HB 2399 -- Authorization of Tax Credits

Sponsor:  Hobbs

This bill changes the laws regarding the authorization of tax
credits with the exception of the Senior Citizens Property Tax
Credit and the Homestead Preservation Tax Credit.

For all fiscal years beginning on or after July 1, 2010, the
aggregate amount of all state tax credits authorized in any
fiscal year cannot exceed 70% of the total dollar amount of all
state tax credits redeemed by July 1, 2010, for Fiscal Year 2009,
excluding the Senior Citizens Property Tax Credit and the
Homestead Preservation Tax Credit.  The aggregate cap will be
adjusted annually by the percentage change in general revenue
collections net of refunds of the preceding fiscal year over the
second preceding fiscal year, as determined by the Commissioner
of the Office of Administration.

For Fiscal Year 2011, 100% of the aggregate cap amount must be
allocated to the Department of Economic Development for tax
credit authorizations.  For all fiscal years beginning on or
after July 1, 2011, 80% of the aggregate cap amount must be
allocated to the department for tax credit authorizations.  The
General Assembly must appropriate up to 20% of the aggregate cap
amount to the department for tax credit authorizations for fiscal
years beginning on or after July l, 2011.

The bill requires the department to prepare and publish a draft
allocation plan setting forth the proposed allocation of tax
credits by October 1, 2010, and each year thereafter.  The plan
must be made available for public review and comment and must
allocate tax credits in the following manner:

(1)  At least 5% for community assistance purposes;

(2)  At least 4% for financial and insurance purposes;

(3)  At least 6% for public infrastructure purposes;

(4)  At least 10% for affordable housing purposes;

(5)  At least 25% for redevelopment purposes; and

(6)  At least 30% for business development purposes.

After these allocations have been made, the department may,
subject to appropriation, allocate any remaining portion of the
aggregate cap toward authorizations for tax credits for any other
specified purpose.

At a minimum, the plan must include:

(1)  Application deadlines for the tax credits authorized, except
for tax credits for business development purposes;

(2)  The proposed evaluation criteria and definitions applicable
to each of the purposes specified in the bill;

(3)  The methodology used to determine the economic impact and
return on investment for each of the specified purposes; and

(4)  Any priorities established for the authorizations of credits
under each of the specified purposes.

Following an opportunity for public comment on the draft plan,
but no later than January 1, 2011, and each year thereafter, the
department must approve and transmit the plan, along with any
public comments, to the Budget Committee of the House of
Representatives and the Appropriations Committee of the Senate.
The department's approved plan will govern the authorization of
tax credits, except that the department must adjust it to reflect
the additional percentage of the aggregate cap appropriated by
the General Assembly by July 1, 2011, and each year thereafter.

The department must prepare a report for the General Assembly by
September 1, 2011, and each year thereafter, detailing the tax
credits authorized for each of the specified purposes during the
prior fiscal year.

Credits against the income, corporate franchise, and financial
institution taxes may be authorized for:

(1)  Business development;

(2)  Redevelopment;

(3)  Affordable housing;

(4)  Public infrastructure;

(5)  Community assistance; and

(6)  Financial and insurance purposes.

The department will be the administering agency for all tax
credits authorized for these purposes, and the director may
authorize a tax credit:

(1)  Equal to 50% of any eligible project costs or the direct
economic impact of the eligible project or activity for the
purpose of business development, whichever is less.  Business
development includes eligible projects or activities which
stimulate job creation or retention and new private investment,
create added value, improve environmental efficiencies, or cause
a unique activity or event that creates significant direct and
measurable economic benefit to the state.  The department may
increase a tax credit to an existing Missouri business by up to
2% of the tax credits authorized for each continuous five-year
period the employer has been a Missouri business, up to a total
of 10%.  In determining whether to authorize this tax credit, the
department must consider the state's net fiscal general revenue
benefit as a result of the credit along with any other
information specified in the allocation plan;

(2)  Of up to 35% of eligible project costs incurred for an
eligible project or activity for the purpose of redevelopment.
Redevelopment includes eligible projects or activities which
rehabilitate real property for productive use.  In determining
whether to authorize this tax credit, the department must
consider a cost-benefit analysis of the eligible project or
activity along with any additional information specified in the
allocation plan;

(3)  Of up to 50% of eligible costs incurred for an eligible
project or activity for the purpose of providing community
assistance.  Community assistance includes eligible projects or
activities which assist in the creation or expansion of a service
designed to meet a community or social need, either through
physical improvements or increased operating capacity.  In
determining whether to authorize this tax credit, the department
must consider a cost-benefit analysis of the eligible project or
activity along with any additional information specified in the
allocation plan; and

(4)  For assisting financial and insurance firms.  The term
"financial and insurance" includes eligible projects or
activities which assist financial and insurance firms.  In
determining whether to authorize this tax credit, the department
must consider a cost-benefit analysis of the eligible project or
activity along with any additional information specified in the
allocation plan.

The Missouri Housing Development Commission may authorize a tax
credit of up to 50% of eligible project costs incurred for an
eligible project or activity for the purpose of providing
affordable housing.  Affordable housing includes eligible
projects or activities which create, rehabilitate, or provide
access to decent, safe, and sanitary housing within the financial
capability of the occupants.  In determining whether to authorize
this tax credit, the commission must consider a cost-benefit
analysis of the eligible project or activity along with any
additional information specified in the allocation plan.

The Missouri Development Finance Board may authorize a tax credit
of up to 50% of eligible project costs incurred for an eligible
project or activity for the purpose of providing public
infrastructure.  Public infrastructure includes eligible projects
or activities which assist in the construction or rehabilitation
of facilities, utilities, transportation systems, and related
improvements for public use.  In determining whether to authorize
this tax credit, the board must consider a cost-benefit analysis
of the eligible project or activity along with any additional
criteria specified in the allocation plan.

The bill requires the department director to enter into an
agreement with an eligible applicant prior to authorizing any tax
credit.  The agreement must specify, at a minimum, the public
benefit, the eligible project or activity, the eligible costs,
the amount of the tax credit to be authorized, the applicable
term of authorization, applicable recapture provisions, and any
contractual conditions required under Section 620.017, RSMo.  The
department director can also agree that the tax credit:

(1)  May be carried forward for up to five years but cannot be
carried back to previous tax years;

(2)  May be transferred, sold, or assigned;

(3)  May be considered refundable but in no event can the
department authorize refundable tax credits in an amount that
exceeds 20% of the aggregate cap amount for Fiscal Year 2012; 30%
of the aggregate cap amount for Fiscal Year 2013; or 50% of the
aggregate cap amount for any fiscal year beginning on or after
July 1, 2013;

(4)  May be based on a contribution or investment in an eligible
project or activity;

(5)  May continue over a number of years; or

(6)  May include any other feature not otherwise prohibited by
law.

Before authorizing any tax credit, the department must verify
that the applicant does not owe delinquent taxes, interest, or
penalties.

Eligible applicants or single eligible projects or activities
that receive authorization for tax credits of more than $1
million must provide the department with a certification of
eligible activities or costs performed by a certified public
accountant.

The bill contains an emergency clause.

Missouri House of Representatives
95th General Assembly, 2nd Regular Session
Last Updated September 14, 2010 at 3:13 pm