SB 377 Modifies various provisions relating to business incentives
Sponsor: Rupp
LR Number: 1961L.05C Fiscal Note: 1961-05
Committee: Jobs, Economic Development and Local Government
Last Action: 5/15/2009 - S Calendar S Bills with H Amendments--SB 377-Rupp, with HCS, as amended Journal Page:
Title: HCS SB 377 Calendar Position: 4
Effective Date: Varies
House Handler: Flook

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Current Bill Summary


HCS/SB 377 - This act modifies various provisions relating to business incentives.

SECTION 67.2050

This act allows municipalities to engage in projects involving a technology business facility which is a facility located in an underground mine with at least 2 million square feet of space used for data processing, hosting, Internet publishing and broadcasting, or web search portals. The governing body of any county, city, incorporated town, or village is authorized to: (1) Carry out technology business facility projects for economic development; (2) Accept grants from the federal and state governments for the project's purposes and enter into agreements which may be required by the grantor if the agreements are not contrary to Missouri laws; (3) Receive any gifts and donations from private sources to be used for the project's purposes; and (4) Enter into loan agreements, sell, lease, or mortgage to individuals, partnerships, or corporations any component of a technology business facility. Transactions involving the lease or rental of any project component are exempt from local sales taxes. Leasehold interests will not be subject to property taxes. If an individual or corporation transfers property for a project free of charge to the governing body of any municipality, it will retain the right to have the governing body transfer the donated property back at no cost.

This provision is identical to HB 702 (2009).

SECTION 71.275

The governing body of a municipality may annex a research park that is compact and contiguous to the existing municipal boundaries if the property has not been sold within the previous six months and the municipality receives the written consent of all the property owners. A "research park" is defined as an area developed by a university to be used by technology-intensive and research-based companies as a business location.

SECTION 99.865

Tax increments for any project of a municipality which fails to provide the statutorily required report to the department of economic development will be returned to the taxing authorities as if no TIF were in effect. The State Auditor is required to make information on municipal tax increment finance projects available to the public in a searchable database on the Auditor's website.

This provision is identical to a provision of HCS/SB 386 (2009).

SECTIONS 99.1082, 99.1088, 99.1090, AND 99.1092

The act defines "other net new revenues" as it relates to the Downtown Revitalization Preservation Program, commonly referred to as MODESA-Lite, as the amount of state sales tax increment or state income tax increment, or the sum of both, as determined under Section 99.918, RSMo; and defines "state income tax increment" as it relates to the Downtown Revitalization Preservation Program, commonly referred to as MODESA-Lite, as an estimate of the income tax due the state for salaries and wages paid to new employees in new jobs in the redevelopment area and created by the redevelopment project. Such estimate will be a percentage of gross payroll based upon analysis done by the Department of Revenue which cannot exceed two percent.

This act allows contributions to a downtown revitalization preservation development project from any private not-for-profit organization or local contributions from tax abatement or other sources to be substituted on a dollar-for-dollar basis for the local match of 100% of payments in lieu of taxes and economic activity taxes from the development's fund.

These provisions are identical to SB 479 (2009) and HCS/SB 386 (2009).

SECTION 100.286

Under current law, the Missouri Development Finance Board is prohibited from issuing the greater of ten million dollars or an amount equal to five percent of growth in general revenue receipts for the preceding three years in Missouri Development Finance Board Infrastructure Development Fund Contribution Tax Credits annually unless the Commissioner of Administration, the director of the Department of Economic Development, and the director of the Department of Revenue agree to exceed such limit. This act limits the authorization or approval of infrastructure and development contribution credits in fiscal year 2010 to no more than ten million dollars. The authorization or approval of infrastructure development contribution fund tax credits after June 30, 2010, is prohibited unless an allocation is made. Such allocation cannot exceed ten million dollars per fiscal year. The limitation on authorization and approval of infrastructure development fund contribution tax credits may only be exceeded by a signed and notarized letter evidencing mutual agreement by the Commissioner of Administration, the director of the Department of Economic Development, the director of the Department of Revenue, the Chairman of the House Budget Committee, and the Chairman of the Senate Appropriations Committee, provided that in such case no more than twenty-five million dollars in tax credits may be authorized for such fiscal year. Taxpayers must file an application with the department of economic development for infrastructure development contribution tax credits. If the amount of eligible applications exceeds the allocation for tax credits, tax credits will be awarded on a first-to-file, first-to-receive basis. The authorization or approval of infrastructure development fund contribution tax credits is prohibited after June 30, 2013.

