STATE OF MISSOURI
MO Historic Tax Credits (MO HTC)
www.ded.mo.gov/cd/historic.htm
*MO Dept. of Economic Development (DED) issues state income tax credit equal to 25% of the eligible historic rehab costs and expenses. $1 of MO HTC reduces income tax owed to the State of Missouri by $1.
*Applications are submitted to MODED, Community Development division. MO DED works with the MO State Historic Preservation office in determining and approving project eligibility.
*MO HTC has two features that the Federal Historic Tax Credit does not:
a.) it can be used on non-income producing residential structures
b.) credits can be sold or transferred to other qualified MO tax payers.
MO Brownfield Redevelopment Program
www.ded.missouri.gov/cd/brownfield.htm
*MO Dept. of Economic Development (DED) issues state income tax credits to qualified redevelopers of abandoned commercial and industrial sites that are contaminated by hazardous substances (i.e. lead paint, asbestos, storage tanks.)
*Applications must be made to both MODED and MO Dept. of Natural Resources.
*Credits can be issued for 3 types of activities at a Brownfield site:
a.) remediation tax credits (site cleaning);
b.) demolition tax credits (removing structures on site)
c.) job and investment tax credits (creating new jobs after redevelopment.)
*Tax credits for up to 100% of remediation and demolition costs may be issued. *Remediation tax credits can be sold or transferred.
*To be eligible, a project must create 10 new jobs or retain 25 existing jobs.
MO Rebuilding Communities (RBC) Tax Credits
www.ded.mo.gov/Existing%20Business%20Solutions/Managing%20and%20Growing%20Your%20Business/Tax%20Information/Tax%20Incentives/Rebuilding%20Communites.aspx
*Provides state income tax incentives for eligible businesses locating, relocating or expanding their businesses within a “distressed community.”
*Downtown St. Louis qualifies as a “distressed community.”
*A pre-application must be submitted to MODED who will let an applicant know if they are eligible for the tax credits. Once eligible, an applicant will formally apply.
*New, relocating or existing businesses can earn tax credits on equipment purchases (such as computer hardware and software) while employees of new and relocating businesses can earn tax credits against their annual salaries.
*RBC tax credits can be sold or transferred, but cannot be combined with federal Enterprise Zone or MO Quality Jobs tax credits for the same tax period.
MO Quality Jobs (MOQJ) Program
www.ded.mo.gov/BDT/Business%20Location%20Services/Financial%20and%20Incentive%20Programs/Tax%20Incentives/Quality%20Jobs%20Program.aspx
*Organized and administered under the MODED.
*Three different project types are eligible IF they create a minimum number of new jobs at the project facility within a 2-year period:
a.) Small / Expanding businesses (40 jobs in the City of St. Louis;)
b.) Technology businesses (10 jobs;)
c.) High-Impact businesses (100 jobs.)
*Designed to encourage an employer to create new full-time jobs that at least equal the average county wage (where the employer is located) and offer health insurance. In exchange, the employer benefits by: a.) keeping a portion of that new employee’s income tax it would normally have to submit to the state of Missouri; b.) For technology and high-impact businesses, an employer can earn a MOQJ tax credit that can be assigned, sold or transferred.
*Annual program cap of $12 million, which is provided on a first-come basis.
*A business is ineligible for this program if it is already earning benefits from any of the following programs:
a.) MO Enhanced Enterprise Zone
b.) Business Facility;
c.) Rebuilding Communities
d.) Brownfield redevelopment job and investment tax credits.
MO Enhanced Enterprise Zone (EEZ)
www.ecodev.state.mo.us/cd/EEZ.htm
*EEZ’s are specific geographic areas designated by local governments and certified for program eligibility by the MO DED for a 25-year span.
*To be eligible in an EEZ, a new or expanding businesses needs to demonstrate positive impact on local industry cluster development and/or the creation of sustainable jobs in a targeted industry. If approved, and in order claim the EEZ state-income tax credit, the business must create 2 new jobs and $100,000 in new investment over the prior year. This process can be repeated for a 10-year period.
*Eligible investment purchases include land, building, machinery and equipment.
*Designed to replace the expired MO Enterprise Zone program.
