Summary of the House Committee Version of the Bill

HCS SS SCS SB 8 -- TAX CREDITS

SPONSOR:  Mayer (Tilley)

COMMITTEE ACTION:  Voted "do pass" by the Committee on Economic
Development by a vote of 21 to 4.

This substitute changes the laws regarding certain tax credits.

EXPIRATION OF CERTAIN TAX CREDITS

The substitute adds sunset language to the following tax credits
as specified but allows any credit that is authorized prior to
the expiration date to be issued and redeemed:

(1)  Development Tax Credit Program.  No credit can be authorized
for this program under Sections 32.100 - 32.125 on or after the
effective date of the substitute (Section 32.115);

(2)  Income Tax Credit for Surviving Spouses of Public Safety
Officers.  The substitute extends the provisions regarding the
credit from August 28, 2013, to August 28, 2015 (Section
135.090);

(3)  Special Needs Adoption and Children in Crisis Tax Credits.
Expenses incurred as the result of an international adoption are
not eligible for a tax credit under the Special Needs Adoption
Tax Credit Program.  The substitute extends the provisions
regarding the Children in Crisis Tax Credit from August 28, 2012,
to August 28, 2015 (Sections 135.326 and 135.327);

(4)  Rebuilding Communities and Neighborhood Preservation Act.
No credit can be authorized under this program on or after the
effective date of the substitute (Section 135.484);

(5)  Residential Dwelling Access Tax Credit.  The substitute
extends the provisions regarding this credit from December 31,
2013, to August 28, 2015 (Section 135.562);

(6)  Tax Credit for Contributions to Pregnancy Resource Centers.
The substitute extends the provisions regarding the tax credit
from August 28, 2012, to August 28, 2015 (Section 135.630);

(7)  Tax Credit for Donated Food.  The substitute extends the
provisions regarding the income tax credit for a donation to a
food pantry from August 28, 2011, to August 28, 2015 (Section
135.647);

(8)  Tax Credit for Grape and Wine Producers.  Beginning
January 1, 2012, no more than $200,000 in tax credits can be
authorized annually (Section 135.700);

(9)  Residential Treatment Agency Tax Credit Act.  The substitute
extends the provisions regarding the credit from August 28, 2012,
to August 28, 2015.  The annual amount of tax credits for which
an agency is authorized is increased from up to 40% to up to 100%
of the payments received from the Department of Social Services
in the preceding 12 months (Section 135.1150);

(10)  Family Development Account Program Tax Credit.  The
substitute reduces the credit from 50% to 35% of a contribution
that exceeds $1,000 for all taxable years beginning on or after
January 1, 2012.  The credit is transferable (Section 208.770);

(11)  Historic Structures Rehabilitation Tax Credit.  For each
fiscal year beginning on or after July 1, 2011, the substitute
limits to $80 million the total amount of credits that the
Department of Economic Development can approve.  For all
applications for credits approved on or after July 1, 2011, no
more than $125,000 may be issued for eligible costs and expenses
incurred in the rehabilitation of certain eligible owner-occupied
residential property.  For each fiscal year beginning on or after
July 1, 2011, the substitute limits to $10 million the total
amount of credits for projects receiving less than $275,000 that
the department can approve.  For all credits authorized on or
after July 1, 2011, the substitute reduces from three years to
one year the time period that the credit can be carried back and
from 10 years to five years the time period that the credit can
be carried forward.  A taxpayer who receives a low-income housing
tax credit for a project not financed through tax-exempt bond
issuance cannot be eligible for a historic preservation tax
credit for the same project.  An application for final approval
and issuance of a tax credit must include a cost and expense
certification by an independent licensed certified public
accountant with any accrued developer fees stated separately.
The department will have 120 days from receipt of the application
for final approval to determine whether the completed project
meets required standards and to issue tax credit certificates
equal to 75% of the eligible costs and expenses verified to that
date.  If a taxpayer receives tax credits that include an amount
attributable to accrued developer fees, he or she must submit
within six years of completion of the rehabilitation an
additional cost and expense certification verifying the total
amount of developer fees actually accrued and paid.  If the
amount of the tax credits issued and attributable to developer
fees exceeds the amount of developer fees actually accrued and
paid, the taxpayer is liable to repay 25% of the excess.  A
taxpayer or his or her authorized representative may appeal any
official decision on a preliminary or final approval to an
independent third-party appeals officer designated by the
department (Sections 253.545 - 253.559); and