SECTION 100.297

For fiscal year 2010, the Missouri Development Finance Board is barred from issuing more than ten million dollars in revenue bonds or notes for which tax credits are available under the bond guarantee program. Beginning July 1, 2010, the issuance of revenue bonds or notes under the Missouri Development finance board bond guarantee program will be prohibited, unless an allocation is made for the fiscal year of issuance. Such allocation cannot exceed ten million dollars in bond or note issuance. Bond guarantee tax credits are prohibited from being authorized after June 30, 2011.

SECTIONS 100.710, 100.720, 100.750, 100.760, 100.770

Currently, an eligible industry with an economic development project that is an office industry must create a minimum of 500 new jobs for the purposes of the Business Use Incentives for Large-Scale Development (BUILD) Program. This act reduces the minimum number of new jobs to 350. Currently, in order to approve an application, the board must find that there is at least one other state that the applicant verifies is being considered for the BUILD project and there is a significant disparity in the project's costs based on the incentives offered by the competing state. The act removes these requirements.

This act also authorizes the Missouri Development Finance Board within the Department of Economic Development to allow the program to temporarily suspend or waive its requirements if market or economic conditions are such that an eligible industry is unable to meet the program's requirements.

These provisions are similar to HCS/HB 575 (2009).

SECTIONS 105.145, 238.207, 238.212, and 238.235

The act requires the circuit court to order a public hearing on the creation and funding of a proposed transportation development district, if the petition to create such district was filed by the owners of all real property within the proposed district. The director of the department of revenue will perform all functions incident to the administration, collection, enforcement, and operation of transportation development district sales taxes. The board of directors of every transportation development district is required to annually submit a report of financial transactions to the state auditor. Failure to timely file such a report by a transportation development district will result in the imposition of a fine not to exceed five hundred dollars. Petitions to create transportation development districts must include details of the budgeted expenditures, including estimated expenditures for real physical improvements, estimated land acquisition expenses, estimated expenses for professional services, and estimated interest charges.

SECTION 135.155

This act allows business headquarters to receive tax credits for new or expanding businesses. Expansions at headquarter facilities will be considered separate business facilities and entitled to the credits if at least 25 new employees and at least $1 million of new investment are attributed to the expansion. Buildings on multiple noncontiguous properties will be considered one facility if they are in the same county or within the same municipality. No headquarters will receive the credits for facilities commencing or expanding operations after January 1, 2020.

This provision is similar to HCS/HB 313 (2009).

Section 135.680

This act increases the tax credit cap on New Market tax credits to $27.5 million and extends the date for reauthorization from 2010 to 2012.

This provision is similar to HCS/HB 575 (2009).

SECTION 135.1160

Beginning January 1, 2010, this bill authorizes an income tax credit for costs associated with a taxpayer's renovation of a rented residence. The rental property must be a multi-family dwelling with at least two units, one of which must be occupied by the taxpayer. The credit will be equal to 20% of the renovation's costs, up to $2,500 per taxpayer. The tax credit will be issued on a first-come, first-served basis and is not refundable or transferable but can be carried forward for three years. No more than $5 million of these tax credits can be issued in any fiscal year. The provisions of this section will expire December 31 six years from the effective date.

This provision is similar to HB 1019 (2009).

SECTION 144.022

Beginning January 1, 2009, this bill allows airports to retain all revenues received from enplanement sales taxes collected from passengers. The revenues must be used solely for marketing expenses incurred by the airport. The provisions of the bill will expire December 31, 2015.