*Annual program cap of $4.0 million until 12/31/2006. Annual cap after: $7.0 million.
*EEZ tax credits can be assigned, sold or transferred.
*A business is ineligible for this program if it is already earning benefits from any of the following programs:
a.) MO Enhanced Enterprise Zone
b.) Business Facility
c.) Rebuilding Communities;
d.) Brownfield redevelopment job and investment tax credits.
MO State Tax Increment Financing (TIF)
www.ded.mo.gov/cd/state_tif.htm
*TIF financing is both a state and local economic development tool, although the practice of combining both into one deal is rare.
*A state TIF is designed to help finance improvements in designated redevelopment areas or districts that have been “blighted.”
*Either a private developer or a debt-issuing municipal entity can underwrite the improvements, and be reimbursed later for eligible project costs—i.e. expenses incurred for assembly, acquisition, demolition, financing or rehabilitation.
*TIF district improvements are made by using new tax revenues from two sources that are generated by a finished project. The first source—‘PILOTS’—are from any increase in property tax assessments when comparing the values before and after a project’s completion. The second source—‘EATS’—are from increases in economic activity taxes (i.e. local sales, earnings, utility) in the area that are generated by the finished project. A MO State TIF supplements these local ‘EATS’ sales tax revenues by providing state ‘EATS’ sales tax revenues as well.
*100% of the increase in PILOTS taxes and 50% of the increase in local AND state EATS taxes are put in a Special Allocation Fund. These monies are then used to repay certain debts incurred by the private developer or the municipal entity.
*The district must have local TIF funds committed before state TIF funds are awarded. Annual MO appropriations are capped at $32 million as of 8/28/2005.
*Similar to MODESA, but one important distinction is that an applicant must choose the state increment (up to 50%) sought - a state sales tax increment or a state income tax increment. This captured amount is then used in a redevelopment area—along with the local increment--to pay for the infrastructure improvements.
*Applications must be submitted to MO DED who will decide on a project’s eligibility in conjunction with the Commissioner of the MO Office of Administration.
*Created by MO in 1982 but legislative changes are anticipated in 2006
MO Downtown Economic Stimulus Act (MODESA)
www.ded.mo.gov/cd/modesa.htm
*Designed to facilitate the redevelopment of “blighted” downtown Central Business District (CBD) areas by providing for funding of public infrastructure.
*Downtown St. Louis is eligible. The city of St.Louis must expend at least $10 million on project costs and create at least 100 new jobs within the designated area.
*A redevelopment area must have local funds committed before state funds are awarded. Annual state appropriations are capped at $108 million as of 8/28/2005.
*Similar to a state TIF, but one important distinction is that a combination of state sales and income tax increments (up to 50%) may be captured in a redevelopment area—along with the local increment--to pay for the infrastructure improvements.
*Applications must be submitted to MO DED who will work in conjunction with MO Development Finance Board (MODFB) on rendering a decision.
Urban Enterprise Loan (UEL) Program
www.slmbc.org/who/programs/UELindex.htm
*Funded by MO DED and administered locally by STL Minority Business Council.
*Must be a for-profit business with less than 100 employees located in an eligible census tract block group in the City of St. Louis that is a designated “UEL zone.”
*Proceeds can be used for starting a new business or purchasing an existing business, purchasing equipment or inventory, or for working capital.
* UEL Loans can be made up to 50% of the total project costs to a maximum amount of $100,000. Financing structure is made up of 3 components: Private bank loan in a first-lien position (typically 40-45% project costs) UEL loan in a subordinate-lien position (45-50%) and an applicant’s personal equity (10%.)
*A job creation criterion is associated with UEL loans. Within two years of the project’s completion, one job must be created for every $20,000 in UEL funds borrowed. A first source employment agreement for entry level job referrals must be signed with the St. Louis Agency on Training and Employment (SLATE.)
RMI-SBA MicroLoan Program
www.rmiinc.org/micro.php
*Organized under the Small Business Administration (SBA) and administered by a private for-profit corporation by the name of Rural Missouri Inc (RMI).
*Designed to assist for-profit start-up and small companies in MO who cannot access capital via conventional lending.
*Proceeds are used for business equipment and inventory purchases, working capital or leasehold improvements.
