SCS/HS/HCS/HB 1656 - This act provides various tax relief measures for businesses in economically distressed communities in the state. The act contains the following provisions:

Section 92.336 - Increases from 30% to 40% the minimum amount of convention and tourism tax revenues in Kansas City which goes to the not-for-profit organization which promotes the city as a convention and tourist center, with the balance going for operating expenses and capital expenditures;

Sections 100.710 and 100.850 - Expands the definition of "assessment" under the Business Use Incentives for Large-Scale Development (BUILD) program to include 10% of the gross wages paid to eligible employees if the economic development project is located in a distressed community and reduces the minimum number of new jobs created in such a community from 500 to 200;

Section 135.110 - Requires a letter of intent to be filed with the Department of Economic Development at least 15 days prior to the commencement of commercial operations at a new business facility;

Section 135.258 - conditions eligibility for new business facility and enterprise zone tax benefits to receipt of an approved letter of intent by the Department of Economic Development;

Section 135.403 - Expands the tax credit for investments in small businesses to include a Missouri small business in a distressed community. The total amount of credits for Missouri small businesses is increased to $13 million, with $4 million of the additional amount earmarked for investment in small businesses in distressed communities; the aggregate amount of credits, including those for investment in community banks, is increased $19 million;

Section 135.405 - Exempts investments in Missouri small businesses in distressed communities from the current limit of $1,500-$100,000 per taxpayer per business;

Section 135.408 - Allows investors in a Missouri small business to qualify for tax credits if the investor owns less than 80% of the business;

Section 135.530 - Defines "distressed community" as a Missouri municipality or United States census block group with median household income under 70% of median household income for either metropolitan or nonmetropolitan areas;

Section 135.535 - Allows qualified corporations, LLCs, partnerships or sole proprietorships with less than 100 employees (but more than 75% at a facility in a distressed community) to get a 25% credit against income taxes owed for income generated by a facility which relocates to or locates in a distressed community. The maximum amount of credits is capped at one hundred twenty-five thousand dollars per taxpayer for each of the three years the credit is claimed. The section also allows an employee of such a company to take an income tax credit equal to 1.5% of the employee's gross salary at the facility. In lieu of the employer 25% tax credit, an employer may take a credit in the amount of 25% of funds expended for various high tech equipment at the facility, up to $75,000 per year per entity for the first 3 years. An income tax credit is also authorized for certain businesses already located in a distressed community equal to 25% of income taxes owed, up to a maximum of $75,000 per taxpayer for certain equipment expenditures. Total credits are limited to $5 million per year;

Section 135.545 - Allows an income tax credit in the amount of 50% of qualified capital investment in transportation development equipment located in a distressed community, if the investment is part of a development plan approved by the municipality and the local transit agency. The total amount of credits is limited to $5 million for each year;

Section 215.030 - Expands powers of the Missouri Housing Development Commission to make or purchase mortgage loans for residential housing, for sale or rent, in distressed communities; Sections 253.550, 253.557 and 253.559 - Expands application of the historic building rehabilitation tax credit to cover corporate franchise taxes and allows not-for-profit organizations, other than religious or government institutions, to sell, assign or transfer the tax credits. The aggregate amount of tax credits is limited to $50 million, and the aggregate amount of tax credits per eligible property is limited to $7.5 million. These provisions expire on December 31, 2003;

Sections 1-14 - Authorize Missouri generation zones located within distressed communities. One or more local governmental units may apply to the Department of Economic Development for zone status, which cannot last more than 15 years, be larger than 3,000 acres, nor contain more than four distinct geographic areas. No one person can own more than fifty percent of the real property in each area, which has to meet certain income and unemployment levels. No generation zones can be designated before January 1, 1999 or after December 31, 2000.

During the duration of the zone, all taxable income is exempted and real property taxes on subsequent improvements are abated. Businesses within the zones that pay personal property taxes shall be reimbursed for those payments through appropriations. Businesses located within a generation zone are not eligible for any other tax credits administered or certified by the Department of Economic Development under Chapters 135 or 620, RSMo.

The Department of Economic Development is authorized to issue infrastructure development, improvement or removal grants to qualified local government units in which a generation zone is located.

A generation zone association shall be created in each zone, consisting of seven members each serving a three-year term; two of the members shall be selected by the Governor and five by the chief executive officer of the qualified local government unit. Each business located within a zone which receives any tax exemptions, abatements or reimbursements authorized under this act shall pay ten percent of the value of those incentives to the generation zone association, which has the authority to expend those funds for purposes of crime prevention, educational improvements, health services and other community revitalization activities within the zone.

The Department of Economic Development is required to report annually to the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives on the economic effects of this act in each generation zone.

Sections 15-21 - Authorize the Missouri Individual Training Account Program within the Department of Economic Development and applies it only within distressed communities. Employers must notify the Department of their intent to participate and to pay the cost of classroom training for employees. These costs are reimbursed through credits against the income tax and the financial institutions tax; the maximum amount per employee is the lesser of fifty percent of the classroom training costs or $1,500. The total amount of credits is capped at $6 million per year.

Section 22 - Prohibits granting any tax credit authorized by this act to any business entity which closes a current business location within six months of locating within a distressed community.

The bill has an effective date of January 1, 1999, except for the sections expanding the historic rehabilitation tax credit, which apply to all eligible property placed in service after January 1, 1998.
RUSS HEMBREE