This provision is similar to HB 1140 (2009).

SECTIONS 144.055

This act authorizes a sales and use tax exemption for machinery, equipment, & computers used by certain data center and server farm facilities.

These provisions are similar to HB 1199 (2009).

SECTION 147.010

Beginning January 1, 2010, this bill increases the outstanding shares and surplus threshold amount used to calculate a corporation's annual franchise tax from $1 million to $10 million.

SECTION 208.770

For fiscal years ending on or before June 30, 2010, the total tax credits authorized under the Family Development Account Program shall not exceed $4 million. For fiscal years beginning on or after July 1, 2010, the total tax credits authorized under this program shall not exceed $300,000.

SECTION 253.550

No more than $165 million dollars in historic preservation tax credits may be authorized in fiscal year 2010. The limit shall not apply to tax credits authorized for applicants requesting less than $350,000 in tax credits for one project. Beginning fiscal year 2011, the amount of tax credits available shall be increased by a percentage equal to the increase in the CPI for All Urban Consumers.

SECTION 253.559

This act creates new requirements that applications for a historic preservation tax credit application must include, such as proof of ownership, floor plans of the existing structure, estimated costs of rehabilitation, proof that the property qualifies as a historic structure, and other information the department requires to a determination. This act provides the procedure that will be followed when an application is denied or when all tax credits for the year are authorized. All projects receiving tax credits must begin rehabilitation within two years and evidence of compliance must be submitted. Failure to comply shall result in rescinding the tax credit.

SECTION 338.337

This act specifies that, under certain conditions, an out-of-state wholesale drug distributor that is a drug manufacturer which produces and distributes from a facility inspected and approved by the federal Food and Drug Administration will not be required to be licensed but must register its business name and address with the Board of Pharmacy within the Department of Insurance, Financial Institutions and Professional Registration and pay a $10 filing fee. This applies to wholesale drug distributors located in a foreign country, too, so long as they are authorized and in good standing to operate as drug manufacturers within that jurisdiction.

This provision is similar to HCS/HB 575 (2009).

SECTIONS 348.273 & 348.274

Subject to allocation, the Department of Economic Development will be allowed to authorize tax credits to encourage equity investment in technology-based early stage Missouri companies, commonly referred to as angel investments. Investors who contribute the first five hundred thousand dollars in equity investment to a qualified Missouri business may be issued a tax credit equal to thirty percent of the investment or forty percent of the investment if the qualified business is located in a rural area or distressed community. An investor can receive a credit of up to fifty thousand dollars for an investment in a single qualified business and up to one hundred thousand dollars for investments in more than one qualified business per year. Tax credits for equity investment in technology-based early stage Missouri companies may be carried forward for up to three years or transferred.

SECTION 393.110

This act removes the provision prohibiting the Missouri Public Service Commission from having jurisdiction over the rates, financing, accounting, or management of any electrical corporation operating as a not-for-profit cooperative.

This provision is identical to HB 599 (2009).

SECTION 447.708

This act modifies the brownfield redevelopment tax credit to include costs incurred due to environmental insurance premiums and the backfill of areas where contaminated soil excavation occurs. The act allows for the release of a prorated amount of tax credits upon receipt of a letter of completion, for a portion of a project, from the department of natural resources. It limits the tax credits to $60 million per year.

SECTIONS 620.1039

Currently, no tax credits for qualified research expenses can be approved, awarded, or issued. The act removes these restrictions and allows a tax credit equal to no more than 6.5% of a taxpayer's qualified research expenses. The department is prohibited from issuing more than ten million dollars in tax credits for qualified research expenses annually. Qualified research expenses will be limited to those incurred in the research and development of agricultural biotechnology, plant genomics products, diagnostic and therapeutic medical devices, prescription pharmaceuticals consumed by humans or animals, and electronic patient health record technology. Expenses incurred in the research, development, or manufacturing of power system technology for aerospace, space, defense, or implantable or wearable medical devices or qualified research expenses incurred in the research, development, or manufacturing of gears, speed changers, and industrial high speed drivers utilized in the wind turbine industry are also permitted. The director of the department may allow a taxpayer to transfer up to forty percent of tax credits issued, but not yet claimed, between January 1, 2010, and December 31, 2016. The act requires the director to act between August 1 and August 15 on tax credit applications filed between January 1 and July 1 for claims from the previous year. The formula is specified by which tax credits will be issued if the eligible claims for the credits exceed the annual cap. No one taxpayer can be issued more than thirty percent of the total amount of tax credits authorized in any calendar year.