*Loans range from $500 to $35,000 and terms range from one to five years.
Industrial Revenue Bonds (IRB’s)
www.stlouis.missouri.org/sldc/busdev/revbond.html
*MO law gives authority to Industrial Development Corporations (IDC’s) in MO cities and counties to purchase or construct certain types of projects with IRB bond proceeds, and to lease or sell that project to an eligible private company.
*Proceeds can be used for purchase, construction, extension and improvements on all types of manufacturing plants, assembly, industrial and processing plants, distribution facilities, solid waste and water distribution facilities, multi-family housing projects and facilities for 501c(3) non-profits.
*IDC’s can issue General Obligation (GO) or revenue IRB’s. These bonds are purchased by either a private bank or public underwriter, and proceeds are “passed through” the IDC, to the private company, to finance the project.
*IRB’s are attractive to all parties because IDC’s want to encourage economic development within its borders, the private company finances new land and/or equipment with sub-prime interest rates, and the interest paid to bondholders is exempt from federal and state income taxes.
*About $260 million in IRB’s are authorized in MO annually. For an individual IRB project, the floor and ceiling on bond proceeds ranges from $1-10 million.
MO Business Use Incentives for Large-Scale Development (BUILD) Program
*Designed to finance a portion of the capital, infrastructure and utility costs for eligible businesses seeking to expand in MO or relocate to MO.
*Applications must be submitted to MO DED, who will recommend a course of action to the final project arbiter - the MO Development Finance Board (MODFB.)
*If accepted and if local governments have committed local incentives first, MODFB will issue certificates (usually IRB’s) to finance the project. The eligible business will then pay principal and interest to the owners of the certificates. Finally, MODFB will reimburse the business for these certificate payments by issuing MO state income tax credits that the business may apply towards the income taxes they owe to the state of MO.
*An eligible business must meet both a capital investment and new job creation requirement within a 3 year period.
*Authorized annual cap of $15 million
MO Low Income Housing Tax Credits (LIHTC)
www.mhdc.com/rental_production/low_inc_tax_pgrm.htm
*The LIHTC Program is both a Federal and State financing instrument. State credits can only be awarded if federal credits are awarded.
*Both US Congress & the MO General Assembly have delegated administration of the Federal & State LIHTC Programs to the MO Housing Development Commission (HDC.)
*MO HDC allocates federal and state tax credits to provide an incentive to qualified private developers to construct, rehab or maintain rental housing units for low and very-low income households in the state of Missouri. MO HDC also monitors private developer compliance with state and federal regulations.
*MO HDC will issue the credits to private developers, who then sell them to investors (i.e. bank or corporation.) The developer will then use these funds as equity to construct or rehab the proposed housing units.
*Each year, tax credit amounts are made available to developers in August, application submissions are required by October, and MO HDC project allocation decisions are made in December. For the current 2006 cycle, $10.7 million is available for federal tax credits and $10.7 million is available for MO tax credits.
*A qualified LIHTC project must be both rent restricted and have a percentage of units set aside for individuals whose income doesn’t exceed certain area figures.
MO First Linked Deposit Program
www.treasurer.mo.gov/link/ld.asp
*Organized under and administered by the MO State Treasurer’s Office.
*The State Treasurer takes available state funds, and offers to deposit them in qualified MO financial institutions at below market interest rates. These institutions then must make low-interest loans to eligible borrowers by “passing” these interest rate savings they received from the state onto the borrower.
*$350 million in State deposits are available for loans to businesses engaged in: a.) job creation
b.) small businesses
c.) multi-family housing;
Eligibility criteria, dollar allocations, proceed usage regulations and deposit terms vary in each of these areas.
*Generally, an eligible borrower is a new, existing or expanding business that creates or retains jobs in the state of MO.
*A job creation criterion is associated with the program. A borrower must create or retain one new job in exchange for every $25,000 in borrowed funds.
Small Business Incubator Tax Credit
www.ded.mo.gov/BDT/Business%20Location%20Services/Financial%20and%20Incentive%20Programs/Tax%20Incentives/Small%20Business%20Incubator%20Tax%20Credit.aspx
*Designed to encourage taxpayers to contribute their private funds to an approved MO small business incubator sponsor. In exchange, MO DED will issue state tax credits to the donor in an amount equal to 50% of their contribution.
