HS HCS HB 246 & 405 -- HOUSING REHABILITATION TAX CREDITS (Bray)

This substitute authorizes tax credits for rehabilitation of
certain older housing through the Rebuilding Communities Act.

The substitute authorizes owner-occupied or intended to be
owner-occupied houses to be eligible for the tax credits in 2
types of communities.  These communities are:  distressed
communities, defined as communities or census block groups with
median household incomes of less than 70% of the median
household income for the entire state or metropolitan area; or
other eligible communities, defined as communities or census
block groups with median household incomes of less than 90% of
the median household income for the entire state or metropolitan
area.

The substitute provides varying amounts of tax credits based on
the age of the structure, where the structure is located, what
type and how extensive the rehabilitation has been, and what
percentage the cost of the rehabilitation is in relation to the
cost basis of the property.

Taxpayers must apply to the Department of Economic Development
to be eligible for a credit against income taxes, corporate
franchise taxes, or taxes on financial institutions and
insurance premium taxes.  These tax credits are limited to $20
million per year.  If, in a given calendar year, the $20 million
allocation is not fully used, the unused balance will be
available for the 3 subsequent calendar years.  After 3 years
the available credits become limited.  The tax credits
authorized cannot be claimed in addition to any other available
tax credit, except for certain cases in distressed communities.
The tax credits authorized may be transferred or sold, and
credits exceeding tax liability may be carried back for 3 prior
tax years and carried forward 5 subsequent years

The substitute also extends the existing affordable housing tax
credits available through the Neighborhood Assistance Act to
market rate housing in distressed communities.

FISCAL NOTE:  Estimated Net Decrease to General Revenue Fund of
$5,284,863 in FY 2000, $17,765,243 in FY 2001, and $37,772,099
in FY 2002.

HCS HB 246 & 405 -- HOUSING TAX CREDITS FOR CERTAIN COMMUNITIES

SPONSOR:  Bray

COMMITTEE ACTION:  Voted "do pass" by the Committee on Ways and
Means by a vote of 14 to 1.

This substitute authorizes tax credits for rehabilitation of
certain housing through the Rebuilding Communities Act.

The substitute authorizes owner-occupied or intended to be
owner-occupied houses to be eligible for the tax credits in 2
types of communities.  These communities are:  distressed
communities, defined as communities or census block groups with
median household incomes of less than 70% of the median
household income for the entire state or metropolitan area; or
other eligible communities, defined as communities or census
block groups with median household incomes of less than 90% of
the median household income for the entire state or metropolitan
area.

The substitute provides varying amounts of tax credits based on
where the structure is located, what type of rehabilitation has
been completed, and what percentage the cost of the
rehabilitation is in relation to the cost basis of the property.

Taxpayers must apply to the Department of Economic Development
to be eligible for a credit against income taxes, corporate
franchise taxes, or taxes on financial institutions and
insurance companies pursuant to Chapter 148, RSMo.  These tax
credits are limited to $20 million per year.  If, in a given
calendar year, the $20 million allocation is not fully used, the
unused balance will be available for the 3 subsequent calendar
years.  After 3 years the available credits become limited.  The
tax credits authorized cannot be claimed in addition to any
other available tax credit, except for certain cases in
distressed communities.  The tax credits authorized may be
transferred, and credits exceeding tax liability may be carried
back for 3 prior tax years and carried forward 5 subsequent years

The substitute also extends the existing affordable housing tax
credits available through the Neighborhood Assistance Act to
market rate housing in distressed communities.

FISCAL NOTE:  Estimated Net Decrease to General Revenue Fund of
$5,284,863 in FY 2000, $17,765,243 in FY 2001, and $37,772,099
in FY 2002.

PROPONENTS:  Supporters say that the combination of the 2 bills
will provide needed tax credits to improve owner-occupied
housing in distressed communities and in communities that are on
the verge of being distressed.

Testifying for the bill were Representatives Bray and Foley;
Councilman Tim Dunn of Maplewood; Alderman Jack Richardson of
Willow Springs; St. Louis 2004; Governor's Office; Micke Gage;
St. Louis County Municipal League; Larry Foster; Regional
Commerce and Growth Association; St. Louis Development
Corporation; St. Louis County Executive Buzz Westfall; St. Louis
County Economic Council; St. Louis Homebuilders's Association;
and Missouri Coalition for the Environment.

OPPONENTS:  There was no opposition voiced to the committee.

Bill Tucker, Assistant Director of Research

HB 246 -- Rebuilding Communities Act and Distressed Communities
Tax Credits

Co-Sponsors:  Bray, Kennedy, Auer, McLuckie, Hilgemann, May (108)

This bill authorizes two tax credits, beginning January 1, 2000,
through the Rebuilding Communities Act.

For building or substantially rehabilitating market rate owner--
occupied structures located in a distressed community, as
defined in current law, taxpayers can apply to the Department of
Economic Development for a credit against income taxes,
corporate franchise taxes, or taxes on financial institutions
and insurance companies pursuant to Chapter 148, RSMo.
Qualified taxpayers receive a tax credit equal to 15% of
eligible new construction costs, and 25% of the eligible
substantial rehabilitation costs of an existing structure built
prior to 1948.  These tax credits are limited to $10 million per
year, with a cap of $3 million for any one multiple housing
project.  If, in a given calendar year, the $10 million
allocation is not fully used, the unused balance will be
available for the 3 subsequent calendar years to provide tax
credits equal to 25% of the eligible costs of substantial
rehabilitation of market rate rental properties in distressed
communities, for structures built prior to 1948.  These rental
property tax credits will not be counted against the $10 million
annual limit allowed for the other tax credits authorized.  The
tax credits authorized can be claimed in addition to any other
available tax credit, except for the Missouri Low-Income Housing
tax credit, or other low- to moderate-income housing tax
credits.  The tax credits authorized may be transferred, and
credits exceeding tax liability may be carried back for 3 prior
tax years and carried forward for 10 subsequent tax years.

A second credit authorized through the Rebuilding Communities
Act and administered by the department provides a credit equal
to 25% of the eligible costs for rehabilitating an owner--
occupied residence against income taxes, corporate franchise
taxes, or taxes on financial institutions and insurance
companies pursuant to Chapter 148, RSMo.  Tax credits may not
exceed $20,000 per eligible residence in a 10 year period.  To
qualify, rehabilitation costs must exceed $10,000 for eligible
residences located in a U.S. Census Block Group, or $5,000 for
eligible residences located in a distressed community.
Residences otherwise eligible which are in violation of any
municipal or county property maintenance or zoning code do not
qualify for the tax credit.  These tax credits may be
transferred and are capped at $5 million per year.  Credits
exceeding tax liability may be carried back for 3 prior tax
years, and carried forward for 10 subsequent tax years.

The bill also extends the existing affordable housing tax
credits available through the Neighborhood Assistance Act to
market rate housing in distressed communities, and exempts such
market rate housing from land use restrictions.

Finally, the bill authorizes training provided by an outside
firm, other than the employer, which provides training on the
job or in other facilities to qualify for the tax credits
available through the existing Missouri Individual Training
Account Program Act within distressed communities.  Current law
allows only that training provided in a classroom by educational
institutions to qualify for these tax credits.

The provisions of the bill are effective December 31, 1999.