HCS HB 863 -- TAX INCENTIVES FOR ECONOMIC DEVELOPMENT

SPONSOR:  Richard (Wasson)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Job
Creation and Economic Development by a vote of 18 to 0.

This substitute establishes the Downtown Revitalization
Preservation Program which allows any municipality with fewer
than 200,000 residents to undertake redevelopment projects to
reduce blight in their downtown-area if certain requirements are
met.

The municipality must submit an application to the Department of
Economic Development for approval.  The application requirements,
which include a development plan, are specified.  Cities
participating in the program are prohibited from simultaneously
receiving the state's tax increment financing.  Cities with a
population of 100,000 to 199,999 must have a capital investment
of at least $5 million; cities with a population of 50,000 to
99,999 must have at least $1 million; and cities with fewer than
50,000 residents must have at least $500,000 in order to utilize
this program.

The projects' costs are reimbursed to the cities through
disbursements from the Downtown Revitalization Preservation Fund,
which is established and will be administered by the department.
The fund will include $15 million of other net new revenues
generated annually by the development projects, reimbursement
costs charged by the state, and any gifts or other contributions.
At no time can the annual amount of other net new revenues
approved for disbursement from the fund exceed $15 million.  The
department is authorized to disburse the funds to the projects;
however, projects cannot receive disbursements for more than 25
years.

FISCAL NOTE:  No impact on state funds in FY 2006, FY 2007, and
FY 2008.

PROPONENTS:  Supporters say that the program is similar to the
Missouri Downtown Economic Stimulus Act (MODESA), but it is
designed to be used for small and medium-sized cities.  MODESA is
too expensive for most Missouri cities and towns, so the bill
helps level the playing the field so that all areas of the state
can receive similar assistance to redevelop their historic
downtowns.

Testifying for the bill were Representative Wasson; City of
Springfield; City of Joplin; and City of Montgomery.

OPPONENTS:  There was no opposition voiced to the committee.

OTHERS:  Others testifying on the bill say that it is similar to
MODESA, but it's cheaper and more streamlined allowing smaller
cities to use it.  Small cities cannot afford MODESA, and the
application process is too cumbersome for their smaller staffs.
The state's largest cities are able to use MODESA because they
have large staffs who are often very experienced in redevelopment
making it easier for them to complete the application.  The
cities of Kansas City and St. Louis also have access to more
capital than the state's smaller cities, so they can more easily
afford MODESA.

Others testifying on the bill was Department of Economic
Development.

Alice Hurley, Legislative Analyst

Missouri House of Representatives
93rd General Assembly, 1st Regular Session
Last Updated August 25, 2005 at 1:20 pm