*A sponsor is an organization which by agreement with MODED, administers, funds or operates a small business incubator program.
*In the incubator, a number of small businesses collectively operate during their start-up period. The program sponsor uses the privately donated funds to purchase land, buildings, equipment, furnishings and professional business services—i.e. advising, educating or marketing—for the businesses located in the incubator. *Sharing these assets and services allows the businesses to defray costs, thus assisting them during their growth period.
*This credit can be assigned, sold or transferred.
*Authorized annual cap of $500,000
Neighborhood Preservation Act Tax Credit
www.ded.mo.gov/cd/NPA.htm
*Designed to encourage the rehabilitation or new construction of owner-occupied homes in income-restricted neighborhoods. MO DED will issue state tax credits to the homeowner or developer responsible for their investment in these areas.
*The credit is available for 3 project types: a.) new construction (15% of eligible costs); b.) rehab (25%); or c.) substantial rehab (between 25-35%)
*Application for these credits is accepted annually from September to mid-November. For the current 2006 cycle, $8.0 million is available for homes in “eligible areas,” and $8.0 million is available for homes in “qualifying / distressed community areas.” St. Louis city qualifies as a “distressed community.”
*This credit can not be coupled with any other state tax credit except the MO Historic Tax Credit.
*This credit can be assigned, sold or transferred.
*Created in 1999.
Neighborhood Assistance Program (NAP) Tax Credit
www.ded.mo.gov/cd/NAP.htm
*Designed to encourage donors to make contributions to approved Community Based Organizations (CBO) for local needs. In exchange, MO DED will issue state tax credits to the donor in an amount equal to 50% of their contribution.
*A CBO is usually a non-profit or charitable entity. It will use donor contributions to meet people’s needs in underserved communities via NAP projects.
*NAP’s aim to improve the quality of life in these areas by assisting in education, job training, crime prevention and physical revitalization opportunities, and by providing resident services such as counseling, day care or transportation.
*Application for these credits is accepted any time after mid-March until credits are depleted, or March 1st of the following year. For the current 2006 cycle, $12.0 million is available for non-rural areas.
*Created in 1978.
Development Tax Credit Program
*Similar to the NAP Tax Credit Program.
*Designed to encourage donors to make contributions to Not-For-Profit Corporations (NPC) for approved business projects that will create new jobs. Projects must be in a blighted, distressed or enterprise zone area, and are generally awarded to manufacturing, processing or assembly oriented companies.
*An NPC is a not-for-profit corp. or a community development corp. (CDC) It cannot be a church, unit of govt., or a private or public educational institution.
*The NPC acts as a liaison between the donor and the business, accepting the donated good (cash, real estate, machinery and equipment,) which they will then lease to the business. Once granted, MODED will issue state tax credits to the donor in an amount equal to 50% of their contribution.
*A borrower must create one permanent, full-time job with health benefits in exchange for every $10,000 in borrowed funds.
*Application for these credits is accepted by MODED at any time of year. $6.0 million in total funds are available per fiscal year until 2008.
*This credit can be sold or transferred.
Sales & Use Tax Exemptions
www.ecodev.state.mo.us/BDT/Business%20Location%20Services/Tax%20Information/Sales,-s-,Use%20Tax.aspx
*Sales tax: A tax that is levied on a retail good or service that is purchased.
*Use tax: A tax levied on tangible personal property (property that is not real estate, such as cars, furniture, machinery, tools, artwork, jewelry, etc.) that is purchased in another state, but consumed, distributed, stored or used in Missouri.
*Missouri has 18 major exemptions from the sales and use tax. Each is described on the above web link.
Certified Capital Companies (CAPCO’s) Tax Credit
http://ded.mo.gov/BDT/Business%20Location%20Services/Financial%20and%20Incentive%20Programs/Venture%20Capital/Certified%20Capital%20Companies.aspx
*Designed to encourage insurance companies to invest in new or growing MO small businesses, through a venture capital intermediary known as a “CAPCO.” In exchange, MO DED would issue a 100% premium state tax credit--which would be passed through a CAPCO-- to the investing insurance companies.
