Relating to large-scale economic development projects.

BE IT ENACTED BY THE GENERAL ASSEMBLY OF THE STATE OF MISSOURI, AS FOLLOWS:

Section 1. Sections 1 to 16 of this act shall be known as the "Missouri Business Use Incentives for Large-Scale Development Act".

Section 2. As used in sections 1 to 16 of this act, the following terms mean:

(1) "Board", the Missouri development finance board as created by section 100.265, RSMo;

(2) "Certificates", the revenue bonds or notes authorized to be issued by the board pursuant to section 15 of this act;

(3) "Credit", the amount agreed to between the board and an eligible industry, but not to exceed the incremental income tax withholding attributable to the eligible industry's project;

(4) "Department", the Missouri department of economic development;

(5) "Economic development project":

(a) The acquisition of any real property by the board, the eligible industry, or its affiliate; or

(b) The fee ownership of real property by the eligible industry or its affiliate; and

(c) The development of the real property including construction, installation, or equipping of a project, including fixtures and equipment, and facilities necessary or desirable for improvement of the real property, including surveys; site tests and inspections; subsurface site work; excavation; removal of structures, roadways, cemeteries and other surface obstructions; filling, grading and provision of drainage, storm water retention, installation of utilities such as water, sewer, sewage treatment, gas, electricity, communications and similar facilities; off-site construction of utility extensions to the boundaries of the real property; and the acquisition, installation, or equipping of facilities on the real property, for use and occupancy by the eligible industry or its affiliates;

(6) "Eligible employee", a person employed on a full-time basis in a new job at the economic development project averaging at least thirty-five hours per week who was not employed by the eligible industry or a related taxpayer in this state at any time during the twelve-month period immediately prior to being employed at the economic development project;

(7) "Eligible industry", a business located within the state of Missouri which is engaged in interstate or intrastate commerce for the purpose of manufacturing, processing or assembling products, conducting research and development, or providing services in interstate commerce, but excluding retail health, or professional services. "Eligible industry" does not include a business which closes or substantially reduces its operation in one area of the state and relocates substantially the same operation in another area of the state. This does not prohibit a business from expanding its operations in another area of the state provided that existing operations of a similar nature are not closed or substantially reduced. An eligible industry must:

(a) Invest a minimum of two hundred million dollars in an economic development project; and

(b) Create a minimum of one hundred new jobs for eligible employees at the economic development project;

(8) "Financing agreement", any agreement entered into, pursuant to sections 1 to 16 of this act, on behalf of the board and an eligible industry with respect to an economic development project. No such agreement shall be for a period longer than fifteen years;

(9) "Incremental income tax withholding", the total amount withheld pursuant to sections 143.191 to 143.265, RSMo, by the employer during the taxable year from the compensation of eligible employees;

(10) "New job", a job in a new or expanding eligible industry not including jobs of recalled workers, replacement jobs or jobs that formerly existed in the eligible industry in the state;

(11) "Program costs", all necessary and incidental costs of providing program services including payment of the principal of premium and interest on certificates, including capitalized interest, issued to finance a project, and funding and maintenance of a debt service reserve fund to secure such certificates. Program costs shall include:

(a) Obligations incurred for labor and obligations incurred to contractors, subcontractors, builders and materialmen in connection with the acquisition, construction, installation or equipping of an economic development project;

(b) The cost of acquiring land or rights in land and any cost incidental thereto, including recording fees;

(c) The cost of contract bonds and of insurance of all kinds that may be required or necessary during the course of acquisition, construction, installation or equipping of an economic development project which is not paid by the contractor or contractors or otherwise provided for;

(d) All costs of architectural and engineering services, including test borings, surveys, estimates, plans and specifications, preliminary investigations and supervision of construction, as well as the costs for the performance of all the duties required by or consequent upon the acquisition, construction, installation or equipping of an economic development project;

(e) All costs which are required to be paid under the terms of any contract or contracts for the acquisition, construction, installation or equipping of an economic development project; and

(f) All other costs of a nature comparable to those described in this subdivision;

(12) "Program services", administrative expenses of the board, including contracted professional services, and the cost of issuance of certificates.

