CCS SS SCS HCS HB 289 -- TAX INCENTIVES FOR ECONOMIC DEVELOPMENT

MISSOURI DOWNTOWN ECONOMIC STIMULUS ACT

This bill:

(1)  Defines "central business district" as that area which is
locally known as the "downtown" with at least 50% of buildings
being 35 years or older and a median household income of under
$62,000;

(2)  Requires Kansas City, St. Louis City, and St. Louis County
to approve a disadvantaged business enterprise program for
implementation by the downtown economic stimulus authority.  The
bill explains the requirements of the program;

(3)  Prohibits new applications for downtown development
financing from being approved after January 1, 2013;

(4)  Allows applications for downtown development funding to be
approved prior to August 28, 2003, if the project is located in a
county for which assistance has been requested by the Governor
due to a natural disaster of major proportions that occurred
between May 1 and May 10, 2003;

(5)  Allows the Missouri Development Finance Board to approve up
to two development project applications in Kansas City prior to
December 31, 2006.  These projects will receive up to 50% of the
incremental increase in all general revenue sales taxes;

(6)  Requires Kansas City, St. Louis City, St. Louis County,
Boone County, and all municipalities within Boone County to
establish a community development corporation revolving fund for
the purpose of providing funds to community development
corporations to stimulate economic development, housing, and
other public benefits leading to the development of economically
sustainable neighborhoods;

(7)  Requires that the fund be administered by a board with six
members appointed by the mayor or chief executive officer of the
municipality.  The bill explains how the board members are
selected and their terms;

(8)  Allows the General Assembly to appropriate up to 5% of the
state sales tax increment portion of other net new revenues
generated by development projects certified for state
supplemental downtown development financing to be deposited into
the State Supplemental Downtown Development Fund for the purpose
of providing grants to these cities and counties for these
programs; and

(9)  Prohibits the sum of the grants from exceeding $1.5 million
annually.

MISSOURI RURAL ECONOMIC STIMULUS AUTHORITIES

The bill defines "development project" as a project that creates
a renewable fuel production facility.

PROVISIONS COMMON TO MISSOURI DOWNTOWN ECONOMIC STIMULUS
AUTHORITIES AND MISSOURI RURAL ECONOMIC STIMULUS AUTHORITIES

The bill:

(1)  Allows any municipality to create a Downtown Economic
Stimulus Authority or a Rural Economic Stimulus Authority, as
long as certain findings are made; however, municipalities within
St. Louis County are required to form a county-wide authority;

(2)  Prohibits downtown and rural development funding from being
used for the construction, maintenance, or operation of any
sports stadium or arena that is used for spectator events and
seats over 10,000;

(3)  Requires that each authority be governed by a board of
commissioners.  The bill explains how the board of commissioners
is selected for the authority.  Each board will have five to 14
commissioners;

(4)  Outlines the powers of the authority.  These authorities are
prohibited from exercising eminent domain;

(5)  Explains how these authorities may dispose of property and
discusses how fair market value will be determined;

(6)  Explains the requirements of the downtown and rural
development plans;

(7)  Allows the municipality and the authorities to issue bonds
for a development project but prohibits the state from issuing
bonds for a development project;

(8)  Requires that, if an authority's development plan includes
an endowment of positions at certain institutions of higher
education, the endowment first be funded with a private donation
to the institution in an amount equal to at least 50% of the
total endowment.  The remaining portion of the endowment can be
paid from local or state funds associated with the development
project;

(9)  Allows municipalities to apply for money from the State
Supplemental Downtown Development Fund by submitting an
application to the Missouri Development Finance Board.
Municipalities with a rural economic stimulus authority can apply
for money from the State Supplemental Rural Development Fund by
submitting an application to the Missouri Agricultural and Small
Business Development Authority.  The bill explains the
requirements of both applications;

(10)  Prohibits the amount of State Supplemental Downtown
Development Financing or State Supplemental Rural Development
Fund approved for a project from being greater than the projected
state benefit of the development project;

(11)  Prohibits the amount of money available for disbursement
from the State Supplemental Downtown Development Fund from
exceeding $150 million annually.  The amount of money available
for disbursement from the State Supplemental Rural Development
Fund cannot exceed $12 million annually;

