SS/SCS/SB 280 - This act modifies provisions of Missouri tax credit programs in accordance with recommendations made by the Missouri Tax Credit Review Commission Report.
BROWNFIELD REMEDIATION TAX CREDITS
The act prohibits the authorization of more than twenty-five million dollars in Brownfield remediation tax credits annually. The credit amount for soft costs is reduced from one hundred percent to twenty-five percent. The act prohibits the stacking of other state incentives with Brownfield remediation tax credits unless the project will generate a positive fiscal benefit to the state. The act requires the recapture of Brownfield remediation tax credits to the extent the amount issued exceeds the state benefit. The act prohibits the authorization of more than five million dollars in Brownfield tax credits each fiscal year for projects that receive benefits under the Distressed Areas Land Assemblage program. (Section 447.708)
NEIGHBORHOOD PRESERVATION TAX CREDITS
The "first-come, first-serve" requirement for tax credit issuance is repealed and replaced with a targeted neighborhood approach that would provide priority for projects which provide the highest impact. Neighborhood Associations will now be able to participate in the program. The annual cap on neighborhood preservation tax credits is reduced from sixteen million dollars to ten million dollars. Tax credits will be allocated among projects located within qualifying and eligible areas based upon demand. Residents which receive tax credits for owner-occupied residences will be subject to recapture if they fail to maintain residency in such home for a five-year period. (Sections 135.481 to 135.487)
LOW-INCOME HOUSING TAX CREDITS
Under current law, low-income housing tax credits are allowed over a ten-year period. Beginning July 1, 2011, this act reduces the period of time in which low-income housing tax credits are allowed to a five-year period and limits the total amount of low-income tax credits authorized annually to no more than eighty million dollars. The issuance of four percent low-income housing tax credits will be prohibited after June 30, 2011. The act also prohibits stacking low-income housing tax credits with historic preservation tax credits. Taxpayers will be capable of receiving tax credits once the first low-income unit is occupied by a qualified tenant. The carry-back provision for low-income housing tax credits is reduced from three years to two years. (Section 135.352)
AFFORDABLE HOUSING ASSISTANCE
Under current law, tax credits for contributions to non-profit organizations for the construction, rehabilitation, or acquisition of affordable housing are capped at ten million per fiscal year. This act reduces the cap to eight million five hundred thousand dollars per fiscal year. The one million dollar fiscal year cap on tax credits for contributions to non-profit housing organizations to assist with their basic operating expenses is increased to two million five hundred thousand dollars. The credit amount for affordable housing tax credits is reduced from fifty-five percent of an eligible donation or contribution to forty percent of such donation or contribution. (Sections 32.105 to 32.120)
HISTORIC PRESERVATION TAX CREDITS
Under current law, the Department of Economic Development is prohibited from issuing more than one hundred forty million dollars in historic preservation tax credits in any fiscal year for projects which will receive more than two hundred and seventy-five thousand dollars in tax credits. Beginning fiscal year 2012, and each fiscal year thereafter, this act would prohibit the Department of Economic Development from issuing more than seventy-five million dollars in historic preservation tax credits increased by the amount of any recisions of approved applications for tax such credits. Projects which would receive less than two hundred seventy-five thousand dollars in tax credits will be subject to the seventy-five million dollar cap.
The act prohibits the department from issuing more than fifty thousand dollars in historic preservation tax credits per project for non-income producing residential rehabilitation projects. Non-income producing residential rehabilitation projects involving a subject property with a purchase price in excess of one hundred fifty thousand dollars will be ineligible for tax credits. Applicants for projects that, as of June 30, 2011, have: received approval from the Department of Economic Development; incurred certain levels of expenses; been approved for 4% federal low-income housing tax credits; or received certification from the state historical preservation officer will not be subject to the new limitations on tax credit issuance, but will be subject to the current law limitations on tax credit issuance. The act also prohibits the stacking of historic preservation tax credits with neighborhood preservation tax credits or low-income housing tax credits. Historic preservation tax credits will now be capable of being carried back one year or forward five years. (Sections 253.545 to 253.559)
SOCIAL AND CONTRIBUTION TAX CREDITS
The definition of taxpayer contained in social and contribution tax credit programs is broadened to allow additional donors to participate. Social and contribution tax credits which under current law are non-transferrable will now be transferrable. For all taxable years beginning on or after January 1, 2012, the act decreases the Missouri Development Finance Board Infrastructure Contribution credit from a fifty percent credit for contributions received to a credit equal to thirty-five percent of the amount contributed. The Affordable Housing Assistance Program tax credit is also reduced from fifty-five percent of the eligible donation to forty percent of such donation. The Disabled Access Tax Credit is reduced from fifty percent to thirty-five percent of eligible access expenditures. The per donor contribution limit for food pantry tax credits is increased to $10,000 for donations of food and the per contribution limit for cash is eliminated. The act excludes international adoption expenses from qualifying under the special needs adoption tax credit program. Beginning January 1, 2012, social and contribution tax credits will be equal to fifty percent of the first one thousand dollars of an eligible contribution or donation and thirty-five percent of any excess above one thousand dollars contributed or donated.
