HCS HB 2 -- ECONOMIC DEVELOPMENT AND TAX INCENTIVES (Nolte)
COMMITTEE OF ORIGIN: Committee on Job Creation and Economic
Development
This substitute changes the laws regarding community improvement
districts; technology business facilities; enhanced enterprise
zones, certified site zones, and dormant manufacturing plant
zones; the Missouri Homestead Preservation Act; taxation; and tax
exemptions for data storage facilities and establishes the
Manufacturing Jobs Act which provides incentives for qualified
manufacturing companies and qualified suppliers that create or
retain Missouri jobs.
COMMUNITY IMPROVEMENT DISTRICTS (Section 67.1461, RSMo)
The substitute allows a community improvement district that
includes or is located within a blighted area to contract with a
private property owner for the original construction of
buildings, structures, or improvements.
TECHNOLOGY BUSINESS FACILITIES (Section 67.2050)
The governing body of any county, city, incorporated town, or
village is allowed to engage in projects involving a technology
business facility which is used for data processing, hosting, and
related services or for Internet publishing and broadcasting and
web search portals. The governing body 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 project.
Transactions involving the lease or rental of any project
component are exempt from local sales taxes, and 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, it will retain the right to
have the governing body transfer the donated property back at no
cost.
ENHANCED ENTERPRISE ZONES, CERTIFIED SITE ZONES, AND DORMANT
MANUFACTURING PLANT ZONES (Sections 135.950 - 135.969)
The substitute changes the laws regarding enhanced enterprise
zones, certified site zones, and dormant manufacturing plant
zones. The substitute:
(1) Reduces from 10 years to five years the length of time that
tax credits for expansions at approved enhanced business
enterprises in enhanced enterprise zones can be received;
(2) Changes the manner in which the tax credit's value is
calculated for approved enhanced business enterprises within an
enterprise zone. Currently, the tax credit is equal to $400 for
each new business facility employee employed within an enhanced
enterprise zone, an additional $400 for each new business
facility employee who is a resident of an enhanced enterprise
zone, an additional $400 for each new business facility employee
who is paid a wage that exceeds the county average wage, and 2%
of new business facility investment. The substitute changes the
credit so that it equals up to 5% of the gross wages of each new
business facility employee employed within the enhanced
enterprise zone and up to 1% of new business facility investment
if the average wage of the new jobs at the enhanced business
enterprise exceeds the county average wage or up to 3% of the
gross wages and up to 0.5% if the average wage is below the
county average wage plus an additional $400 for each new business
facility employee who is paid a wage that exceeds the county
average wage and 2% of new business facility investment;
(3) Authorizes a tax credit for up to five years if approved by
the Department of Economic Development to a taxpayer who
establishes a new business facility in a certified industrial
zone approved or designated as an enhanced enterprise zone. A
taxpayer who receives this tax credit cannot also receive tax
credits from the new or expanded business facilities, enterprise
zones, relocating a business to a distressed community, or
Missouri Quality Jobs programs. To receive the tax credit, a
taxpayer must employ at least nine new individuals at the new
business facility and invest at least $500,000 during the taxable
year in which the credit is claimed. If the average wage of the
new jobs of the enhanced business enterprise exceeds the county
average wage, the tax credit will be equal to 7% of the gross
wages of each new employee at the facility and 2% of the
investment made in the new business facility within an enhanced
enterprise zone. If the average wage is below the county average
wage, the tax credit is equal to 4% of the gross wages of each
new employee at the facility and 1% of the investment made in the
new business facility;
(4) Allows taxpayers to receive the tax credit for an existing
facility which expands if they invest at least $500,000 and hire
at least two additional employees during the tax year in which
the credits are claimed. The substitute specifies the manner in
which the taxpayer's investment in the original facility prior to
expansion must be determined;
(5) Requires $10 million of the $24 million annually authorized
for enhanced business enterprises to be issued for certified
industrial zones. The credits must be claimed for the taxable
year in which commencement of commercial operations occurs at the
new business facility and for each of the following nine years in
which the credit is issued. The credits are refundable and
transferable but cannot be carried forward;
(6) Defines "certified site zone" as an area of real property
that encompasses at least 50 acres which has been approved by the
department as a certified site, has been found by the governing
body to be blighted, and is located in a census tract which has a
poverty rate of at least 15% or for which the median income is
less than the statewide median income or the metropolitan median
income for the metropolitan statistical area in which the zone is
located; and
(7) Defines "dormant manufacturing plant zone" as an area of
real property that encompasses at least 250 acres that, within
five years of the date of the notice of intent, was predominantly
used for manufacturing or assembly and employed at least 3,000
individuals but has since ceased all activity; has been found by
ordinance of the governing body to be a blighted area and
designated for redevelopment; is located in a census tract with a
poverty rate of 15% or more or the median household income is
below the statewide median household income or the metropolitan
median household income for the metropolitan statistical area in
which the property is located, according to the United States
Census Bureau; or involves at least $1 million in funding from a
federal agency to facilitate the property's redevelopment.