(12)  Remediation Tax Credit.  For each fiscal year beginning on
or after July 1, 2011, but ending on or before June 30, 2015, no
more than $40 million in Brownfield Redevelopment Program
remediation tax credits can be authorized.  For each fiscal year
beginning on or after July 1, 2015, the total amount of tax
credits is limited to $35 million.  The substitute prohibits the
authorization of more than $10 million in Brownfield tax credits
each fiscal year beginning on or after July 1, 2011, and ending
on or before June 30, 2015, for projects that receive a
Distressed Areas Land Assemblage Tax Credit.  The total amount of
credits is limited to $5 million for each fiscal year beginning
on or after July 1, 2015, and no credit can be authorized on or
after August 28, 2018.  Projects eligible to receive a
remediation tax credit will not be eligible to also receive a tax
credit for a new or expanded business facility under Sections
135.100 - 135.150 or an enterprise zone under Sections 135.200 -
135.257 after the effective date of the substitute (Section
447.708).

MUNICIPAL TECHNOLOGY BUSINESS FACILITY PROJECTS (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 used for wired telecommunications; data
processing, hosting, and related services; or 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 an agreement which may be
required by the grantor if the agreement is not contrary to
Missouri laws;

(3)  Receive gifts and donations from private sources to be used
for the project's purposes; and

(4)  Enter into loan agreements and to sell, lease, or mortgage
to individuals, partnerships, or corporations any one or more of
the components of a technology business facility project.

Transactions involving the lease or rental of any project
component are exempt from state and 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.  The authorization to engage in projects involving a
technology business facility does not authorize a political
subdivision to provide telecommunications services or
telecommunications facilities to the extent that they are
prohibited from doing so under Section 392.410.

INCOME TAX CREDIT FOR COSTS TO ATTRACT SPORTING EVENTS (Sections
67.3000 and 67.3005)

The substitute authorizes an income tax credit for the eligible
costs of bringing a sporting event to Missouri.  In order to
receive the tax credit, the Department of Economic Development
must certify the applicant's sporting event support contract
between the applicant and a site selection organization.  These
organizations are specified in the substitute and include, but
are not limited to, the National Collegiate Athletic Association,
the United States Olympic Committee, and the United States Golf
Association.

The applicant must submit documentation of the eligible costs
within 30 days of the conclusion of the sporting event.  Within
seven days of the conclusion of the sporting event, the
department, in consultation with the Director of the Department
of Revenue, must determine the total number of tickets sold at
face value for the sporting event.  Within 60 days of receiving
the documentation from the applicant of the eligible costs, the
department must issue a refundable tax credit equal to 100% of
the eligible costs or an amount equal to $5 for every admission
ticket sold to the sporting event, whichever is less.  The tax
credit may be transferred, sold, or assigned.  No more than $3
million of these tax credits can be issued by the department in
any fiscal year.

The department can only certify a support contract for a sporting
event in which the location is selected after the effective date
of the substitute.  The department cannot certify a contract
after August 28, 2017, but can certify a contract before that
date for a sporting event that will be held after that date.

The substitute authorizes a tax credit equal to 50% of any
eligible donation to a certified sponsor or local organizing
committee.  The credit is not refundable but can be carried
forward up to four years or sold.  No more than $10 million of
these tax credits can be issued by the department in any fiscal
year.

DISTRESSED AREAS LAND ASSEMBLAGE TAX CREDIT (Section 99.1205)

The substitute revises the definition of "eligible project area"
to include a redevelopment area as defined under the Real
Property Tax Increment Allocation Redevelopment Act that contains
at least 300 acres in 80 or more parcels, includes or previously
included in excess of 10 million square feet of commercial
building space, and is located within a low income community as
defined in 26 U.S.C. Section 45D as of January 1, 2011.  The
definition of "acquisition costs" is revised to include
engineering costs, attorney fees, and architectural and planning
costs.

