Incentives and Tax Credits Enhance Your Profitability

STATUTORY CITATION: §§ 135.950-135.1150 RSMO

TYPE OF BENEFITS:Tax Credits.

DESCRIPTION OF BENEFITS: Tax credits and real property tax abatement of at least 50% for up to 10 years on improvements to the real property.

ALLOWED USES OF BENEFITS: Tax credits may be transferred, sold or assigned. The sale price cannot be less than 75% of the par value of such tax credits.

ELIGIBLE BUSINESS TYPES: An eligible business must be located in a Missouri Enhanced Enterprise Zone (EEZ). Individual business eligibility will be determined by the zone, based on creation of sustainable jobs in a targeted industry or demonstrated impact on local industry cluster development.

STATUTORY CITATION: Section 620.1875-620.1900.RSMo

TYPES OF BENEFITS: State withholding tax retention and tax credits.

DESCRIPTION OF BENEFITS:For “Small/Expanding” business projects, the benefit of the program is the retention of the state withholding tax of the new jobs. For “Technology” and “High Impact” business projects, the benefits of the program are (a) the retention of the state withholding tax of the new jobs and (b) state tax credits, which are refundable and/or sellable. The program benefits are based on a percentage of the payroll of the new jobs.

ALLOWED USES OF BENEFITS: This tax credit can be applied to Chapter 143 (state income tax, excluding withholding tax) and Chapter 148 (financial institutions tax). Tax credits can only be applied to tax liability for the year in which they were earned. Any unused balance is refundable. The credits may also be transferred, sold or assigned.

ELIGIBLE BUSINESS TYPES: For-profit and nonprofit businesses except for gambling, retail trade, food and drinking places, companies regulated by the Public Service Commission, companies that are delinquent in non-protested taxes or other payments (state, federal or local), or any company that has filed for or has publicly announced its intention to file for bankruptcy. Tax credits must be claimed within one year of the taxable year for which they were issued. A company may treat facilities located within one mile of each other or within the same county as one project facility if engaged in the same business activity.

STATUTORY CITATION: Sections 100.700 to 100.850, RSMo

TYPE OF BENEFITS: Tax Credits

DESCRIPTION OF BENEFITS: Provides a financial incentive for the location or expansion of large business projects. The incentives are designed to reduce necessary infrastructure and equipment expenses if a project can demonstrate a need for funding.

ALLOWED USES: The bonds may be used to finance public or private infrastructure to support the project, or the new capital improvements of the business at the project location. Bond proceeds may not be used for working capital, inventory or other operating costs of the business or another entity.

This tax credit can be applied to:

    Ch. 143 - Income tax, excluding withholding tax
    Ch. 148 - Bank Tax, Insurance Premium Tax, Other Financial Institution Tax

This credit is refundable.

ELLIGIBLE BUSINESS TYPES: An eligible industry in manufacturing, processing, assembly, research and development , agricultural processing or services in interstate commerce must invest a minimum of $15 million; or $10 million for an office industry(regional, national or international headquarters, telecommunications operations, computer operations, insurance companies or credit card billing and processing centers) in an economic development project; and

Create a minimum of one hundred new jobs for eligible employees at the economic development project or a minimum of five hundred jobs if the economic development project is an office industry or a minimum of two hundred new jobs if the economic development project is an office industry located within a distressed community as defined in Section 135.530, RSMo.

Ineligible: Retail, health or professional services, intra-state relocations or replacement facilities.

STATUTORY CITATION: §§ 353 RSMO

TYPE OF BENEFITS: Reduction of real property tax.

DESCRIPTION OF BENEFITS: An incentive that can be utilized by cities to encourage the redevelopment of blighted areas by providing real property tax abatements.

ALLOWED USES OF BENEFITS: Tax abatement is available for a period of 25 years, which begins to run when the Urban Redevelopment Corporation takes title to the property.

ELIGIBLE BUSINESS TYPES: For-Profit “Urban Redevelopment Corporations.”

STATUTORY CITATION: The Housing and Community Development Act of 1974 (Public Law 93-383), as amended. CDBG is a “pass through” funding program from the U.S. Department of Housing and Urban Development. Authorization for the program is set forth in 42 U.S.C. §5301 et seq.; 24 CFR Part 570; and Missouri’s “Consolidated Plan” submitted to the U.S. Department of Housing and Urban Development.

TYPE OF BENEFITS: Grants and Financing Loans.

