SS#2 SCS HCS HBs 3231 & 2531 -- MISSOURI INNOVATION, PUBLIC
`SAFETY, AND ACCOUNTABILITY ACT
MISSOURI DOWNTOWN ECONOMIC STIMULUS ACT (Sections 99.918-99.980)
This bill reauthorizes and reenacts the provisions of the
"Missouri Downtown Economic Stimulus Act" (MODESA), which
previously sunset and no longer permitted new project
authorizations under current law.
The bill modifies definitions under MODESA. The definition of
"central business district" is expanded by removing certain
existing eligibility limitations relating to median household
income and the age of buildings within the district. The bill
also specifies that a municipality’s riverfront may be included
within a central business district, including riverfront areas
with industrial historical land uses. The definition of
"development area" is modified to allow approval of certain
development areas after August 28, 2026, while prohibiting newly
approved development areas or expanded development areas from
being located within one-half mile of another approved area,
except in a city not within a county, where the radius may be
reduced but not eliminated.
The bill provides that a development area may consist of up to
three non-contiguous areas, may not exceed 10% of the
municipality’s total area, and generally may not include property
located within the 100-year flood plain unless protected or
floodproofed in accordance with the bill’s provisions.
The bill creates new definitions associated with expanded
development projects and financing mechanisms. New terms include
"expanded development area", "expanded development plan",
"expanded development project", "expanded development project
area", "expanded development project costs", "municipal
residential earnings tax increment", "net-new increment
district", "retained jobs", and "state residential income tax
increment". These provisions establish a framework allowing
certain previously approved downtown projects to expand into
adjacent or additional redevelopment areas under modified
financing structures.
The bill further provides that, when a development project or
expanded development project relocates an out-of-state business
into Missouri, the state sales tax increment, state income tax
increment, economic activity taxes, and other net new revenues
generated by the relocated business will be calculated using the
full amount of taxes generated by the relocated operations
without offsetting prior baseline revenues.
The bill shortens the statute of limitations for legal challenges
relating to authority contracts, development plans, development
areas, development projects, expanded development areas, expanded
development plans, and taxes authorized under the Act. Current
law allows 90 days to challenge such actions. The bill reduces
the limitation period to 30 days following the effective date of
the applicable ordinance or resolution.
The bill modifies and expands the powers of municipalities and
authorities administering downtown redevelopment projects.
Municipalities and authorities are authorized to prepare and
implement expanded development plans and projects; acquire,
transfer, or dispose of property; install or relocate
infrastructure; enter into contracts; accept grants and
donations; select developers; issue obligations; pledge revenues;
and finance expanded development project costs.
The bill modifies provisions relating to property acquisition and
disposition within development project areas and expanded
development project areas. Municipalities and authorities may
transfer or lease property for residential, recreational,
commercial, industrial, or mixed uses consistent with a
development plan or expanded development plan. No new
application for a development area, development plan, or
development project will be approved after December 31, 2032, and
no new application for expanded development projects will be
approved after January 1, 2037.
The bill revises requirements for development plans and
establishes requirements for expanded development plans.
Expanded development plans must include legal descriptions of the
project area, estimated project costs, financing sources,
evidence of financial commitments, relocation assistance plans,
infrastructure improvements, and findings relating to blight,
conservation, or economic conditions within the area.
The bill modifies notice and hearing requirements applicable to
development areas, expanded development areas, development plans,
and expanded development plans. Public hearings are required
prior to approval of certain redevelopment ordinances, and notice
must be provided by certified mail to affected taxing districts
and certain property owners. Notice of public hearings must also
be published once each week for four weeks immediately prior to
the hearing.
The bill also modifies the application requirements for State
supplemental downtown development financing. Applications
submitted to the Department of Economic Development must include
certifications relating to payments in lieu of taxes, economic
activity taxes, municipal residential earnings tax increments,
projected State tax increments, and affidavits stating that
development would not reasonably occur without the use of other
net new revenues.
The bill authorizes municipalities, authorities, and political
subdivisions to issue obligations to finance development project
costs and expanded development project costs. Such obligations
are payable solely from pledged revenues and do not constitute
general obligations or indebtedness of the State or municipality.
The bill also authorizes refunding obligations and permits
obligations issued under other statutory authority to be retired
using special allocation fund revenues.
The bill modifies provisions relating to special allocation
funds. Following approval of development financing, payments in
lieu of taxes, economic activity taxes, State sales tax
increments, State income tax increments, municipal residential
earnings tax increments, State residential income tax increments,
and other net new revenues may be deposited into a special
allocation fund for payment of redevelopment costs and
obligations.
The bill modifies provisions governing the State Supplemental
Downtown Development Fund. The Fund will continue to be
administered by the Department of Economic Development, and the
Department may use fund monies for reasonable and necessary
administrative expenses. The bill also provides that
municipalities can not commit or obligate State supplemental
disbursements prior to receiving a certificate of approval for
the applicable development project or expanded development
project.
