HCS HB 2058 -- TAX INCENTIVES FOR BUSINESS DEVELOPMENT (Pearce)

COMMITTEE OF ORIGIN:  Special Committee on Job Creation and
Economic Development

This substitute changes the laws regarding tax incentives for
business development.

VARIOUS TAX CREDIT PROGRAMS

The substitute:

(1)  Increases the annual cap on the amount of tax credits the
Department of Economic Development may authorize for the Enhanced
Enterprise Zone Program from $14 million to $24 million;

(2)  Increases the fiscal year cap for economic development tax
credits that are approved as part of the Neighborhood Assistance
Program from $4 million to $6 million;

(3)  Allows the department to authorize up to $5 million in tax
credits per year to encourage equity investment in technology-
based early stage Missouri companies, commonly referred to as
angel investments.  Investors who contribute the first $500,000
in equity investment to a qualified Missouri business may be
issued a tax credit equal to 30% of the investment or 40% if the
qualified business is in a rural area or distressed community.
An investor can receive a credit of up to $50,000 for an
investment in a single qualified business and up to $100,000 for
investments in more than one qualified business per year.
Credits can be carried forward for up to three years or sold;

(4)  Increases the aggregate cap on the amount of tax credits the
department may authorize for the Small Business Incubators
Program from $500,000 to $2 million; and

(5)  Specifies that all demolition activities are part of
remediation and allows remediation tax credits to include up to
100% of demolition costs that are not directly part of the
remediation but which are necessary to accomplish the planned use
of the facility.  Demolition may occur on adjacent property that
independently qualifies as abandoned or underutilized and is
located in a municipality with fewer than 20,000 residents.
Currently, some demolition activities associated with brownfield
redevelopment are separate from remediation activities.

QUALITY JOBS PROGRAM

The substitute:

(1)  Eliminates the cap on the Quality Jobs Program.  Currently,
the department cannot issue more than $40 million in tax credits
for this program annually;

(2)  Allows tax credits to be issued for job retention projects
until August 30, 2013.  Tax credits for this project type were
only authorized through August 30, 2007;

(3)  Allows a project facility to include separate buildings
within the same county.  Currently, they must be located within
one mile of each other; and

(4)  Allows a company that leases or owns facilities that produce
electricity derived from qualified renewable energy sources, or
which produce fuel for the generation of electricity from
qualified renewable energy sources, to participate in the program
as a technology business project if it meets the other
requirements of the program.  Qualified renewable energy sources
include open-looped biomass, close-looped biomass, solar, wind,
geothermal, and hydropower but not ethanol distillation or
production or biodiesel production.

COMMUNITY IMPROVEMENT DISTRICTS

The substitute:

(1)  Allows community improvement districts (CID) to exist in
special business districts within the City of St. Louis.
Currently, any CID in St. Louis that is also in a special
business district cannot levy a CID sales tax unless special
assessments imposed on real property or businesses within the
special business district are repealed; and

(2)  Excludes sales by public utilities and providers of
communications, cable, or video services from the CID sales tax.

TAX POLICY AND TAXATION

The substitute:

(1)  Authorizes the department to issue letter rulings regarding
the New Markets Tax Credit Program.  The letter rulings are
binding in a court of law and must be issued within 60 days of a
request.  The department can refuse to issue the letter ruling
for good cause, but must explain the reason for refusal.  Letter
rulings are closed to the public; however, information can be
released as long as anything which would identify the applicant
or is otherwise protected is redacted;

(2)  Establishes in statute an exemption from state and local
sales and use tax on all tangible personal property included on
the United States munitions list that is sold to or purchased by
a foreign government for a governmental purpose.  Currently, this
exemption is granted by the Department of Revenue through a
letter ruling;

(3)  Specifies that the true value in money for assessment
purposes of any possessor interest in real property located on or
within the ultimate airport boundary shown by a federal airport
layout plan of the Kansas City International Airport will be the
true value in money of the possessor interest in the real
property less the total costs paid toward any new construction or
improvements completed on the property after January 1, 2008, if
included in the possessor interest, unless paid by the political
subdivision, regardless of the year the costs were incurred; and

(4)  Authorizes a property tax credit, beginning January 1, 2009,
for expenses incurred to manufacture, maintain, or improve a
freight line company's qualified rolling stock up to the amount
of its tax liability.  The state will annually reimburse a
political subdivision for any loss in revenue.

The provisions of the substitute regarding the Small Business
Incubators Program contain an emergency clause.

FISCAL NOTE:  Estimated Cost on General Revenue Fund of $226,293
to Unknown in FY 2009, $274,449 to Unknown in FY 2010, and
$254,874 to Unknown in FY 2011.  Estimated Cost on Other State
Funds of Unknown in FY 2009, FY 2010, and FY 2011.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:11 pm