DESCRIPTION OF BENEFITS: Benefits may include grants awarded to communities to offset the cost of public infrastructure or loans for private companies for job creation. Refer to specific CDBG categories for specific benefits available.

ALLOWED USES OF BENEFITS:

• Action Fund Loan – loans to private companies resulting in the creation of jobs.
• Community Facilities – development of a public facility designed to provide services from a central location (senior center, community center, fire station, etc.)
• Downtown Revitalization – public infrastructure and improvements that significantly contribute to the revitalization or redevelopment of downtown areas.
• Emergency – projects meeting an urgent threat to health and safety.
• Industrial Infrastructure Grant – public infrastructure development that results in the creation of jobs by a private company benefiting from the infrastructure.
• Interim Financing Loan – short-term loans to a private company resulting in the creation of jobs.
• Speculative Industrial Building Loan – loans to a nonprofit development organization to develop a shell building for industrial purposes.
• Water and Wastewater – publicly owned water and wastewater improvements and new construction. Proposals must be reviewed by the Missouri Water and Wastewater Review Committee before application is made.
• Other Public Needs – eligible activities that are not addressed with a specific Community Development Block Grant category as listed above. Examples include: bridges, streets, housing demolition, handicapped accessibility in public buildings or other activities deemed important for the economic growth of the community.
• Rural Affordable Housing Request for Proposals – included as part of the other public needs category listed above. Proposals must address housing development for low — to moderate — income persons and must match low-income housing tax credit or other Missouri Housing Development Commission funding applications.

 ELIGIBLE BUSINESS TYPES: Community Development Block Grant funds are only available to cities or counties in non-entitlement areas (incorporated municipalities with a population under 50,000 and counties with a population under 200,000).

STATUTORY CITATION: 42 USC § 5301 et seq., 24 C.F.R. Part 570; and Missouri’s “Consolidated Plan” submitted to the U.S. Department of Housing and Urban Development.

DESCRIPTION OF BENEFITS: Assists local governments in the development of public infrastructure that allows industries to locate new facilities, expand existing facilities, prevent the closing of a facility or the relocation of a facility outside the state.

ELIGIBLE APPLICANTS: Cities or counties

ELIGIBLE BENEFICIARY BUSINESSES: More than one business must potentially benefit from the facilities to be funded. For-profit manufacturing, processing and assembly companies that will have wages above the county average and provide medical benefits are prioritized.

STATUTORY CITATION: §§ 135.535 RSMO

TYPE OF BENEFITS: Tax Credits.

DESCRIPTION OF BENEFITS: There are several tax credits available under the program. They include the 40% income tax credit, 40% equipment tax credit, 1.5% employee tax credit and 25% equipment tax credit. Details regarding the credits are available in the detail write up or the statute.

ELIGIBLE BUSINESS TYPES: New or Relocating Business: Eligible new or relocating business may choose one of the 40% Tax Credits and the employees may receive the 1.5% Employee Tax Credit.

Existing Businesses: Eligible businesses already located in a distressed community may be eligible for the 25% equipment tax credit. Existing businesses that double the number of full-time employees in the distressed community from the previous year may choose one of the 40% tax credits.

STATUTORY CITATION: Section 144.054(3), RSMo, as enacted in Senate Bill 30 (2007).

PROGRAM DESCRIPTION: The Missouri Department of Economic Development (DED) will issue a state or local sales tax exemption to a company for which Chapter 100 bonds have been issued. The company must present the exemption to the vendor they are purchasing the equipment from.

ELIGIBLE APPLICANTS: Any company for which Chapter 100 bonds are issued that purchases personal property

ELIGIBLITY CRITERIA: The project cannot have been announced; bonds already approved/issued; or personal property already purchased. The project must:

• Involve competition with another state; therefore, a comprehensive state/local incentive proposal will be involved in an attempt to win the project;
• Have above-average wages with benefits, or be in an economically distressed or blighted area;
• Include local incentives provided to the project commensurate with the state incentives, relative to the new state/local tax revenues created by the project;
• Have a positive state fiscal benefit, including all the state incentives proposed for the project; and
• Have an indication that the city and county have approved the local sales tax exemption. (The local sales tax exemption may also be provided independent of the state sales tax).

APPLICATION/APPROVAL PROCEDURE: DED will coordinate a state/local incentive proposal to qualifying projects, in which the exemption will be included.

STATUTORY CITATION: §§ 620.1910 RSMO

TYPE OF BENEFITS: State withholding tax retention.