The bill modifies annual reporting requirements for redevelopment
projects receiving state assistance. Municipalities must report
information relating to project status, public expenditures, jobs
created and retained, wage groups, tax revenues, employment
levels, and redevelopment progress. Municipalities failing to
file required reports may become ineligible for future
disbursements from the State Supplemental Downtown Development
Fund. The Department of Economic Development must submit an
annual report to the Governor and General Assembly by April 30
each year.
CAPITAL INVESTMENT TAX CREDIT (Section 620.2012)
The bill creates an additional capital investment tax credit
component within the Missouri Works program. Beginning January
1, 2027, qualified companies may receive tax credits if the
Department of Economic Development approves a benefits proposal
and the company makes at least $30 million in new capital
investments within two years if located within a certified
Missouri Innovation Zone, or at least $50 million if located
outside such a zone. Data storage centers are not eligible.
The credit may not exceed 2.5% of new capital investment made at
the project facility during the three-year period following
submission of a notice of intent. Investments made prior to the
notice of intent do not qualify. Credits expire if the company
fails to satisfy minimum investment requirements within two
years.
The Department of Economic Development must respond to notices of
intent within 30 days by approving, rejecting, or conditionally
approving the request. In determining benefits, the Department
must consider the necessity of incentives, the number of jobs
created or retained, wages, investment size, local incentive
participation, financial stability, economic distress,
competitiveness of alternative locations, and related economic
factors.
MISSOURI INNOVATION, PUBLIC SAFETY, AND ACCOUNTABILITY ACT
(Sections 620.6000-620.6033)
The bill further modifies provisions relating to the expiration
and continued authorization of the Downtown Economic Stimulus Act
in Sections 620.6000 to 620.6033 and will be known as the
"Missouri Innovation, Public Safety, and Accountability Act". The
provisions will sunset 10 years after the effective date.
Existing approvals and benefits may continue for their authorized
duration.
MISSOURI INNOVATION ZONE (Sections 620.6000, 620.6003 & 620.6006)
The bill establishes the Missouri Innovation Zone program.
Eligible cities may designate one geographic area as a certified
Missouri Innovation Zone for purposes of receiving and
administering specified economic development incentives.
Participation in the program is voluntary, no city may have more
than one certified zone, and a certified Missouri Innovation Zone
must be contiguous and may not exceed 10% of the total area of
the participating city.
The executive branch of the participating city must prepare and
submit a master plan to the Department of Economic Development.
The master plan must identify zone boundaries, vacant or
underutilized properties, infrastructure priorities, public
safety strategies, reinvestment plans for net-new revenues, and
projected housing, population, and employment impacts.
The bill defines "state income tax increment" as up to 50% of the
state income tax withheld on behalf of employees in new jobs
within the zone. The bill defines "state sales tax increment" as
up to 50% of the incremental increase in state sales tax revenue
generated within the zone, subject to limitations on certain
retail sales unless the Department determines such sales
constitute new economic activity.
The Department must approve, conditionally approve, or deny
complete applications within 45 calendar days. If an application
is incomplete, the Department must issue a notice of deficiency
within 45 days, and the applicant will have 15 days to cure
deficiencies while retaining its position in the application
review process. Failure by the Department to issue a
determination within the required period may result in deemed
approval if statutory requirements are otherwise satisfied.
The Department’s review authority is limited to determining
whether statutory and regulatory requirements have been
satisfied. The Department may issue a conditional designation if
local implementation policies remain incomplete, but incentives
may not be utilized until certification is finalized.
The bill provides that certified Missouri Innovation Zones
qualify for several state-administered incentives, including
employer retention and reinvestment incentives, employer
relocation incentives, office-to-residential conversion
incentives, Missouri Opportunity Zone tax deferrals, and Missouri
angel investment incentives. Certified zones will also qualify
as redevelopment areas for purposes of Chapters 99 and 353, RSMo,
allowing the use of local tax increment financing and property
tax abatement tools.
The bill requires the Department to establish a master scorecard
system applicable to office-to-residential conversion projects
and certain local redevelopment incentives. The scorecard must
contain not less than 100 possible points, establish not fewer
than five incentive tiers, and require a minimum eligibility
threshold of not less than 50 points. Criteria must include
public safety, infrastructure improvements, housing development,
vacant property reuse, fiscal impacts, project readiness, and
related redevelopment considerations.
The bill authorizes the Department to charge application,
participation, or administrative fees of up to 2.5% of the tax
credits issued under the program.
The Missouri Innovation Zone program sunsets 10 years after the
effective date and terminates on September 1 of the following
calendar year. Existing certifications and benefits may continue
for their authorized duration following the sunset.
RURAL MISSOURI DEVELOPMENT FUND (Section 620.6009)
The bill creates the "Rural Missouri Development Fund". The Fund
will be administered by the Department of Economic Development
for economic development, housing, workforce development,
infrastructure, education, health care, public safety, and
community development projects in rural and smaller communities.
The bill defines a "contributing city" as a city with a certified
Missouri Innovation Zone that also falls within the highest 5% of
statewide taxable assessed valuation and agrees to contribute a
portion of net-new state sales tax revenues generated within the
zone.
