SS SCS HCS HB 2393 -- TAX CREDIT FOR MEGA-PROJECTS IN ENHANCED
ENTERPRISE ZONES

This bill authorizes an income tax credit for a mega-project that
will be equal to a percentage of the taxpayer's payroll for
employees at the project.  No mega-projects can be approved after
December 31, 2008.  The Department of Economic Development cannot
approve any tax credits for mega-projects prior to January 1,
2013, and no more than $40 million can be issued annually for all
mega-projects or to any single taxpayer.  The total amount of tax
credits issued cannot exceed $240 million.

"Mega-project" is defined as any manufacturing or assembling
facility approved by the department for construction and
operation that is located within an enhanced enterprise zone and
which:

(1)  Projects new capital investment in excess of $300 million
over an eight-year period from the date the project is approved
by the department;

(2)  Projects that the number of new jobs will exceed 1,000 over
an eight-year period from the date the project is approved by the
department;

(3)  Pays an average wage for new jobs that exceeds the county
average wage;

(4)  Offers health insurance to all new employees and pays at
least 80% of the premiums; and

(5)  Provides an acceptable plan to repay the mega-project's tax
credits to the state.

The taxpayer may submit an application to the department for
approval of a mega-project, and the department may approve an
application if certain specified criteria are met.  Prior to
final approval of an application, a binding contract must be
executed between the taxpayer and the department.  The contract
must include:

(1)  A repayment plan providing for cash payments to the General
Revenue Fund which will result in a positive internal rate of
return to the state and fully complying with the provisions of
the World Trade Organization Agreement on Subsidies and
Countervailing Measures.  The rate of return must, over the life
of the project, exceed 150% of the state's borrowing costs, based
on the AAA-rated 20-year tax exempt bond rate average over a
20-year borrowing period.  The rate must be verified by a
professional third-party financial analysis;

(2)  A requirement that the department will stop issuing tax
credits if, at any point, the total amount of tax credits issued,
less the total amount of repayments received, equals $155
million;

(3)  An obligation that the taxpayer construct a facility of at
least one million square feet within five years from the date the
project is approved; and

(4)  A requirement that tax credits will cease to be issued and
the taxpayer will immediately repay the state an amount equal to
all credits previously issued, less any amounts repaid, plus an
additional amount that will provide the state a reasonable rate
of return, if the taxpayer fails to meet any of the specified
obligations.

Upon the application's approval, tax credits will be issued
annually for up to eight years from the commencement of the
mega-project's commercial operations and may be extended beyond
the life of the enhanced enterprise zone.  Tax credits will be
equal to the following percentages of annual payroll for the new
jobs located at the mega-project:

(1)  80% for the first three years that tax credits are issued
for the mega-project;

(2)  60% for the next two subsequent years;

(3)  50% for the next two subsequent years; and

(4)  30% for the remaining year.

These tax credits may be claimed against income taxes imposed in
Chapter 143, RSMo, excluding withholding taxes.  The credits are
redeemable; however, owners of these tax credits are not required
to have any Missouri income tax liability in order to redeem the
credits and receive a refund.  The credits may be sold or
transferred but cannot be carried forward past the year of
issuance.

Taxpayers who are issued these credits must provide an annual
report to the department and the House of Representatives and
Senate appropriations committees.  The bill specifies the
requirements of the report.  Taxpayers cannot simultaneously
receive tax credits under the New or Expanded Business Facility
Program, Enterprise Zones Program, Relocating a Business to a
Distressed Community Program, or Quality Jobs Program.  If the
department determines the average wage is below the county
average wage or the taxpayer has not maintained the employee
health insurance as required, the taxpayer will not receive tax
credits for that year.

Any action brought in any court contesting the approval of a
mega-project and the issuance of tax credits or any other action
related to the mega-project must be filed within 90 days of the
department's approval of the mega-project.

Records and documents relating to the proposed mega-project will
be deemed closed until the application has been approved;
however, information containing business plan information which
may endanger the competitiveness of the business will remain
closed.

Taxpayers, and related taxpayers, who receive these credits are
prohibited from directly employing certain individuals prior to
January 1, 2022.  These individuals are:

(1)  Any elected Missouri public official holding office as of
January 1, 2008; or

(2)  Any director, deputy director, division director, or
employee directly involved in negotiations between the department
and the taxpayer regarding the mega-project who was employed by
the department as of January 1, 2008.

Missouri House of Representatives
94th General Assembly, 2nd Regular Session
Last Updated October 15, 2008 at 3:12 pm