HB 1496 -- TAX INCREMENT FINANCING

CO-SPONSORS:  Green (73), Hanaway

COMMITTEE ACTION:  Voted "do pass" by the Committee on
Miscellaneous Bills and Resolutions by a vote of 9 to 1.

This bill defines the following new terms in the Real Property
Tax Increment Allocation Redevelopment Act:  "eligible employee,"
"high unemployment," "low-fiscal capacity," "moderate income,"
"new job," "public subsidy," "redevelopment project of regional
significance," and "unfair competition."

The bill changes criteria used to evaluate redevelopment projects
funded by tax increment financing (TIF) in the City of St. Louis
and in St. Louis, Jefferson, Warren, St. Charles, Franklin,
Crawford, Lincoln, St. Francois, Ste. Genevieve, and Washington
counties.  The bill requires approved project areas to have high
unemployment, low fiscal capacity, and poverty; to be a
redevelopment project of regional significance; to avoid unfair
competition with existing business; and to meet other criteria
showing economic decline.

The bill also limits the maximum amount of public funding for
approved TIF projects to 30% of the total project costs, unless
the redevelopment is occurring in certain specified areas.  The
bill does not allow TIF to be used to develop sites where 25% or
more of the area is vacant and has not been previously developed,
or qualifies as "open space" as defined in Section 67.900, RSMo,
or is presently being used for agricultural or horticultural
purposes, except in certain cases.

The bill requires an economic feasibility analysis indicating the
return on investment of the proposed development and a study
verifying that the proposed redevelopment property has not
previously been developed through private enterprise.  It allows
sharing of payments in lieu of taxes among affected political
subdivisions.

The bill also requires the enumerated counties and the City of
St. Louis to create regional tax increment financing review
authorities for the purpose of determining whether projects meet
the criteria as provided in the bill and approving or rejecting
the projects.

The bill has an effective date of July 1, 2003.

FISCAL NOTE:  No impact on state funds.

PROPONENTS:  Supporters say that current tax increment financing
practices make municipalities compete against one another and are
overused for sites that are not in blighted areas.  Incentives
need to go where they are really needed and not to sites that
would get development regardless.

Testifying for the bill were Representative Green (73); East-West
Gateway Coordinating Council; Cooperating School Districts of
Greater St. Louis; Missouri State School Board Association; and
St. Charles County R-5 (Orchard Farm) School District.

OPPONENTS:  Those who oppose the bill say that the changes are
too severe.  Local jurisdictions should be trusted to make these
decisions.  There can be problem properties in otherwise stable
areas.  This change will not push all projects to more restricted
areas.

Testifying against the bill were St. Louis County Municipal
League; St. Louis County Economic Council; City of St. Peter's,
Missouri Municipal League; and Missouri Economic Development
Financing Organization.

Mark Pioli, Legislative Analyst

Missouri House of Representatives
Last Updated October 11, 2002 at 9:01 am