Each contributing city must annually contribute 10% of the net-
new state sales tax revenue retained for its Innovation Zone
Public Safety Fund. Local sales taxes, local property taxes, and
other local revenues are excluded from the contribution
requirement. Receipt of money from the fund does not require a
city to establish a Missouri Innovation Zone.
The Department may award grants to rural cities, smaller
communities, or development organizations applying on behalf of
such communities. No more than 20% of annual available funds may
be awarded to a single applicant unless unobligated funds remain
after the initial award process.
MISSOURI INNOVATION ZONE PUBLIC SAFETY FUND (Section 620.6012)
The bill creates the "Missouri Innovation Zone Public Safety
Fund" for public safety and infrastructure improvements within
certified Missouri Innovation Zones. Funds may be used for law
enforcement, fire protection, emergency medical services,
nuisance abatement, lighting, transportation improvements,
sidewalks, infrastructure repairs, and related improvements
supporting redevelopment activities within the zone.
MISSOURI WORKS PROGRAM (Section 620.6018)
The bill creates an employer retention and reinvestment incentive
within the Missouri Works program for tax years beginning on or
after January 1, 2027. Qualified companies maintaining retained
jobs within a certified Missouri Innovation Zone may receive
withholding retention benefits for qualifying reinvestment
expenditures and payroll retention activities.
To qualify, a company must employ at least three covered
employees at the certified zone location. The Department of
Economic Development must approve or deny complete applications
within 45 calendar days, and failure to issue a determination
within the required time period will result in deemed approval if
statutory requirements are satisfied.
The bill prohibits companies from relocating or transferring
operations from another Missouri location into the zone if such
relocation materially reduces payroll at the originating
location. Payroll used for this incentive may not also be used
for the employer relocation incentive.
The withholding benefit cannot exceed 3% of the aggregate gross
wages paid to new and retained jobs at the certified innovation
zone location during a single tax year, and the benefit can be
authorized for three to ten years. Tax credits authorized under
the incentive are nonrefundable, may be carried forward for up to
five tax years, and may not be transferred, sold, assigned, or
otherwise conveyed.
MISSOURI ONE START PROGRAM (Section 620.2021)
The bill creates an employer relocation incentive under the
Missouri One Start program for companies creating eligible
relocated jobs or new jobs within a certified Missouri Innovation
Zone. Qualified companies may receive benefits relating to
relocated employees establishing Missouri residency and creating
new employment opportunities within the zone.
To qualify, a company must create at least three eligible
relocated jobs or new jobs within the zone. Eligible relocated
employees must receive annual wages of at least $70,000. If an
eligible relocated employee fails to maintain the primary
residence requirement for 12 consecutive months following
relocation, any state tax credit attributable to that employee
will be subject to recapture from th eligible qualified company.
Tax credits authorized under the incentive are nonrefundable, may
be carried forward for up to five tax years, and may not be
transferred, sold, assigned, or otherwise conveyed.
OFFICE-TO-RESIDENTIAL CONVERSION (Section 620.6024)
The bill creates an office-to-residential conversion incentive
for redevelopment projects converting eligible office properties
into residential use within certified Missouri Innovation Zones.
This tax credit for qualified conversion expenditures will apply
to all tax years starting on or after January 1, 2027. Qualified
conversion expenditures include capital expenditures associated
with adaptive reuse and redevelopment of office buildings.
Projects receiving incentives will be evaluated using the
Department’s master scorecard criteria.
MISSOURI OPPORTUNITY ZONE (Section 620.6027)
The bill creates the "Missouri Opportunity Zone" program within
certified Missouri Innovation Zones. The program is designed to
encourage long-term private investment by allowing a taxpayer to
defer certain Missouri income tax liabilities when eligible gains
are reinvested into qualifying businesses or property located
within the zone. The Department of Revenue will administer tax
filings, certifications, and reporting requirements for the
program.
MISSOURI ANGEL INVESTMENT PROGRAM (620.6030)
The bill creates an angel investment incentive to be administered
by the Department of Economic Development and the Missouri
Technology Corporation. For tax years beginning on or after
January 1, 2027, tax credits may be issued for cash investments
in qualified Missouri businesses operating within certified
Missouri Innovation Zones. A tax credit will be up to 40% of an
investor's cash investment or up to 50% of the cash investment is
in the qualified securities of a qualified business in a rural
county. The credit will be up to 60% of the cash investment if
it is in the qualified securities of a qualified business in a
certified innovation zone.
Qualified Missouri businesses are subject to reporting
requirements, compliance standards, and clawback provisions if
headquarters or substantial Missouri operations are relocated
outside the state within 10 years after receiving assistance.
The bill permits issued tax credits to be transferred to another
natural person if the original investor has not yet claimed the
credit. Qualified businesses receiving investments must submit
annual reports to the Missouri Technology Corporation (MTC), and
the MTC must submit quarterly and annual reports relating to tax
credit allocations, investments, jobs, economic impacts, and
business retention outcomes to the Director of the Department of
Economic Development.