MISSOURI HOMESTEAD PRESERVATION ACT (Section 137.106)
The substitute reauthorizes the provisions regarding the Missouri
Homestead Preservation Act and extends the expiration date until
December 31, 2016.
TAXATION (Sections 137.115 and 144.054)
The substitute specifies that tools, telecommunications
equipment, power production and transmission machinery and
equipment, data processing machinery and equipment, and other
machinery and equipment that can be used by any company which is
located within certain enhanced enterprise zones will be assessed
and valued for purposes of taxation at one-half of 1%. The
substitute also exempts these tools, equipment, and machinery
from all state and local sales and use taxes.
TAX EXEMPTIONS FOR DATA STORAGE FACILITIES (Section 144.810)
Beginning August 28, 2010, the substitute authorizes a state and
local sales and use tax exemption for all machinery, equipment,
computers, electrical energy, gas, water, and other utilities
including telecommunication services used in new and existing
data storage centers and server farm facilities. An exemption is
also authorized for the purchase of tangible personal property
for the construction, repair, or remodeling of a new data storage
center or server farm facility. The departments of Economic
Development and Revenue are authorized to conduct random audits
to ensure compliance with the requirements for state and local
sales and use tax exemptions authorized under the substitute.
MANUFACTURING JOBS ACT (Sections 620.1910 and 620.1881)
The substitute:
(1) Defines "qualified manufacturing company" as a business
that:
(a) Manufactures goods at a facility in Missouri;
(b) Makes a capital investment of at least $75,000 per retained
job at the facility for the manufacture of a new product within
two years of beginning to retain withholding taxes or makes a
capital investment of at least $50,000 per retained job at the
facility for the modification or expansion of an existing product
within two years of beginning to retain withholding taxes;
(c) Manufactures a new product or has commenced making capital
improvements to the facility to manufacture a new product or
modifies or expands the manufacture of an existing product or has
commenced making capital improvements to the facility to
manufacture an existing product; and
(d) Continues to manufacture these goods for the withholding
period in which the company may receive benefits under this
program;
(2) Defines "qualified supplier" as a company that:
(a) Derives more than 10% of its total annual revenues from
sales to a qualified manufacturing company;
(b) Adds five or more new jobs;
(c) Pays wages for new jobs that are equal to or exceed the
county average wage for Missouri as determined by the Department
of Economic Development using the National American Industry
Classification System (NAICS) industry classifications but are
not less than 60% of the statewide average wage; and
(d) Provides health insurance to employees and pays at least 50%
of the insurance premiums;
(3) Requires the department to respond with an approval or
rejection within 30 days to a qualified manufacturing company or
qualified supplier who provides a notice of intent to receive
benefits under this program. Failure of the department to
respond will result in the notice of intent being deemed
approved;
(4) Allows a qualified manufacturing company beginning
January 1, 2012, upon approval of a notice of intent by the
department, to retain 100% of the withholding taxes from retained
jobs for 10 years if it manufactures a new product or to retain
50% of withholding taxes from retained jobs for seven years if it
modifies or expands the manufacture of an existing product;
(5) Allows a qualified manufacturing company to remain eligible
to participate in the Missouri Quality Jobs Program for any new
jobs for which it does not retain withholding taxes if it meets
the other requirements for that program but prohibits a qualified
manufacturing company from simultaneously receiving benefits
from:
(a) Business use incentives for large-scale developments
(Sections 100.700 - 100.850);
(b) New or expanded business facilities (Sections 135.100 -
135.150);
(c) Enterprise zones (Sections 135.200 - 135.286);
(d) Relocation of a business to a distressed community (Section
135.535); or
