SCS/HS/HB 197 - This act makes various changes to the state enterprise zone and rebuilding communities laws. This act:

(1) 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 this plan is submitted and approved by the department's director;

(2) Allows Sugar Creek to establish a satellite enterprise zone within its corporate limits;

(3) Allows St. Joseph to establish a satellite enterprise zone within its corporate limits. The city must submit a plan to the department describing how the zone corresponds to the city's overall enterprise zone strategy. The zone will not be designated until this plan is submitted and approved by the department's director;

(4) Requires the department to establish an enterprise zone in the cities of Bourbon, Richland and Raytown; and

(5) Requires the department to establish Columbia as an enterprise zone.

Concerning the rebuilding communities and neighborhood preservation act, the act:

(1) Expands the definition of "eligible costs for a new residence" to include demolition;

(2) Expands the definition of "eligible costs for rehabilitation" to include expenses associated with the renovation or rehabilitation of an existing structure;

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

(4) 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;

(5) 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 multiple individual structures, in addition to single residences;

(6) 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 act 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

(7) 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.

Regarding the distressed community tax credits: for a United States census block group, or contiguous group of block groups, to be considered a "distressed community," current law states that the population for the block group must be 2,500 and the median household income must be below 70% of the median household income for the area to which the block group belongs. The act decreases the population requirement to 500 and increases the median household income threshold to 75% of the median household income for the area to which the block group belongs. The act also 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 to include the expansion of those zones done after March 16, 1988.

This act authorizes an income tax, corporation franchise tax, or express company tax credit of up to 50% of any contribution of $200 or more to a certified nonprofit educational assistance organization. The cumulative amount of tax credits statewide are capped at $5 million per year. Tax credits taken cannot exceed the taxpayer's liability but may be carried forward up to four years. Any contribution already claimed on the taxpayer's federal income tax return must be added back in the computation of Missouri income taxes. The Department of Economic Development will administer the tax credit program. The department will select designated nonprofit oversight organizations to assist in the administration of the tax credit program and in the selection of certified nonprofit educational assistance organizations that meet the criteria provided in the substitute. This provision is limited to students attending a school in Kansas City and St. Louis

This act modifies the Missouri Certified Capital Company Law. The act includes within the existing law those "qualified investing entities" that meet certain criteria. Such entity must be a wholly owned subsidiary of a certified capitol company. Investments made by a qualified investing entity will be treated as if they were made by a certified capitol company. The act also requires that an investing business be a small business.

This act makes various changes to incentive programs managed by the Department of Economic Development ("DED"). Those changes are:

(1) Regarding Chapter 100 industrial development revenue bonds, the impact on state sales tax revenue is added to the existing reporting requirements;

(2) Regarding Business Use Incentives for Large Scale Development "BUILD", the act:

1. Removes the exclusion of health and professional firms;

2. Reduces the number of new jobs and size of investment to qualify;

3. Removes cumulative bond cap language;

4. Adds an annual tax credit cap of $11 million;

(3) Regarding the New/Expanding Business Facility Tax Credit, the act sunsets the credit; projects commencing operations on or before August 28, 2003, will continue to receive incentives; no new projects will be allowed;

(4) Concerning enterprise zones, the act directs the Joint Committee of Economic Policy and Planning to conduct a review and prepare a report;

(5) The act removes DED's participation in the Charcoal Producer's Tax Credit makes it completely a department of natural resources program;

(6) The act repeals the Transportation Development Tax Credit, the Film Production Tax Credit, the Individual Training Account "Skills Development" Tax Credit; the Mature Worker Tax Credit and the SBA/USDA Loan Guarantee Fee Tax Credit;

(7) Regarding Missouri Technology Corporation ("MTC"), the act

1. Adds protection to business records submitted to MTC so as to make them closed records;

2. Adds a member to the board of directors - the Commissioner of Higher Education;

3. Adds various powers to the MTC, including suing and being sued, purchasing and selling property, charging a fee for applications, and creating accounts outside the state treasury;

(8) Increases the reporting requirements concerning DED programs;

(9) Regarding the Research Tax Credit, the act:

1. Limits the credit to apply only to "targeted industries";

2. Implements a scale of the percentage of expenses can be count toward qualifying for the credit depending on years of existence of the taxpayer;

3. Removes restrictions on transferability;

4. Removes the "aggregate" counting of tax credits for the cap;

(10) The act repeals various provisions from the Affordable Housing Assistance Program, the Neighborhood Assistance Program, and the Youth Opportunities Program;

(11) Creates a new competitive communities tax credit program, wherein:

1. A Flexible credit based upon a multi-year plan adopted after hearings;

2. The Plan must consider/address the following:

a. Targeted industries

b. Distressed communities

c. Wages

d. Investment

e. Local economy

f. Local participation

g. Cost benefit

3. Approved project must enter into agreement with DED

4. Tax liability will be applied against those in Chapters. 143, 147, 148, 153

5. Five year carryforward

6. Sellable, transferable

7. 5 million annual cap

(12) Creates a new Sustainable Neighborhoods and Communities tax credit act wherein:

1. Six categories of projects will qualify:

a. direct service

b. youth service

c. capital campaign

d. physical revitalization

e. youth employment

f. small business revolving loan

2. Credit is for contribution, investment or wages, depending

3. DED will adopt a multi-year plan after hearings for priorities and any set-asides for categories

4. At least an annual application cycle

5. Standard is 50% credit; 70% for rural projects

6. 3 year carryforward

7. revocation for misrepresentation

8. 15 million annual cap
JEFF CRAVER