SECTION 620.1878

This act establishes an energy efficiency project as a new project type under the Quality Jobs Program. Such project is defined as a qualified company that creates at least 50 new jobs and is engaged in the development of new energy efficiency technologies or manufacturing energy efficient products or components. Qualified company with a green jobs project may retain 4% of the withholding tax from its new payroll for five years if the average wage of the new payroll equals or exceeds the county average wage. Five percent can be retained if local incentives equal between 10% and 24% of the new direct local revenue; 6% if local incentives equal between 25% and 49%; or 7% if local incentives equal 50% or more of the new direct local revenue. If the qualified company creates at least 100 new jobs, it may retain this amount for six years or for seven years if it creates at least 500 new jobs. If the withholding tax is not sufficient to provide the entire benefit due the qualified company, the Department of Economic Development will issue a refundable tax credit for the difference. If the qualified company demonstrates to the department that another company expands or commences operations in Missouri or moves to Missouri from another state as a result of its relationship to the qualified company, the qualified company may be eligible for a jobs benefit. The other company must be a direct supplier or a direct purchaser of the qualifying company and must create at least 10 new jobs within a two-year period. The jobs benefit is a tax credit issued to the qualified company for three years and will be equal to 50% of the withholding for the supplier/purchaser company's new jobs if the average wage for these new jobs equals or exceeds the county average wage for the county in which the supplier/purchaser company is located.

Currently, any company which has filed for bankruptcy or has publicly announced its intention to file for bankruptcy protection is prohibited from being deemed a qualifying company for the purposes of the Quality Jobs Program. This bill allows a company which has filed or announced its intention to file for bankruptcy on or after January 1, 2009, to be a qualifying company for the program if it: (1) Certifies to the Department of Economic Development that it plans to reorganize and not to liquidate; and (2) Produces proof after its bankruptcy petition has been filed that it is not delinquent in filing any tax returns or making any payments due to the state including, but not limited to, all tax payments due after the filing of the bankruptcy petition and under the terms of the plan of reorganization.

This act establishes a premium employment project as a new project type under the Quality Jobs Program. A qualified company must, within two years of commencement of operations, create at least 100 new jobs, offer new employees health insurance and pay at least 80% of the premiums, and the wage for at least 100 of the new jobs is equal to or greater than 180% of the county average wage.

A qualified company with a premium employment project may retain 4% of withholding taxes for five years if the average wage of the new payroll equals or exceeds 180% of the county average wage. Five percent may be retained if local incentives equal between 10% and 24% of new direct local revenue; 6% may be retained if the local incentives are between 25% and 49% of new direct local revenue; 8% may be retained if local incentives equal 50% or more of new direct local revenue. If the withholding taxes are not sufficient to provide the entire benefit due to the company, the department will issue a refundable tax credit for the difference. Tax credits issued for premium employment projects will not be considered when issuing tax credits for technology business projects or high-impact projects, nor will they be counted toward the total amount of tax credits issued for the act as a whole. If the qualified company does not pay at least 100 new employees wages equal to at least 180% of the county average wage, the qualified company will not receive tax credits for the balance of the benefit period but may continue to keep the withholding taxes if it otherwise meets the requirements of a quality jobs small and expanding business or a high-impact project.

The definition of "project facility" under the Quality Jobs Act to include separate buildings located within 15 miles of each other. Currently, the buildings must be within one mile of each other.