SUNSET PROVISIONS FOR CERTAIN TAX CREDIT PROGRAMS
Due to the commission's recommendation that reforms to programs be made on a prospective basis, rather than utilizing traditional sunset provisions, this act prohibits the authorization of tax credits under the following programs after August 28, 2014:
1) The Brownfield Remediation Tax Credit;
2) The Neighborhood Preservation Tax Credit
3) The MDFB Bond Guarantee Tax Credit;
4) The MDFB Infrastructure Development Contribution Tax Credit;
5) The Family Farm Breeding Livestock Tax Credit;
6) The Agricultural Product Utilization Tax Credit;
7) The New Generation Cooperative Tax Credit;
8) The Qualified Beef Tax Credit;
9) The Wine and Grape Producer Tax Credit; and
10) The Neighborhood Assistance Tax Credit.
The authorization of tax credits under the following programs will be prohibited after August 28, 2015:
1) The Historic Preservation Tax Credit;
2) The Low-Income Housing Tax Credit;
3) The Domestic Violence Shelter Tax Credit;
4) The Maternity Home Tax Credit;
5) The Pregnancy Resource Center Tax Credit;
6) The Shared Care Tax Credit;
7) The Youth Opportunities Tax Credit;
8) The Disabled Access Tax Credit;
9) The Family Development Account Tax Credit;
10) The Residential Treatment Agency Tax Credit;
11) The Food Pantry Tax Credit;
12) The Neighborhood Assistance Program; and
13) The Property Tax Credit (Circuit Breaker).
Where, under current law, a tax credit was subject to the sunset act, the sunset provision is modified to sunset such program on the date provided above.
The limitations on tax credit authorizations provided in the act will not impair an administering agencies ability to issue tax credits that were authorized prior to the date on which authorizations are prohibited, nor will they affect a taxpayer's ability to redeem such tax credits.
The act prohibits the approval of any new applicants under the Distressed Areas Land Assemblage Tax Credit program after August 28, 2011.
REPEAL OF CERTAIN TAX CREDIT PROGRAMS
This act repeals the following tax credit programs:
1) The Charcoal Producers Tax Credit;
2) The Self-Employed Health Insurance Tax Credit;
3) The Railroad Rolling Stock Tax Credit; and
4) The Brownfield Jobs/Investment Credit.
The act also repeals provisions of the Missouri property tax credit, commonly referred to as the circuit breaker tax credit, which allow renters to receive the property tax credit for rent constituting taxes paid.
This act establishes the Compete Missouri Program which combines six existing business incentive programs and will provide tax incentives for job creation, job retention, and capital investment. The act also establishes the Compete Missouri Job Training Program which combines three existing job training programs and provides funding for job training.
The act establishes the Compete Missouri Job Training Program which will provide financial assistance for job training for new jobs created by qualified companies. Financial assistance will also be available to business and technology centers established by Missouri community colleges, or state-owned postsecondary technical colleges, to provide business and training services for growth industries. The act provides for the diversion of withholding taxes from new or retained jobs of qualified companies to pay costs incurred by new or retained jobs training projects administered by local educational agencies such as community and technical colleges.