The provision is removed which restricts an applicant from
receiving a tax credit for acquisition and interest costs of an
eligible parcel for only up to five years.  The substitute allows
a tax credit for 100% of the reasonable demolition costs.
Currently, the credit is 50% of those costs.  An applicant is
allowed to file for the tax credit quarterly.  Currently, the
applicant can only file annually.

The annual program cap is increased from $20 million to $30
million, but the aggregate program cap remains at $95 million.  A
process is established for allocating the annual $30 million in
tax credits depending upon the number of eligible applicants.
However, if there are more than two applicants, no single
applicant can receive more than 50% of the available tax credits.
The substitute extends the provisions regarding the credit from
August 28, 2013, to August 28, 2016.

LOW-INCOME HOUSING TAX CREDITS (Sections 135.350 and 135.352)

For each fiscal year beginning on or after July 1, 2011, the
substitute limits the total amount of low-income housing tax
credits that can be authorized for projects not financed through
tax-exempt bond issuance to $110 million, authorizes the tax
credit to be carried forward for five years, and reduces from
three years to two years the time period that a low-income
housing tax credit can be carried back.

Beginning July 1, 2011, the substitute limits the total amount of
low-income housing tax credits that can be authorized annually
for projects financed through tax-exempt bond issuance to $20
million.

A taxpayer receiving a Historic Structures Rehabilitation Tax
Credit under Sections 253.545 - 253.559 cannot receive a tax
credit under this program for the same project if it is not
financed through tax-exempt bond issuance.

TAX CREDIT FOR RELOCATING A BUSINESS TO A DISTRESSED COMMUNITY
(Section 135.535)

The substitute repeals provisions authorizing the use of up to
$100,000 of any remaining credits under the cap for relocating a
business to a distressed community to be used for the Residential
Dwelling Access Tax Credit in Section 135.562.

TAX CREDIT ACCOUNTABILITY ACT OF 2004 (Section 135.825)

The Committee on Legislative Research must conduct a review of
any tax credit program by September 1 of the calendar year prior
to the year in which the tax credit sunsets.

DEVELOPMENTAL DISABILITY CARE PROVIDER TAX CREDIT PROGRAM
(Section 135.1180)

The Developmental Disability Care Provider Tax Credit Program is
established which, for all taxable years beginning on or after
January 1, 2011, authorizes a credit of 50% of the amount of a
taxpayer's contribution to a qualified developmental disability
care provider if the provider submits an application for the
credit to the Department of Social Services on behalf of the
taxpayer, provides the taxpayer's name and identification number
and the date and amount of the donation, and pays the department
an amount equal to the value of the credit.  The credit is not
refundable but can be carried forward for up to four years and is
transferable.

MISSOURI EXPORT ACT (Sections 135.1500 - 135.1521)

The substitute establishes the Missouri Export Act to encourage
foreign trade through the Lambert-St. Louis International Airport
by offering a tax credit for freight forwarders.

For all taxable years beginning on or after January 1, 2011, a
tax credit is authorized for a freight forwarder against income
taxes with the exception of withholding taxes; corporate
franchise taxes; and financial institution taxes.  The substitute
specifies the requirements for freight forwarders to receive
benefits and how the benefits will be calculated.  No credit can
be authorized after August 28, 2019.

The amount of tax credits is capped per fiscal year as specified
in the substitute.  Tax credits that are authorized but not
issued due to the annual caps can be carried forward to the next
year.  Tax credits that are authorized before the provisions of
the substitute expire will continue to be issued until all
authorized credits have been issued.  An authorized tax credit
that exceeds an applicant's tax liability for a year may be
carried forward for six years, transferred, sold, or assigned.