Section 3. 1. The Missouri development finance board shall have, in addition to the powers provided to it in sections 100.250 to 100.297, RSMo, and with the approval of the department, all the powers necessary or convenient to carry out and effectuate the purposes and provisions of sections 1 to 16 of this act, including, but not limited to, the power to:

(1) Provide and finance economic development projects, pursuant to the provisions of sections 1 to 16 of this act, and cooperate with eligible industries in order to promote, foster and support economic development within the state;

(2) Conduct hearings and inquiries, in the manner and by the methods as it deems desirable, for the purpose of gathering information with respect to eligible industries and economic development projects, and for the purpose of making any determinations necessary or desirable in the furtherance of sections 1 to 16 of this act; and

(3) Negotiate the terms of, including the amount of project costs, and enter into financing agreements with eligible industries, and in connection therewith to acquire, convey, sell, mortgage, finance or otherwise dispose of any property, real or personal, loan bond proceeds, and permit the use of incremental income tax withholding, in connection with an economic development project, and to pay, or cause to be paid, in accordance with the provisions of a financing agreement, the program costs of an economic development project from any funds available therefor.

2. Certificates issued by the board pursuant to the provisions of sections 1 to 16 of this act shall not constitute an indebtedness or liability of the state of Missouri within the meaning of any state constitutional provision or statutory limitation and shall not constitute a pledge of the faith and credit of the state of Missouri.

Section 4. 1. The department, in conjunction with the board, shall establish the procedures and standards for the determination and approval of eligible industries and their economic development projects by the promulgation of rules or regulations in accordance with sections 1 to 16 of this act, chapter 536, RSMo, and section 620.1066, RSMo. These rules or regulations shall mandate the evaluation of the

creditworthiness of eligible industries, the number of new jobs to be provided by an economic development project to residents of the state, and the likelihood of the economic success of the economic development project. No economic development project which will result in the replacement of facilities existing in the state shall be approved by the board.

2. With respect to each eligible industry making an application to the board for incentives, and with respect to the economic development project described in the application, the board shall request relevant information, documentation and other materials and make inquiries of the applicant as necessary or appropriate. After a diligent review of relevant materials and completion of its inquiries, the board may by resolution designate an economic development project.

Section 5. The board may enter into, with the approval of the department and in consultation with the office of administration, with any eligible industry, a financing agreement with respect to its economic development project. Subject to the inclusion of the mandatory provisions set forth in sections 1 to 16 of this act, the terms and provisions of each financing agreement shall be determined by negotiations between the board and the eligible industry.

Section 6. The financing agreement shall provide in substance that:

(1) It may be assigned by the eligible industry only upon the prior written consent of the board following the adoption of a resolution by the board to such effect; and

(2) Upon default by the eligible industry in any obligations under the financing agreement or other documents evidencing, securing or related to the eligible industry's obligations, the board shall have the right, at its option, to:

(a) Declare the financing agreement or other such documents in default;

(b) Accelerate and declare the total of all such payments due by the eligible industry and sell the economic development project at public, private, or judicial sale;

(c) Pursue any remedy provided under the financing agreement or other such documents;

(d) Be entitled to the appointment of a receiver by the circuit court wherein any part of the economic development project is located; and

(e) Pursue any other applicable legal remedy.

Section 7. After receipt of an application, the board may with the approval of the department, enter into an agreement with an eligible industry for a credit pursuant to sections 1 to 16 of this act if the board determines that all of the following conditions exist:

(1) The applicant's project will create new jobs that were not jobs previously performed by employees of the applicant in Missouri;

(2) The applicant's project is economically sound and will benefit the people of Missouri by increasing opportunities for employment and strengthening the economy of Missouri;

(3) The political subdivisions affected by the project have committed significant local incentives with respect to the project;

(4) Receiving the credit is a major factor in the applicant's decision to go forward with the project and not receiving the credit will result in the applicant not creating new jobs in Missouri; and

(5) Awarding the credit will result in an overall positive fiscal impact to the state.