*Program cap of $140 million in tax credits over the 12-year program period (1996-2008.) All $140 million was issued by 1999.
*MO State Auditor advised MODED and the MO General Assembly to let the CAPCO program expire in 2008 without authorizing any additional credits.
* 4 of the 5 CAPCO’s in Missouri are located in St. Louis City or County.
MO Tax Credit for Contribution Program
www.ecodev.state.mo.us/BDT/Business%20Location%20Services/Financial%20and%20Incentive%20Programs/Public%20Infrastructure%20Financing/Tax%20Credit%20for%20Contribution%20Program.aspx
*Designed to encourage donors—i.e. individuals, corporations, trusts or estates-- to make contributions to 1 of 3 MODFB funds. In exchange, MODFB will issue state tax credits to the donor in an amount equal to 50% of their contribution.
*The 3 funds are: a.) the industrial development and reserve fund—to be used for economic development projects; b.) the infrastructure fund—to be used for qualified infrastructure facilities; c.) the export finance fund—to be used for export trade activities within MO.
*Donated funds are used to make loans and loan guarantees to new and expanding businesses and non-profits, or grants to state agencies and local govt. entities.
*Credit may be sold between 75-100% of its par value.
MO Community College New Jobs Training Program
www.ecodev.state.mo.us/wfd/bus_emp/commcollege.shtml
*Designed to assist an eligible company that’s expanding or relocating to MO with the costs of educating and training their employees in newly created jobs.
*Organized under MODED via the Division of Workforce Development, and administered locally through the STL Community College (SLCC) district.
*Qualified employers are those engaged in interstate or intrastate commerce for manufacturing, processing or assembling products or conducting R&D.
*Eligible businesses that create new MO jobs send their employees to be trained by a SLCC. These training programs are funded by SLCC bond issuances--the proceeds of which pay for employee training assistance such as facilities and equipment, instructor salaries and curriculum development. Bond buyers are comfortable financing these programs because the new employee will begin to generate MO income taxes after training. Instead of all of the employee withholding tax going to the state, a portion instead goes to pay the note holders who funded the training program.
*For the current 2006 cycle, $16.0 million in program funds are available.
*The amount of bond principal outstanding for all 12 MO community college districts for all years cannot exceed $55.0 million at any time.
MO Customized Training Program
www.ded.mo.gov/wfd/bus_emp/customizedtraining.shtml
*Program is offered by MODED, via the Division of Workforce Development, in cooperation with the Dept. of Elementary & Secondary Education. STL education agencies (LEA’s)--community colleges and career & technical schools--locally administer the program on the state’s behalf.
*Designed to reimburse MO employers for eligible on-the-job and / or classroom costs for the training / retraining of new or existing full time employees who are MO residents. Employers must be creating new jobs in MO, or retraining / upgrading the skills of existing employees.
*Eligible expenses include instructor / vendor trainer costs, curriculum design and development costs and supplies. Ineligible expenses include certain travel expenses, senior-level management training or OSHA/safety related training.
*Applications for these funds are accepted in mid-May and approved July 1st. After July 1st, date of receipt is a factor in review and approval of projects. For the current 2006 cycle, $7.5 million in funds are available.
Youth Opportunities & Violence Prevention Tax Credit
www.ded.missouri.gov/cd/YOP.htm
*Designed to encourage donors to make contributions to eligible organizations that benefit “At-Risk” children.
*Created to provide kids opportunities for positive development and community participation, and to discourage them from criminal and violent behavior.
*According to the MO Legislature, a variety of activities and/or programs accomplish these goals, including: counseling, degree completion, employment, internships, mentoring and substance abuse and violence prevention programs.
*An eligible organization can be a local govt. unit, a non-profit, a MO business or an approved school or religious organization.
*MODED will send a claimable tax credit certificate to a donor for their contributions, which can include cash or paid youth wages (50% credit); or property or equipment contributions (30%).
*Application for these credits is accepted by MODED at any time of year, until funds are depleted. $6.0 million in total credits are available annually. Each project is limited to $250,000 in credits and each contributor is limited to $200,000 per year in credits.