DATA STORAGE CENTERS (Section 144.810)

The substitute authorizes an exemption for 100% of the state and
local sales and use tax for up to 15 years on items related to a
new data storage center and for up to 10 years on items related
to an expanding data storage center.  The exemption for a new
center includes all electrical energy, gas, water, and other
utilities including telecommunications and Internet services; all
machinery, equipment, and computers; and all retail sales of
tangible personal property and materials for the purpose of
constructing, repairing, or remodeling a new data storage center.
To be eligible, a new facility must invest at least $37 million
within 36 consecutive months.  The exemption for an expanding
center includes all electrical energy, gas, water, and other
utilities including telecommunications and Internet services
which, on an annual basis, exceed the amount used in the existing
or the replaced facility prior to the expansion; all machinery,
equipment, and computers if the cost, on an annual basis, exceeds
the average of the previous three years' expenditures used in the
existing or the replaced facility prior to the expansion; and all
retail sales of tangible personal property and materials for the
purposes of constructing, repairing, or remodeling an expanding
data storage center.  To be eligible, an expanding facility must
invest at least $5 million within 12 consecutive months.  The
Department of Economic Development and the Department of Revenue
must cooperate in conducting random audits to make certain that
the intent of these provisions are followed.  No person receiving
an exemption will be eligible for benefits under any business
recruitment tax credit as defined in Section 135.800.

MISSOURI HOUSING DEVELOPMENT COMMISSION (Sections 215.020,
215.030, 215.033, and 215.034)

The substitute creates the Missouri Housing Development
Commission Operating Budget Fund, authorizes the commission to
transfer moneys from any fund it administers to the new fund, and
requires the operating budget of the commission to be subject to
annual appropriations by the General Assembly.

MO JOBS TRAINING PROGRAM (Sections 620.800 - 620.809)

The MO Jobs Training Program is established to assist qualified
companies with the training of employees in new jobs and the
retraining or upgrading of the skills of full-time employees in
retained jobs.  The program will be funded through appropriations
from the MO Jobs Development Fund which was formerly the Missouri
Job Development Fund; the MO Jobs Community College New Jobs
Training Fund which was formerly the Missouri Community College
Job Training Program Fund; and the MO Jobs Community College Job
Retention Training Fund which was formerly the Missouri Community
College Job Retention Training Program Fund.  The substitute
specifies the requirements for a qualified company to receive
benefits under the program, how the benefits will be calculated,
and the penalties for failure to meet any requirements under the
program.

The provisions regarding the Missouri Job Training Joint
Legislative Oversight Committee are repealed and the MO Jobs
Training Joint Legislative Oversight Committee is established
consisting of three members of the House of Representatives
appointed by the Speaker and three members of the Senate
appointed by the President Pro Tem.  An annual report must be
submitted by October 1 to the Governor, Speaker of the House of
Representatives, and President Pro Tem of the Senate regarding
all assistance provided to industries during the preceding fiscal
year.

These provisions will expire July 1, 2018, unless reauthorized by
the General Assembly.

MISSOURI QUALITY JOBS PROGRAM (Sections 620.1878 - 620.1890)

The substitute authorizes economic incentives for job retention
projects under the Missouri Quality Jobs Program for a qualified
company that meets certain requirements if the Department of
Economic Development determines that there is a significant
probability that the qualified company would relocate to another
state in the absence of the benefits.  The economic incentives
can be in the form of retaining taxes otherwise withheld from
full-time jobs or a tax credit.  Prior to the award of any
benefits, the department director must notify the President Pro
Tem of the Senate and the Speaker of the House of Representatives
of the amount of the award and other specified information unless
the disclosure is otherwise protected by law.

In order to receive withholding tax retention benefits, the
qualified company must retain at least 125 full-time employees
for a period of 10 years from approval of the notice of intent,
make a new capital investment at the project facility within
three years from approval of the notice of intent in an amount
equal to 50% of the total withholding tax retention benefits, and
enter into a written agreement with the department containing
detailed performance requirements and repayment penalties in the
event of nonperformance.  If a qualified company meets these
requirements, it may be authorized to retain up to 100% of the
withholding taxes from full-time jobs for a period of 10 years if
the average wage of the retained jobs equals or exceeds 90% of
the county average wage.  The aggregate amount of retained
withholding taxes authorized is limited to $6 million for each
fiscal year beginning on or after July 1, 2011.  The substitute
specifies the factors that the department must consider in
awarding withholding tax retention benefits.

