HB 3231

Published by the Missouri House as the official summary of the version that passed (source PDF). Reproduced here in full, unedited.

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