(12)  Prohibits development projects that use State Supplemental
Downtown Development Financing or State Supplemental Rural
Development Financing from also using tax increment financing;

(13)  Considers the reasonable costs incurred by the departments
of Economic Development and Revenue, the Office of
Administration, the Missouri Development Finance Board, and the
Missouri Agricultural and Small Business Development Authority
for processing applications for funding as allowable development
project costs.  These costs can include the portion of salaries
and expenses that can be reasonably allocated to each development
project;

(14)  Establishes the State Supplemental Downtown Development
Fund and the State Supplemental Rural Development Fund, which are
both administered by the Department of Economic Development.  The
downtown development fund will consist of the first $150 million
of other net new revenues generated annually by the development
projects, fees charged for salaries of state employees that are
attributable to the development projects, and any gifts or other
contributions.  The rural development fund will consist of the
first $12 million of other net new revenues generated annually by
the development projects, fees charged for salaries of state
employees that are attributable to the development projects, and
any gifts or other contributions;

(15)  Requires the department to annually disburse financing from
the funds in amounts determined by the certificates of approval
for projects.  If the revenues in the funds are not sufficient to
equal the amounts indicated on certificates of approval, the
department will disburse revenues on a pro rata basis to all
approved projects;

(16)  Prohibits municipalities from obligating state funds prior
to receiving a certificate of approval from the department;

(17)  Requires a joint committee of the General Assembly to
review the act every five years, beginning in 2008.  A report
must be issued to the Speaker of the House of Representatives and
the President Pro Tem of the Senate no later than February 1
following the year in which the review was conducted;

(18)  Requires each municipality to submit an annual report
concerning the status of its development plan to the director of
the department.  The department and the Missouri Development
Finance Board will review reports submitted for downtown
development projects, and the department and the Missouri
Agricultural and Small Business Development Authority will review
reports submitted for rural development projects; and

(19)  Requires the director of the department to submit a report
to the Governor, the Speaker of the House of Representatives, and
the President Pro Tem of the Senate summarizing the information
submitted by the municipalities.  This report must be submitted
by April 30 of each year.

AGRICULTURAL AND SMALL BUSINESS DEVELOPMENT AUTHORITY

The bill defines a new term, "value-added agricultural products."

AUTO MANUFACTURING PLANT IN HAZELWOOD

(1)  Exempts 50% of the Missouri taxable income attributed to the
Hazelwood Ford Plant from taxation;

(2)  Allows Ford to use the following tax credits for 10 years:

(a)  A $400 or $500 tax credit for each employee retained by Ford
at the Hazelwood facility;

(b)  A $400 tax credit for each year in which a retained employee
lives in Hazelwood.  This tax credit can be prorated for
employees who have not lived in Hazelwood for a full year;

(c)  An annual $400 tax credit for each retained employee that
fits the criteria for "a person difficult to employ."  This tax
credit can be prorated for employees who have not worked for the
facility for a full year;

(d)  A tax credit equal to 80% of the training expenses that are
in excess of $400 per trainee for trainees who are residents of
Hazelwood or who meet the definition of "persons difficult to
employ."  This tax credit cannot exceed $400 per trainee; and

(e)  A tax credit equal to 10% of the first $10,000 of qualifying
investment, a 5% tax credit on the next $90,000 of qualifying
investment, and a 2% tax credit on all remaining qualifying
investments;

(3)  Allows Ford to receive a tax refund for the facility in
Hazelwood, but only if the certified tax credits exceed Ford's
total Missouri tax liability by at least $1 million.  In this
case, a portion of the tax credits earned will be considered an
overpayment of taxes and may be refunded.  The maximum amount of
the refund cannot exceed $2 million a year;

(4)  Prohibits Ford from taking advantage of the tax exemption
for new businesses in enterprise zones, tax credits for a new or
expanded business facility in an enterprise zone, tax credits for
training employees, tax credits for new or expanded business
facilities, or the income tax refund for establishing a new
business facility in an enterprise zone if it uses the tax
exemption, tax credits, and tax refund explained in the bill;

(5)  Allows Ford to participate in the New Jobs Training Program;
and

(6)  Requires any contract entered into between Ford and the
Department of Economic Development to include a requirement that
the company maintain operations at the facility for at least 10
years at a specified employment level.  The contract must also
include provisions for repayment of incentives upon breach of
contract.