The provisions of the act creating the Compete Missouri Training Program will automatically sunset July 1, 2018, unless reauthorized. (Sections 620.800 to 620.809)
The Compete Missouri Program is established to provide tax incentives in the form of sales and use tax exemptions, retained withholding taxes, and refundable income and financial institutions tax credits for qualified companies that create new or retain existing jobs and make capital investments. The program provides both entitlement and discretionary benefits for qualified companies that offer health insurance to all employees and pay at least fifty percent of the premiums. Tax credits provided under the program are fully transferrable and must be used within one taxable year following the close of the taxable year in which they are issued. (Sections 620.2000 to 620.2020)
Qualified companies, which create a minimum of twenty new jobs with an average wage equal to or exceeding ninety percent of the county average wage or retain at least one hundred and twenty-five jobs with an average wage equal to or in excess of ninety percent of the county average wage and make at least fifteen million dollars in capital investment, will be eligible to receive up to three years of state and local sales tax exemption for purchases of tangible personal property and building materials used to construct, repair, or remodel a project facility. The Department of Economic Development will certify qualified companies for the state sales tax exemptions while local governments will have the option to certify qualified companies for exemptions from their local sales taxes. The act contains recapture provisions requiring repayment of tax incentives in the event a qualified company fails to meet program requirements. (Sections 144.062 and 144.540)
Qualified companies that create twenty or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to two percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed five percent of new payroll. The act gives the Department of Economic Development the discretion to issue such company additional tax credits, equal to up to four percent of payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. In addition, discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
If a qualified company is in a targeted industry and it creates ten or more new jobs with an average wage equal to or in excess of ninety percent of the county average wage, it will be entitled to retain withholding taxes from new payroll for a period of five years. Such a company will also be entitled to tax credits equal to up to three percent of new payroll to be issued each year for five years, provided that the combined tax credit and retained withholding benefits cannot exceed six percent of new payroll. The act gives the Department of Economic Development the discretion to issue such company additional tax credits, equal to up to six percent of new payroll, for five years provided that the total amount of all benefits received does not exceed nine percent of new payroll annually. Discretionary tax credits authorized by the department cannot exceed the projected net state benefit.
Qualified companies, located within an enhanced enterprise zone, that create two or more new jobs with an average wage equal to or in excess of eighty percent of the county average wage and make a capital investment of at least one hundred thousand dollars will be entitled to retain withholding taxes for a period of five years.
Any qualified company that is an existing Missouri business and meets the aforementioned conditions under the compete Missouri program will be entitled to retain withholding taxes for an additional year.
As an alternative to all other benefits available under the program, the department of economic development may provide up-front financing to qualified companies in the form of refundable tax credits capable of being issued upon approval of the project. To receive such benefits, a qualified company must enter into a written agreement with the department that provides performance requirements and clawback provisions. Qualified companies in targeted industries could receive tax credits equal to as much as nine percent of new payroll projected over a five year period. Non-targeted industry qualified companies could receive tax credits equal to as much as seven percent of new payroll projected over a five year period.
The Department of Economic Development may allow qualified companies, that agree to retain at least one hundred and twenty-five existing jobs with an average wage equal to or in excess of ninety percent of the county average wage for at least five years and agree to make a capital investment equal to three times the amount of state benefits provided within two years, to retain withholding taxes from the retained jobs for a period of five years. As an alternative to all other benefits available under the program, the Department of Economic Development may provide up-front financing to qualified companies in the form of refundable tax credits capable of being issued upon approval of the project. Qualified companies, that agree to retain at least one hundred and twenty-five existing jobs with an average wage equal to or in excess of ninety percent of the county average wage for at least five years and agree to make a capital investment equal to three times the amount of state benefits provided within two years, could receive tax credits equal to as much as eighty percent of withholdings from retained job payroll projected over a five year period. In order to receive the job retention benefits, a qualified company must enter into a written agreement with the department providing detailed performance requirements and recapture provisions.
The Department of Economic Development is required to respond to a request for a proposed benefit award under the Compete Missouri Program within five business days of the receipt of such request. The response must contain either a proposal of benefits or a written refusal stating the reasons no proposal will be provided. Failure by the department to approve or disapprove a notice of intent for benefits under the program will result in a deemed approval. Beginning January 1, 2012, the Department of Economic Development must provide quarterly reports on the program to the General Assembly, including a listing of all approved and disapproved applicants and the department's response time to requests for proposed benefit awards. Qualified companies that receive benefits under the program will be required to provide annual reports to the department, in order to document compliance with all applicable requirements and stating the amount of sales taxes exempted.
The act prohibits the approval of new projects after August 28, 2011, under the Quality Jobs, Enhanced Enterprise Zone, BUILD, Development, Rebuilding Communities, and Business Facilities programs.
The act limits the amount of up-front job creation and retention tax credits that may be authorized each fiscal year to no more than:
1) $15 million for FY 2012;
2) $30 million for FY 2013;
3) $45 million for FY 2014; and
4) $60 million for FY 2015 and all subsequent fiscal years.
The total amount of all tax credits authorized for each fiscal year under the Compete Missouri Program including any up-front job creation/retention tax credits and any outstanding authorizations for tax credits under the six programs prohibited from approving new projects after August 28, 2011, cannot exceed:
1) $111 million for FY 2012;
2) $126 million for FY 2013; and
3) $141 million for FY 2014 and each subsequent fiscal year.
The provisions of the act creating the Compete Missouri Program will automatically sunset six years after the effective date of the act unless reauthorized.
This act contains an emergency clause.