CCS/SS/SCS/HCS/HB 289 - This act revises certain provisions regarding tax increment financing and creates a new tax increment financing method for certain projects.

MISSOURI DOWNTOWN AND RURAL ECONOMIC STIMULUS ACT

This act creates the Missouri Downtown and Rural Economic Stimulus Act. The provisions of the act shall not be construed to provide funding for sports stadiums, arenas or related facilities which have as its intended purpose use for spectator events which seat over 10,000 people. Powers in the act are to exercised by authorities created in the act. Areas may be designated and tax increment financing may be used in the areas and state tax increment financing may be used for public infrastructure purposes.

DOWNTOWN ECONOMIC STIMULUS PROJECTS

The development area is defined to require that there has either been a decline in property taxes or population for 25 years or 50% or more of the structures in the area are older than 35 years. The development area shall not include property within the 100 year floodplain unless the area is protected as required by the Army Corps of Engineers.

A Downtown Economic Stimulus Authority may be created in certain municipalities upon the enactment of an ordinance establishing a development area in accordance with the act. Projects may be carried out through a municipality or an authority. Each Authority will be governed by a Board of Commissioners which will consist of between 5 and 14 members with staggered terms of three years. One of the Commissioners will be appointed by the school district or districts within the development area for a term of three years. Commissioners will be appointed by the mayor or chief executive. In addition to the Commissioners, a non-voting advisor shall be appointed by the other taxing districts located within the development area.

The powers of the Authority shall be exercised by its Board of Commissioners and powers of the authority are specified. The Authority shall be a public body corporate and politic. Powers granted to the authority are specified. The powers exclude the right to acquire property by eminent domain. Certain information must be included in a development plan.

The act allows Kansas City, St. Louis County, St. Louis City and Boone County to enact an ordinance establishing a fund for the purpose of providing funds to a community development corporation. The Community Development Corporation Revolving Fund is created. A Board to administer the fund is created. Funding is provided from 5% of the state sales tax increment portion from other net new revenues generated from projects certified for state supplemental downtown development financing.

Prior to the adoption of the ordinance designating the development area, adopting a development plan or adopting a development project, the authority must hold a public hearing.

A municipality may adopt development financing for the development project area and a special allocation fund for the deposit of certain taxes from the development area to be apportioned or diverted pursuant to the Real Property Tax Increment Allocation Redevelopment Act if all or a part of the development project area becomes subject to tax increment financing.

The municipality shall submit the development plan to the Department of Economic Development who will review the application and submit its analysis and recommendation to the Missouri Development Finance Board. The application will then be sent to the Missouri Development Finance Board for consideration and approval of the disbursement of project costs from the State Supplemental Downtown Development Financing Fund. Project costs eligible for reimbursement from the State Supplemental Downtown Development Financing Fund are limited to items of public infrastructure as defined in the act. Caps on state funding for projects are specified. The Department of Economic Development is granted authority to approve two projects within a certain time frame that would be eligible to receive elevated state funding.

The development plan must contain certain information. The municipality will provide certain information from the Department of Revenue for verification which must be provided within 45 business days. The Missouri Development Finance Board will promulgate rules. The first $150 million of other net new revenues will be deposited into the State Supplemental Downtown Development Financing Fund. The Department of Economic Development will administer the fund and may disburse the funds in payment of public infrastructure costs of the developments to the extent those projects have generated sufficient revenue.

No new applications for financing will be approved by the Missouri Development Finance Board after January 1, 2013.

The act establishes a Missouri Downtown Economic Stimulus Act Joint Legislative Committee which will consist of ten members of the General Assembly, five from each body.

The Authority must make a report to the Director of the Department of Economic Development by the end of February each year. The annual report for downtown projects must also include an analysis of the distribution of state supplemental financing by municipality and by economic region. The Director shall then compile a report for submission to the Governor and General Assembly.

Every five years after the establishment of a development plan, the governing body of the authority must hold a public hearing. The Director of the Department of Economic Development shall provide information and technical assistance as requested by any municipality.

These provisions have an emergency clause. However, only projects in central business districts affected by a natural disaster between May 1 and May 10, 2003, may be approved by the Department of Economic Development prior to August 28, 2003. The area must also be in a county for which public and individual assistance is requested for Federal Disaster Relief.

This act is similar to SCS/SB 253 (2003).