DESCRIPTION OF BENEFITS: Allows a qualified manufacturing company, beginning January 1, 2012, upon approval of a notice of intent by the department, to retain 100% of the withholding taxes from full-time jobs at the facility for 10 years if it manufactures a new product, or to retain 50% of withholding taxes from full-time jobs for seven years if it modifies or expands the manufacture of an existing product.

Allows a qualified supplier, upon approval of a notice of intent by the department, to retain 100% of the withholding taxes from new jobs for three years. If the qualified supplier pays wages for the new jobs that are equal to or greater than 120% of the county average wage for Missouri as determined by the department using NAICS industry classifications, it can retain the withholding taxes for five years. 

ELIGIBLE BUSINESS TYPES: Qualified manufacturing companies with a NAICS code of 33611 that:

    (a) Manufacture goods at a facility in Missouri throughout the period in which the company receives benefits under the Act; and
    (b) Makes a capital investment of at least $75,000 per retained job at the facility for the manufacture of a new product within two years of beginning to retain withholding taxes; or
    (c) Commits to make a capital investment of at least $50,000 per retained job at the facility for the modification or expansion of the manufacture of an existing product within two years of beginning to retain withholding taxes.

Qualified suppliers that:

    (a) Attest to the Department of Economic Development (DED) that it derives more than 10% of its total annual sales revenue from sales to a qualified manufacturing company;
    (b) Adds five or more new jobs;
    (c) Pays wages for the new jobs that are equal to or exceeds the county average wage for Missouri as determined by the department using the NAICS industry classifications but are not less than 60% of the statewide average wage; and
    (d) Provides health insurance for all full-time jobs and pays at least 50% of the insurance premiums.

STATUTORY CITATION: §§ 447.700 to 447.718 RSMO

TYPE OF BENEFIT: Tax Credits

DESCRIPTION OF BENEFITS: Provides financial incentives for the redevelopment of commercial/industrial sites that are contaminated with hazardous substances and have been abandoned or underutilized for at least three years.

ELIGIBLE BUSINESS TYPES: The applicant cannot be a party who intentionally or negligently caused the release or potential release of hazardous substances at the project. If the property is not owned by a public entity, the city or county must endorse the project. The project must be accepted into the “Voluntary Cleanup Program” of the MO Department of Natural Resources. The project must be projected by DED to result in the creation of at least ten new jobs or the retention of 25 jobs by a private commercial operation.

STATUTORY CITATION: 42 USC § 5301 et seq., 24 C.F.R. Part 570; and Missouri’s “Consolidated Plan” submitted to the U.S. Department of Housing and Urban Development.

DESCRIPTION OF BENEFITS: Provides a loan to certain types of for-profit companies that need funds for start-up or expansion and have exhausted other sources.

ELIGIBLE APPLICANTS: Cities and counties must apply on behalf of beneficiary companies. For-profit manufacturing, processing and assembly companies that will have wages above the county average and provide medical benefits are prioritized.

The Missouri Life Sciences Research Trust Fund was established in 2007 to enhance research capacity and transform research into commercial life science technology. In conjunction with Missouri’s universities and industry, $10.5 million was awarded for research grants and $2.6 million for commercialization grants. The scope of research will focus on agriculture research, animal science, plant science, medical devices, biomaterials and composite research, nanotechnology related to drug development and delivery, diagnostics, clinical imaging, and information technology related to human health.

DESCRIPTION OF BENEFITS: Principal and interest payments may be deferred for up to 3 years (4 years for minority business enterprises (MBE) and woman business enterprises (WBE) to aid in obtaining approval for the other project financing. After the initial deferral period, payments may be interest-only for up to 3 additional years. The maximum term of the loan is 8 years.

The collateral may be subordinated to the primary lender. An approved applicant will have 120 days after DED’s approval of the loan application to secure commitments of the other financing for the expansion project; therefore, there is no need to have the entire project financing secured when applying. Interest rates are 2% fixed rate per annum. (MBE/WBE is 0% rate.)

ELIGIBLE BUSINESS TYPES:

• Generally, for-profit “primary” companies (that mostly sell/compete outside the local market area) are eligible.
• Applicants must demonstrate a reasonable ability to create at least 1 new or retained job for every $75,000 of Grow Missouri Loan funding within 5 years of approval. Such new or retained jobs must have average wages that are at least 80% of the county average wage, or 70% within Enhanced Enterprise Zones or MBE/WBEs.
• The applicant must offer to pay at least 50% health insurance for all Missouri employees.