This act also revises the definition of "technology business project" to include certain clinical molecular diagnostic laboratories.

It specifies how the department must apply the definition of "project facility" when a business that has already received an approved notice of intent later files another notice of intent. For high impact projects, where such facilities are located within two adjacent counties, the new payroll must equal or exceed the higher county wage of the two counties.

This act removes the per project caps for technology business projects and high impact projects under the Quality Jobs Act.

This act increase the annual cap on the amount of Quality Jobs Act tax credits that can be issued from $60 million to $100 million. The cap will not include tax credits issued for premium employment projects.

These provisions are similar to HB 1111 (2009), HCS/HB 575 (2009), & HB 1035 (2009).

SECTION 620.1895

This act allows a county or municipality to establish a "Missouri jobs for technology and science district" (MO-JTS) by adopting a MO-JTS plan and passing an ordinance to create the district. This act describes what must be included in such a plan and the powers of the municipality within such district. It also outlines the procedure that must be followed to establish a MO-JTS.

Under this act, "MO-JTS revenues" is defined as 1) half of the incremental increase in the general revenue portion of state sales tax revenues, excluding sales tax dedicated to the schools, sales and use taxes on motor vehicles, trailers, boats, and outboard motors and futures sales taxes earmarked by law; and 2) up to 100% of the state income tax withheld on behalf of new employees by employers at the businesses located within the project identified in the MO-JTS plan. The amount of MO-JTS revenues generated within a project area shall be available for appropriation by the general assembly from the general revenue fun to the department of economic development (DED). The treasurer shall deposit MO-JTS revenues from DED into the newly created "MO-JTS Projects Financing Fund". Revenues in the fund shall be used to pay for eligible project costs and make payments on obligations whose proceeds were used to pay the project costs.

SECTIONS 620.2050, 620.2053, 620.2056, 620.2059, 620.2062, 620.2065, 620.2068, 620.2071, 620.2074, and 620.2077

This act creates the "Missouri Advantage Act".

Applicants may qualify for benefits in one of five tiers that are based on the investment in qualified property and the hiring of a certain number of new employees. A taxpayer who qualifies under a tier one, two, three, or four project shall be entitled to a credit equal to 3% times the average wage of new employees times the number of new employees if the average wage of the new employees equals at least 60% of the Missouri average annual wage for the year of application. The credit increases when the average wage of the new employee equals an increasingly greater percent of the Missouri average annual wage for the year. Any taxpayer who has met the required levels of employment and investment for a tier two or four project shall receive a credit equal to 10% of the investment made in qualified property at the project. Any taxpayer who has met the required levels of investment and employment for a tier one project shall receive a credit equal to 3% of the investment made in qualified property.

A taxpayer who has a project for an Internet web portal and who has met the required level of investment for a tier five project shall receive an incentive for certain computer systems. Taxpayers qualifying for tier four projects shall receive such incentive.

Applicants must apply with the department of economic development and provide certain information, including the plan of employment and investment, sufficient documentation of the plan and specifications, evidence to show that employment and investment at different locations are interdependent parts of the plan and a timetable showing the expected sales tax refunds and what year they are expected to be claimed. A nonrefundable application fee must be provided, with the amount varying with the level of the project. The required levels of employment and investment for a project must be met within a certain amount of time depending on the level of the project. After approval, the taxpayer and department shall enter into a written agreement. The required contents of such agreement are described in the act. A taxpayer receiving an incentive under these provisions cannot simultaneously receive benefits under the Quality Jobs Act. A taxpayer and the department may enter into agreements for more than one project and include more than one project in an agreement.

This act describes how the credit may be used by the taxpayer and the provisions for refund claims. The incentives under this program are not transferable except in limited circumstances.

This act creates the "Missouri Incentives Fund" and shall consist of moneys collected under these provisions.

Under this act, the department must submit an annual report to the general assembly regarding the program. The information that must be included is described in the act.

These provisions are identical to HB 1199 (2009).

SUSAN HENDERSON MOORE