RURAL ECONOMIC STIMULUS PROJECTS

Powers in the act are to be exercised by municipalities or authorities created in the act. The act may be used for public infrastructure related to the creation of renewable fuel production facilities which are in a municipality smaller than 100,000 persons and which will cost at least $3,000,000 and create at least 30 new jobs within three years.

A Rural Economic Stimulus Authority may be created in each municipality upon the enactment of an ordinance establishing a development area in accordance with the act. Each Authority will be governed by a Board of Commissioners which will consist of between 5 and 14 members with staggered terms of three years. One of the Commissioners will be appointed by the school district or districts within the development area for a term of three years. Commissioners will be appointed by the mayor or chief executive. In addition to the Commissioners, a non-voting advisor shall be appointed by the other taxing districts located within the development area.

The powers of the Authority shall be exercised by its Board of Commissioners and powers of the authority are specified. The Authority shall be a public body corporate and politic. Powers granted to the municipality or authority are specified, excluding the right to acquire property by eminent domain. Certain information must be included in a development plan.

Prior to the adoption of the ordinance designating the development area, adopting a development plan or adopting a development project, the authority must hold a public hearing.

A municipality may adopt development financing for the development project area and a special allocation fund for the deposit of certain taxes from the development area to be apportioned or diverted pursuant to the Real Property Tax Increment Allocation Redevelopment Act if all or a part of the development project area becomes subject to tax increment financing.

The municipality shall submit the development plan to the Missouri Agricultural and Small Business Development Authority for approval of the disbursement of project costs from the State Supplemental Rural Development Financing Fund. The development plan must contain certain information. The municipality will provide certain information from the Department of Revenue for verification which must be provided within 45 business days. The Missouri Agricultural and Small Business Development Authority will promulgate rules. The first $150 million of other net new revenues will be deposited into the State Supplemental Rural Development Financing Fund. The Department of Economic Development will administer the fund and may disburse the funds in payment of public infrastructure costs of the developments to the extent those projects have generated sufficient revenue.

The act establishes a Missouri Rural Economic Stimulus Act Joint Legislative Committee which will consist of ten members of the General Assembly, five from each body.

The Authority must make a report to the Director of the Department of Economic Development by the end of February each year. The Director shall then compile a report for submission to the Governor and General Assembly.

Every five years after the establishment of a development plan, the governing body of the authority must hold a public hearing. The Director of the Department of Economic Development shall provide information and technical assistance as requested by any municipality.

TAX INCREMENT FINANCING SATELLITE ZONE

This act authorizes the cities of St. Joseph, Independence and Springfield, with approval of the governing authority of the city and the department of economic development, to designate an additional satellite enterprise zone in such city.

SUPER TIF

This act restricts the definition of new state revenues by excluding increases in sales tax revenues attributable to retail sales unless it can be proven that the revenues are from sources which do not currently exist in the state. The act also requires additional documentation in Super-TIF applications and changes the calculation of the tax increment for Super-TIF financing for businesses which relocate their national headquarters from out- of-state to allow for a use of the portion of the full new state revenues generated rather than only the incremental increase in new state revenues generated over the revenues generated in the base year.

RETENTION PROJECTS FOR CERTAIN ESSENTIAL OR TARGETED INDUSTRIES

This act implements various economic development concerning targeted industries, enterprise zones and job training programs at community colleges. The major provisions of the act are as follows:

Essential and targeted industries (Sections 100.710, 100.840, 100.850, RSMo): The above sections within the Missouri Business Use Incentives for Large-Scale Development Act (BUILD) are modified to allow for retention projects in "essential industries".

The act adds to the purview of "eligible industries" those that meet the following requirements:

- Must be a "targeted industry", i.e. one that is critical to state's economic security and growth as determined by the Department of Economic Development (DED) and affirmed by the Joint Committee on Economic Development Policy & Planning;

- Must be located in a city meeting certain population parameters in a county meeting certain parameters (Hazelwood is only city that currently qualifies);

- Must have had at least 2,000 jobs at the project site for each of the five preceding years;

- Must retain the number of jobs (actual number of jobs not the 2,000 minimum) for the duration of the BUILD certificates (10 15 years); and

- Must invest at least $500 million (new investment) in the project.

The act also eliminates the cumulative cap and replaces it with an annual tax credit cap of $11 million.