Section 8. In determining the credit that should be awarded, the board shall take into consideration the following factors:

(1) The economy of the county where the projected investment is to occur;

(2) The potential impact on the economy of Missouri;

(3) The incremental payroll attributable to the project;

(4) The capital investment attributable to the project;

(5) The amount the average wage paid by the applicant exceeds the average wage paid within the county in which the project will be located;

(6) The costs to Missouri and the affected political subdivisions with respect to the project;

(7) The financial assistance that is otherwise provided by Missouri and the affected political subdivisions.

Section 9. The board shall determine the amount and duration of a credit awarded pursuant to sections 1 to 16 of this act. The credit amount may not exceed the incremental income tax withholding.

Section 10. An agreement between the board and an eligible industry shall include all of the following:

(1) A detailed description of the project that is the subject of the agreement;

(2) A specific method for determining the number of new employees employed during a taxable year who are performing jobs not previously performed by an employee of the eligible industry;

(3) A requirement that the taxpayer shall annually report to the board the number of new employees who are performing jobs not previously performed by an employee, the new income tax revenue withheld in connection with the new employees, and any other information the board needs to perform its duties pursuant to sections 1 to 16 of this act;

(4) A requirement that the taxpayer shall provide written notification to the director and the board not more than thirty days after the taxpayer makes or receives a proposal that would transfer the taxpayer's state tax liability obligations to a successor taxpayer; and

(5) Any other performance conditions that the board and the director determine are appropriate.

Section 11. If the director determines that an eligible industry which has received a credit pursuant to sections 1 to 16 of this act, is not complying with the requirements of the credit agreement or all of the provisions of sections 1 to 16 of this act, the director shall, after giving the industry an opportunity to explain the noncompliance, notify the department of revenue of the noncompliance and request an assessment. The director shall state the amount of the assessment, which may not exceed the sum of any previously allowed incremental income tax withholding pursuant to sections 1 to 16 of this act. After receiving such a notice, the department of revenue shall make an assessment against the taxpayer for the amount stated in the director's notice.

Section 12. On an annual basis, the director shall provide for an evaluation of the program. The evaluation shall include an assessment of the effectiveness of the program in creating new jobs in Missouri and of the revenue impact of the program. The director shall submit a report on the evaluation to the governor, the president pro tem of the senate, and the speaker of the house of representatives.

Section 13. An agreement between the board and an eligible industry shall provide that all or part of program costs are to be met by receipt of incremental income tax withholding. Incremental income tax withholding shall be based upon wages paid to eligible employees. A portion or all of the total payments made by the employer pursuant to section 143.221, RSMo, shall be designated as the incremental income tax withholding. If business or employment conditions cause the amount of the incremental income tax withholding to be less than the amount projected in the agreement for any time period, then other withholding tax paid by the employer pursuant to section 143.221, RSMo, shall be credited to the Missouri large-scale development fund by the amount of such difference. The employer shall remit the amount of the incremental income tax withholding to the department of revenue in the manner prescribed in section 16 of this act. When all program costs, including the principal of, premium, if any, and interest on the certificates have been paid, the employer credits shall cease.

Section 14. 1. The board shall establish a special fund for and in the name of each project. All funds appropriated by the general assembly to the department of economic development from the large-scale development fund and disbursed by the board for the project and other amounts received by the board in respect of the project and required by the agreement to be used to pay program costs for the project shall be deposited in the special fund. Amounts held in the special fund may be used and disbursed by the board only to pay program costs for the project.

2. Any disbursement in respect of a project received from the department of economic development pursuant to the provisions of sections 1 to 16 of this act, and the special fund into which it is paid, may be irrevocably pledged by the board for the payment of the principal of, premium, if any, and interest on the certificate issued by the board to finance or refinance, in whole or in part, the project.

