HCS HB 1143 -- TAX CREDITS FOR DISTRESSED COMMUNITIES (Rizzo)

Relating to the Rebuilding Communities and Neighborhood
Preservation Act, the substitute:

(1)  Expands the definition of "eligible residence" to include
condominiums, entire apartment buildings, or single apartments
within an apartment building;

(2)  Expands the definition of "new residence" to include
condominiums, owner-occupied units, or other units intended to be
owner-occupied in multiple unit structures or as separate
adjacent single-family units regardless of whether or not these
units are located in a distressed community;

(3)  Expands the definition of "project" to include the new
construction, rehabilitation, or substantial rehabilitation of
multiple residences, whether comprised of one structure
containing multiple single-family residences or multiple
individual structures, in addition to single residences;

(4)  Increases the value of the eligible residence tax credit
from 15% of eligible costs up to $25,000 to 20% of eligible costs
up to $40,000;

(5)  Increases the value of the qualifying residence tax credit
from 15% of eligible costs up to $40,000 to 20% of eligible costs
up to $40,000;

(6)  Limits the tax credits available for the rehabilitation and
construction of residences in distressed communities and census
blocks to $1.5 million for projects commenced after August 28,
2002.  Under current law, of the $16 million in community
improvement tax credits allowed, $8 million are to be allocated
for eligible residence programs and $8 million for qualifying
residence programs.  The substitute states that if, by October 1
of the calendar year, the Director of the Department of Economic
Development has issued all $8 million of the credits allowed for
one of these programs and has not issued the entire $8 million
allowance for the other program, the director is required to
reallocate 70% of any unused tax credits from the program which
has not reached its $8 million cap to the one which has.  The
reallocated credits will be given to taxpayers who have applied
for, but have not received, tax credits in that same year and who
are engaged in projects in the area where the tax credit cap has
been met for that same year.  The maximum reallocated tax credit
for any project may not exceed $500,000;

(7)  Allows one application for tax credits to be submitted to
the department for preliminary approval in the case of projects
involving the new construction, rehabilitation, or substantial
rehabilitation of more than one residence.  Tax credits will be
awarded upon final approval of an application and presentation of
acceptable proof that substantial construction of each individual
residence has been completed, rather than delaying issuance of
the tax credits until the entire project is substantially
complete; and

(8)  Expands the definition of "distressed community" as it
relates to tax credits for investment in or relocating a business
to a distressed community by reducing the population requirement
for certain census block groups from 2,500 to 500 and by
increasing the median household income threshold for
municipalities not located in a metropolitan statistical area.

The substitute also:

(1)  Requires the Department of Economic Development to designate
one enterprise zone in Wright County; and

(2)  States that any overpayment of taxes resulting from the
carryback of a tax credit will be deemed not to have been made
prior to the close of the taxable year in which the tax credit
was authorized.  As a result, a refund equal to the amount of the
overpayment will be made, but interest on the amount of the
overpayment will not be refunded to the taxpayer.

FISCAL NOTE:  Estimated Net Effect to General Revenue Fund is
Minimal in FY 2003, a Cost of $138,000 to an Income of $5,162,000
in FY 2004, and a Cost of $138,000 to an Income of $5,162,000 FY
2005.

Missouri House of Representatives
Last Updated October 11, 2002 at 9:00 am