Regarding the Enterprise Zone Program: (new Sections 135.276, 135.277, 135.279, 135.281, 135.283, RSMo):

This part of the act contains new provisions that build on existing enterprise zone law concerning retention projects. The act follows the pattern of existing enterprise zones except as follows:

- Must be an "essential industry" to be eligible to apply for the retention program:

- Must be a "targeted industry" one that is critical to state's economic security and growth as determined by DED and affirmed by the Joint Committee on Economic Development Policy & Planning;

-Enterprise zone must include all or part of a city meeting certain population parameters in a county meeting certain parameters (Hazelwood is only city that currently qualifies)

- Must have had at least 2,000 jobs at the project site for the five preceding years;

- Must retain the jobs for 10 years (actual number of jobs not the 2,000 minimum);

- Must invest at least $500 million (new investment) in the project over two-year period within first five years of project;

- DED must consider soundness of project;

- Local incentives must be provided;

- Wages must exceed average wage of county;

- The incentive must be needed to make a project remain in MO; and

- Company must be considering another state for the project.

The act offers a refund mechanism:

- Eligible to apply if tax credits exceed taxable income for facility by $1 million;

- No more than 2 million refund in any year;

- Cannot receive refund for more than five consecutive years;

- If tax credits exceed taxable income by more than $2 million, those credits can be carried forward for refund purposes.

Community College New Jobs Training Program (Section 178.892, RSMo) - Modified to allow for retention projects in "essential industries":

- Must be a "targeted industry" one that is critical to state's economic security and growth as determined by DED and affirmed by the Joint Committee on Economic Development Policy & Planning;

- Must be located in a city meeting certain population parameters in a county meeting certain parameters (Hazelwood is only city that currently qualifies);

- Must have had at least 2,000 jobs at the project site for the five preceding years;

- Must retain the jobs (actual number of jobs not the 2,000 minimum) for the duration of the CCNJT certificates (8 years);

- Wages must exceed average wage of county.

The act will terminate January 1, 2006 if a project has not been approved by DED by December 31, 2005. If a project has been so approved, act will terminate on January 1, 2020.

This portion has an emergency clause and an expiration date.

These provisions are also contained in SCS/SB 620 (2003).

AGRICULTURAL AND SMALL BUSINESS DEVELOPMENT AUTHORITY

This act creates a definition of value added agricultural products for the Agricultural and Small Business Development Authority.

LICENSE FEES FOR BUSINESSES

This act prohibits any investment funds service corporation shall from being charged a license fee in excess of $25,000 after December 31, 2003 and prohibits villages with less than 1,300 persons from charging a license tax in excess of $10,000.

CERTIFIED CAPITAL COMPANY LAW

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 capital 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.

The act also requires prior approval of the Department of Economic Development in order for investments of a qualifying investing entity to be counted.

These provisions are similar to SS/SCS/HS/HB 197 (2003).

COMMUNITY DEVELOPMENT CORPORATION ASSOCIATION

The act creates statutory funding for the Community Development Corporation Association. The Department of Economic Development shall assist the Association in an amount up to 10 percent of its total appropriation for Community Development Corporations.

These provisions are similar to SB 229 (2003).

TRANSITIONAL SCHOOL DISTRICT

This act prevents the transitional district operating levy authorized in current law from being subject to certain tax increment financing projects. The tax will not be subject to any certificate of tax abatement issued after August 28, 1998, or, as of January 1, 2002, such tax will not be subject to any TIF project in St. Louis with the exception of a project concerning a convention headquarters hotel adopted by ordinance in St. Louis after August 28, 2003.

These provisions are similar to SB 634 (2003).

INDUSTRIAL DEVELOPMENT BONDS

This act makes changes to industrial development bonds as follows:

- Adds a definition for "revenue bonds"

- Requires approval of a plan of development by the governing body of a municipality to issue revenue bonds; Such project plan shall include:

(1) A statement identifying each taxing district;

(2) Equalized assessed valuation of the real property and personal property in the project, and an estimate of equalized assessed valuation of real property and personal property in the project after development;

(3) Cost benefit analysis; and

(4) Identification of any payments in lieu of taxes expected to be made by any lessee of the project;

- Contains public hearing provisions;

- Provides that the calculation of the limit for local government indebtedness required by the Constitution shall include the additional value added to an area as a result of a redevelopment project;

- The County Assessor will include such value in the assessor's book.

- The impact on state sales tax revenue is added to the existing reporting requirements.

These provisions are contained in SS/SCS/HS/HB 197 (2003).
CINDY KADLEC