SB 0392

Broadens the class of employees which count toward tax credit calculations for a certain new business facility

Sponsor:	Kenney
LR Number:	0846L.11C	Fiscal Note:	0846-11
Committee:	Ways and Means
Last Action:	05/18/01 - H Calendar S Bills for Third Reading		Journal page:
Title:
Effective Date:	August 28, 2001

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HCS/SB 392 - This act makes a wide variety of modifications to programs relating to tax incentives for economic development, including:

Allows Newton county and the City of Joplin to impose a hotel-motel tax of not more than 5% for the promotion of tourism; (Section 67.1360)

The governing body of Springfield may, upon request and after a public hearing, move or remove a parcel of real property from a Community Improvement District; (Section 67.1442)

Allows municipalities to acquire rights or interests in real or personal property as part of a TIF redevelopment project; (Section 99.820)

Adds airports to the definition of "revenue producing enterprises" for purposes of enterprise zone tax relief laws. Adds hotels and motels operated in Salem (Dent County) to the list of businesses and activities which qualify as a "revenue- producing enterprise" for purposes of enterprise zone tax relief laws. The act explicitly prohibits eligibility of these hotels and motels for state Enterprise Zone tax credits, but allows them to be eligible for real property improvement exemptions, regardless of the number of new jobs created or maintained; (Section 135.200)

Allows Springfield, in cooperation with the Dept, of Economic Development, to designate up to three Satellite Enterprise Zones; (Section 135.207)

Requires the Department to designate one new Enterprise Zone for Sugar Creek; (Sections 135.208 & 135.209)

Broadens the class of employees of the Harley-Davidson plant in Kansas City who count toward achieving the fifteen-percent requirement in order for the plant to be granted the tax credits and exemptions available to a business located within an Enterprise Zone, in that it allows Harley-Davidson to count current employees who were residents of the Enterprise Zone at the time of their employment and for at least 90 days thereafter regardless of whether the employee continues to reside within the Enterprise Zone on the date of the count, as long as the employee continues to reside in Missouri and work at H-D. (Section 135.230) Provisions similar to this portion of the act are contained in the TAT version of CCS/SS/SCS/HB 453 (2001);

Allows exempt wholesale generators of electricity, who are not subject to regulation by the Missouri Public Service Commission, and which are establishing a new business facility in New Florence, to qualify for Enterprise Zone tax exemptions & tax credits; (Section 135.248)

Increases (from 5 to 10) the years during which a Missouri wood energy producer may claim tax credits; (Section 135.305)

Caps at $1 million the amount of small business tax credits available for qualified investments in Missouri small businesses with an SIC code of 8731 and engaged solely in pharmaceutical R & D. Allows transfer of unused credits; (Section 136.406)

Broadens the definition of an "eligible residence" for purposes of tax credits for rehabilitation of residences in distressed communities: (1) to include a condominium or multiple residence structure; and (2) to include vacant agricultural/horticultural property that is within or adjacent to a Central Business District in Christian or Greene Counties. Broadens the definition of an "project" for purposes of tax credits for rehabilitation of residences in distressed communities to include a multiple residence structure or multiple individual structures. Defines "Central Business District"; (Section 135.478)

Increases (from 15% to 20%) the amount of eligible costs of a new residence, located in a distressed community or certain census block groups, which can be claimed as a Neighborhood Preservation tax credit. Removes the $25,000 per-taxpayer cap on these tax credits; (Section 135.481)

Reduces (from $3 million to $1.5 million) the per-project maximum tax credits available for Rebuilding Communities & Neighborhood Preservation projects. Requires reallocation of unused tax credits; (Section 135.484)

Allows tax credits to be approved and issued upon substantial completion of each individual residence; rather than delaying approval and issuance until substantial completion of the entire project; (Section 135.487)

Increases (from 10% to 15%) the amount of ownership interest in a Missouri certified capital company (CAPCO) a person must hold to be defined as an "affiliate of a certified company". Modifies the term "certified capital" to "certified capital investment" and narrows the definition to include only those CAPCO investments that fully fund either the investor's equity CAPCO interest, or a qualified debt instrument issued by a CAPCO. Defines the new terms "qualified debt instrument" and "qualified Missouri agricultural business". Narrows the definition of "qualified distribution" to include payment of CAPCO management and operation fees only if such fees of the CAPCO do not, on an annual basis, exceed 2.5% of the CAPCO's certified capital. Narrows the definition of what constitutes a "qualified investment". Clarifies the definition of "qualified Missouri business" and requires the business to maintain its HQ, principal operations and 80% of its employees in Missouri, or in a distressed community, for 3 years after the qualified investment; (Section 135.500)

Caps the aggregate amount of CAPCO tax credits at $4 million per year for 10 years, beginning in 2002. Caps the "cumulative" amount of CAPCO tax credits at $180 million; (Section 135.503)

Significantly expands the requirements for an entity to be a certified CAPCO, to wit: at least 2 principals (1 of which must be full-time and located in Missouri) must have 5 years of private equity venture capital investment experience with no less than $20 million from third-party venture investors; the applicant shall not have violated the CAPCO laws or any criminal laws, or made false representations, or been found liable for civil fraud or other crimes of moral turpitude; (Section 135.508)

Significantly expands the restrictions for investments by CAPCOS of certified capital which is not required to be placed in qualified investments, to require that such investments be held in a financial institution or held by a broker, shall not be reciprocally invested, and shall be invested only in US Treasury obligations, CDs, obligations rated "A" or better, mortgage- backed securities, collateralized mortgage obligations, or interests in money market funds; (Section 135.516)

Requires each certified CAPCO to file an annual report with the Department. Allows the Department to audit CAPCOS. Requires the Department to file an annual report with the General Assembly and the Governor; (Section 135.527)

Reduces (from 2,500 to 500) the amount of population required of a low-income census block group or contiguous such blocks to be eligible as a "distressed community". Further expands the definition of "distressed community" to include those areas within Metropolitan Statistical Areas designated as a federal Empowerment Zone, a federal Enhanced Enterprise Community, or a state Enterprise Zone prior to 1/1/86; (Section 135.530)

Reduces (from $4 million to $2 million) the aggregate amount of annual tax credits available for contributions to the Family Development Account Program; (Section 208.770)

Requires late fees on leases for public warehouses and self- service storage facilities to be set forth in the governing rental agreement. Allows late fees of the greater of $20 or 20% of the monthly rent, or such other reasonable amount, for each late rental payment; (Section 415.417) and

Reduces (from $6 million to $1 million) the aggregate amount of annual tax credits available for qualified contributions to the Individual Training Account Program. (Section 620.1450)
ALAN KELLY