield to designate a satellite
enterprise zone within its corporate limits.  The zone must be on
land owned by the city which contains a wastewater treatment
plant with a capacity of 5.6 million cubic feet per day and an
electrical power plan with a capacity of at least 275 megawatts.
The city must submit a plan to the Department of Economic
Development describing how the zone corresponds to the city's
overall enterprise zone strategy.  The zone will not be
designated until the plan is submitted and approved by the
department's director.

The Department of Economic Development is required to establish
an enterprise zone in Pulaski County and the entire City of
Richland.

The substitute also allows Independence to designate Sugar Creek
as a satellite enterprise zone.  The Sugar Creek satellite
enterprise zone must be in an area of general distress, low
income, and high unemployment and within a specific population
outlined in the substitute.  Retail business, as identified by
the 1997 North American Industry Classification System sector
numbers 44 to 45, located within the satellite enterprise zone
must be eligible for all benefits under current enterprise zone
laws.

The substitute also makes changes relating to the Rebuilding
Communities and Neighborhood Preservation Act.  The substitute:

(1)  Expands the definition of "eligible residence" to include
condominiums, entire apartment buildings, or single apartments
within an apartment building;

(2)  Expands the definition of "new residence" to include
condominiums, owner-occupied units or units intended to be
owner-occupied in an apartment building, and separate, adjacent
single-family units even when these types of units are not
located in a distressed community;

(3)  Expands the definition of "project" to include the new
construction, rehabilitation, or substantial rehabilitation of
multiple residences, whether comprised of one structure
containing multiple single-family residences (e.g., an apartment
building) or multiple individual structures (e.g., townhouses or
individual homes), in addition to single residences;

(4)  Limits the tax credits available for the rehabilitation and
construction of residences in distressed communities and census
blocks to $1.5 million per project for those commenced after
August 28, 2003.  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 has not issued 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 may not exceed $500,000; and

(5)  Allows one application for tax credits to be submitted to
the department for preliminary approval in the case of projects
involving the new construction, rehabilitation, or substantial
rehabilitation of more than one residence.  Tax credits will be
awarded upon final approval of an application and presentation of
acceptable proof that substantial construction of each individual
residence has been completed, rather than delaying issuance of
the tax credits until the entire project is substantially
complete.

Relating to tax credits for investment in or relocating a
business to a distressed community, the substitute:

(1)  Reduces the population requirement for a United States
census block group or contiguous group of block groups within a
metropolitan statistical area from 2,500 to 500 for an area to be
a distressed community; and

(2)  Expands the definition of a "distressed community" to
include areas within metropolitan statistical areas that are
designated as either a federal empowerment zone, a federal
enhanced enterprise community, or state enterprise zones
designated prior to January 1, 1986, but not including the
expansion of those zones done after March 16, 1988.

FISCAL NOTE:  Estimated Net Loss to General Revenue Fund of
Minimal in FY 2004, $242,849 in FY 2005, and $242,849 in FY 2006.
The fiscal impact could be divided between the General Revenue
Fund and the County Foreign Insurance Fund (which ultimately goes
to local school districts) if some of the tax credits are
utilized against insurance premium taxes.

PROPONENTS:  Supporters say that the bill will help distressed
communities.

Testifying for the bill was Representative Marsh.

OPPONENTS:  There was no opposition voiced to the committee.

Steve Bauer, Legislative Analyst

Missouri House of Representatives
Last Updated July 25, 2003 at 10:11 am