Beginning January 1, 2012, but ending on December 31, 2013, in
lieu of the withholding tax retention benefits, the department
may authorize a qualified company a one-time tax credit in an
amount up to 7% of new payroll from the new jobs created over a
five-year period or up to 9% if the qualified company is in a
targeted industry as identified by the department by rule
following a specified process.  The qualified company must also
enter into a written agreement with the department covering the
applicable project period which contains detailed performance
requirements; the time period during which the tax credits will
be issued; repayment penalties, including recapture of the tax
credits, in the event of nonperformance; and other specified
information.  The total credits authorized cannot exceed $10
million annually.

REPEAL OF CERTAIN TAX CREDITS

The provisions regarding the following tax credits are repealed:

(1)  The credit for a person, firm, or corporation who engages in
the business of producing charcoal or charcoal products in the
state which has expired (Section 135.313);

(2)  The credit for a donation of more than $100 to the Missouri
Health Care Access Fund (Section 135.575); and

(3)  The credit for a self-employed taxpayer who is ineligible
for the federal income tax health insurance deduction under
Section 162 of the federal Internal Revenue Code (Section
143.119).

The provisions of the substitute regarding the income tax credit
for attracting sporting events will expire six years from the
effective date, and the provisions regarding the Developmental
Disability Care Provider Tax Credit Program will expire four
years from the effective date.

The substitute contains an emergency clause.

FISCAL NOTE:  Estimated Effect on General Revenue Fund of an
income of Unknown greater than $69,011,524 to a cost of Unknown
greater than $14,470,213 in FY 2012, an income of Unknown greater
than $69,011,524 to a cost of Unknown greater than $25,138,784 in
FY 2013, and an income of Unknown greater than $69,011,524 to a
cost of Unknown greater than $21,312,882 in FY 2014.  Estimated
Cost on Other State Funds of Unknown in FY 2012, Unknown in FY
2013, and Unknown greater than $300,000 in FY 2014.

PROPONENTS:  Supporters say that the bill's economic incentives
are necessary to foster economic development, create new jobs,
and retain jobs by encouraging companies to stay in Missouri.
The bill will also help to create an international marketplace in
Missouri and a demand for our products internationally.

Testifying for the bill were Senator Mayer, Missouri Chamber of
Commerce and Industry; Tony Clayton, Clayton Agri-Marketing,
Incorporated; Francis Slay, Mayor of St. Louis City; Eric Green,
Sigma Aldrich; Missouri Pork Association; University of Missouri;
J. P. Dunn, Missouri Soybean Association; Tammy Henderson, Hunt-
Midwest; St. Louis Regional Chamber and Growth Association;
Associated Industries of Missouri; Taypayers Research Institute
of Missouri; Greater Kansas City Chamber of Commerce;
Metropolitan Community College; Bob Langenkamp, Assistant City
Manager of Kansas City; Missouri AFL-CIO; Monsanto; Missouri
Budget Project; Erica Leonard, Office of the St. Louis County
Executive; Campaign Life Missouri; and David Kerr, Director of
the Department of Economic Development.

OPPONENTS:  Those who oppose the bill say that there is already
enough empty warehouse space in the St. Louis metropolitan area
and the Aerotropolis tax credit portion of the bill is
unnecessary and wasteful.  It is not the role of government to
create jobs.  The legislature should just let the free market
system work on its own and not interfere.  The bill does not
treat people equally, but rather treats them differently based
upon geographic location and the industry they serve.

Testifying against the bill were Missouri Association of
Realtors; Robert Wood; Missouri Right To Life; Paul Hamby,
Campaign for Liberty; Ron Calzone, Missouri First, Incorporated;
David Linton; Bruce Hillis; Debbie Sheals; Elizabeth Rosin, Rosin
Preservation; and Alliance for Investment, Jobs and Preservation.

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Missouri House of Representatives
96th General Assembly, 1st Special Session
Last Updated October 6, 2011 at 5:18 pm