(e) Rural empowerment zones (Sections 135.900 - 135.906);
(6) Allows a qualified supplier, upon approval of a notice of
intent by the department, to retain 100% of the withholding taxes
from new jobs for three years. If the qualified supplier pays
wages for the new jobs that are equal to or greater than 120% of
the county average wage for Missouri as determined by the
department using NAICS industry classifications, it can retain
the withholding taxes for five years. A qualified supplier is
prohibited from simultaneously receiving benefits from:
(a) Business use incentives for large-scale developments
(Sections 100.700 - 100.850);
(b) New or expanded business facilities (Sections 135.100 -
135.150);
(c) Enterprise zones (Sections 135.200 - 135.286);
(d) Relocation of a business to a distressed community (Section
135.535);
(e) Rural empowerment zones (Sections 135.900 - 135.906);
(f) Enhanced enterprise zones (Sections 135.950 - 135.970); or
(g) Missouri Quality Jobs Program (Section 620.1881);
(7) Limits the amount of retained withholding taxes authorized
under the program for any one qualified manufacturing company to
$10 million per year and limits the aggregate amount of retained
withholding taxes authorized under the program to $15 million per
year;
(8) Specifies that if a qualified manufacturing company is
utilizing withholding taxes from jobs at the facility for any
other state program, the taxes will first be credited to the
other state program before beginning to accrue to this program.
The other state programs include, but are not limited to:
(a) New jobs training (Sections 178.892 - 178.896);
(b) Job retention (Sections 178.760 - 178.764);
(c) Real Property Tax Increment Allocation Redevelopment Act
(Sections 99.800 - 99.865); or
(d) Missouri Downtown and Rural Economic Stimulus Act (Sections
99.915 - 99.980);
(9) Specifies that any taxpayer who is awarded benefits under
this program and knowingly hires individuals who are not allowed
to work legally in the United States will immediately forfeit
these benefits and repay the state an amount equal to any
withholding taxes already retained;
(10) Specifies that taxpayers awarded benefits under the program
will not be required to obtain affidavits from subcontractors
regarding the employment of illegal immigrants;
(11) Requires a qualified manufacturing company that fails to
make the required capital investment within two years to cease
retaining any withholding tax with respect to jobs at the
facility, repay all withholding tax previously retained with
interest of 5% per year, and forfeit all rights to retain
withholding tax for the remainder of the withholding period. If
the failure to make the capital investment is due to economic
conditions beyond the company's control, the department director
may suspend the right to retain withholding tax one time for up
to three years;
(12) Requires a qualified manufacturing company that
discontinues the manufacturing of a new product without replacing
it with a subsequent or additional new product manufactured at
the facility during the withholding period to cease retaining any
withholding tax with respect to jobs at the facility and to
forfeit all rights to retain withholding tax for the remainder of
the withholding period;
(13) Requires the department to submit an annual report by
March 1 to the General Assembly with information on the
participating companies and suppliers, the amount of benefits
provided, the estimated net state fiscal impact, and the number
of new and retained jobs; and
(14) Requires, beginning January 1, 2012, $15 million of the $80
million Quality Jobs Program annual cap to be used for retaining
withholding tax by all qualified manufacturing companies under
the Manufacturing Jobs Act.
The provisions of the substitute regarding the Manufacturing Jobs
Act will expire six years from the effective date.
FISCAL NOTE: Estimated Cost on General Revenue Fund of More than
$267,809 to Unknown in FY 2011, More than $281,243 to Unknown in
FY 2012, and More than $286,679 to Unknown in FY 2013. Estimated
Cost on Other State Funds of Unknown in FY 2011, FY 2012, and
FY 2013.
Copyright (c) Missouri House of Representatives
Missouri House of Representatives
95th General Assembly, 1st Special Session
Last Updated August 13, 2010 at 9:52 am