3. The employer shall certify to the department of revenue that the credit from withholding is in accordance with an agreement and shall provide other information the department may require.

4. An employee participating in a project shall receive full credit for the amount designated as incremental income tax withholding and withheld as provided in section 143.221, RSMo.

5. If an agreement provides that all or part of program costs are to be met by receipt of incremental income tax withholding, the provisions of this section shall also apply to any successor to the original employer until such time as the principal and interest on the certificates have been paid.

Section 15. 1. To provide funds for the present payment of the costs of economic development projects, the board may borrow money and issue and sell certificates payable from a sufficient portion of the future receipts of payments authorized by the agreement including disbursements from the Missouri large-scale development fund to the special fund established by the board for each project. The certificates shall be marketed through financial institutions authorized to do business in Missouri. The receipts shall be pledged to the payment of principal of and interest on the certificates. Certificates may be sold at public sale or at private sale at par, premium, or discount of not less than ninety-five percent of the par value thereof, at the discretion of the board, and may bear interest at such rate or rates as the board shall determine, notwithstanding the provisions of section 108.170, RSMo, to the contrary. Certificates may be issued with respect to a single project or multiple projects and may contain terms or conditions as the board may provide by resolution authorizing the issuance of the certificates.

2. Certificates issued to refund other certificates may be sold at public sale or at private sale as provided in this section with the proceeds from the sale to be used for the payment of the certificates being refunded. The refunding certificates may be exchanged in payment and discharge of the certificates being refunded, in installments at different times or an entire issue or series at one time. Refunding certificates may be sold or exchanged at any time on, before, or after the maturity of the outstanding certificates to be refunded. They may be issued for the purpose of refunding a like, greater or lesser principal amount of certificates and may bear a higher, lower or equivalent rate of interest than the certificates being renewed or refunded.

3. The board shall determine if revenues provided in the agreement are sufficient to secure the faithful performance of obligations in the agreement.

4. Certificates issued pursuant to this section shall not be deemed to be an indebtedness of the state or the board or of any political subdivision of the state and the principal and interest on such certificates shall be payable only from the incremental income tax withholding which is pledged in the agreement.

Section 16. 1. There is hereby established within the state treasury a special fund, to be known as the "Missouri Large-Scale Development Fund", to be administered by the department of economic development. The department of revenue shall credit to the large-scale development fund, as received, all incremental income tax withholding remitted by employers. The fund shall also consist of any gifts, contributions, grants or bequests received from federal, private or other sources. The general assembly, however, shall not provide for any transfer of general revenue funds into the large-scale development fund. Moneys in the Missouri large-scale development fund shall be disbursed to the department of economic development pursuant to regular appropriations by the general assembly. The department shall disburse such appropriated funds in a timely manner into the special funds established by the board for projects, which funds shall be used to pay program costs, including the principal of, premium, if any, and interest on certificates issued by the board to finance or refinance, in whole or in part, a project. Such disbursements by the department of economic development shall be made to the special fund for each project in the same proportion as the incremental income tax withholding remitted by the employer participating in such project bears to the total remitted by all employers participating in projects during the period for which the disbursement is made. Moneys for economic development projects established pursuant to the provisions of sections 1 to 16 of this act shall be obtained from appropriations made by the general assembly from the Missouri large-scale development fund. All moneys remaining in the Missouri large-scale development fund at the end of any fiscal year shall not lapse into the general revenue fund, as provided in section 33.080, RSMo, but shall remain in the Missouri large-scale development fund.

2. The department of revenue shall develop such forms as are necessary to demonstrate accurately each employer's incremental income tax withholding paid into the Missouri large-scale development fund. The incremental income tax withholding shall be accounted as separate from the normal withholding tax paid to the department of revenue by the employer. Reimbursements made by all employers to the Missouri large-scale development fund shall be no less than all allocations made by the department of economic development to the board for all projects. The employer shall remit the amount of the incremental income tax withholding to the department of revenue in the same manner as provided in sections 143.191 to 143.265, RSMo.