For the purposes of tax credits for Business-Use Incentives for
Large-Scale Development (BUILD), the bill defines "essential
industry" to include the Ford Plant in Hazelwood.  Existing jobs
at the plant are allowed to be considered new jobs for the
purpose of receiving BUILD tax credits.

The bill also limits the amount of authorized BUILD tax credits
to $11 million annually and removes the $75 million limit on
revenue bonds the Missouri Development Finance Board can sell.

SUPER-TAX INCREMENT FINANCING

The bill:

(1)  Authorizes retail sales taxes to be included in the
calculation of "new state revenues" for the purpose of state tax
increment financing (Super-TIF) under certain circumstances;

(2)  Expands what is required on a Super-TIF application; and

(3)  Specifies how economic activity taxes and new state tax
revenues will be calculated for a national headquarters that has
moved from another state to Missouri.

INDUSTRIAL DEVELOPMENT CORPORATIONS

For any industrial development plan approved after August 28,
2003, that authorizes the issuance of revenue bonds or the
conveyance of a fee interest in property to the municipality, the
bill requires that the project plan also include a statement
identifying each taxing district affected by the project, except
property associated with railroads, street railroads, bridges,
and express and public utilities that are assessed by the State
Tax Commission.  The project plan must also include the most
recent equalized assessed valuation of the real and personal
property included in the project and an estimate as to the
equalized assessed valuation of real and personal property
included in the project after development.  A cost-benefit
analysis is also required, as is the identification of any
payments in lieu of taxes or other payments expected to be made
by the lessee of the project.

The bill requires that the county in which the municipality is
located and any school district be notified of any hearing
regarding an industrial development project and invited to
testify to the governing body about the project.

The current assessed value of all property within the taxing
district must be included in the aggregate valuation of assessed
property to be used for the purpose of determining the local
government's debt limitation.

Current law requires municipalities to file a report with the
Department of Economic Development regarding the revenue bonds
issued in the previous year.  The bill requires the report to
also include a general description of the property purchased by
the municipality with bond proceeds.

TAX CREDITS FOR INVESTMENT IN SMALL BUSINESSES

The bill:

(1)  Redefines the term "community development corporation"; and

(2)  Requires the Department of Economic Development to allocate
up to 10% of its total appropriation for community development
corporations to the community development corporation association
for costs associated with the activities of the association.

TAX CREDITS FOR INVESTMENTS IN CERTIFIED CAPITAL COMPANIES
(CAPCO)

The bill allows a qualified investing entity to make qualified
investments on behalf of a certified capital company.  A
qualified investing entity must be a wholly owned subsidiary of a
certified capital company, so it would be making qualified
investments on behalf of its parent company.  In addition, with
regard to CAPCO, the bill:

(1)  Modifies the definitions of "capital in a qualified Missouri
business" and "qualified Missouri business" and defines the term
"qualified investing entity";

(2)  Removes the limitation on gross sales of a qualified
Missouri business in a distressed community.  Current law states
that these businesses cannot have gross sales in excess of $5
million during the most recently completed fiscal year; and

(3)  Requires that all qualifying investments made by a
qualifying investment entity receive prior approval from the
Department of Economic Development before they can be considered
actual qualifying investments.

TRANSITIONAL SCHOOL DISTRICT

The bill exempts the operating levy of the transitional school
district (which has the same boundaries as the St. Louis City
School District) from being subject to a certificate of tax
abatement and further exempts the operating levy or its sales tax
equivalent amount from tax increment financing in connection with
any redevelopment plan adopted by the City of St. Louis on or
after January 1, 2004.

SATELLITE ENTERPRISE ZONES

The bill requires the Department of Economic Development to
designate satellite enterprise zones in St. Joseph, Independence,
and Springfield.

OTHER

The bill:

(1)  Prohibits investment funds services corporations from being
required to pay an annual license fee in excess of $25,000 after
December 31, 2003; and

(2)  Prohibits any village with fewer than 1,300 inhabitants from
imposing a business license tax in excess of $10,000 per license.

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