MEDC Supports Mega-Project Legislation

Missouri legislators are working to give state and local economic developers tools to help attract large employer projects to Missouri.

A bill sponsored in the House by Rep. Ron Richard and in the Senate by Senator Charlie Shields and Senator Luann Ridgeway, would provide tax credits to such projects, beginning July 1, 2010. The bi-partisan legislation was supported by many economic development and employer groups in the state, including the Missouri Economic Development Council, and there was no opposition to the House or the Senate bills expressed in the hearings.

The bills define a "mega-project" as any manufacturing or assembling facility, approved by the Department of Economic Development (DED) for construction and operation within an enhanced enterprise zone, which satisfies the following:

1. The new capital investment is projected to exceed $300 million over a period of eight years from the date of approval by the department;
2. The number of new jobs is projected to exceed 1,000 over a period of eight years beginning on the date of approval by the department;
3. The average wage of new jobs to be created shall exceed the county average wage;
4. The taxpayer shall offer health insurance to all new jobs and pay at least 50% of such insurance premiums;
   
5. An acceptable plan of repayment, to the state, of the tax credits provided for the mega-project has been provided by the taxpayer;
6. The taxpayer's project is financially sound and the taxpayer has adequately demonstrated an ability to successfully undertake and complete the mega-project;
7. The taxpayer's plan of repayment, to the state, of the amount of tax credits provided is reasonable and sound;
8. The taxpayer's mega-project will create new jobs that were not jobs previously performed by employees of the taxpayer or a related taxpayer in Missouri;
9. Awarding the credit will result in an overall positive net fiscal impact to the state;
10. Local taxing entities are providing a significant level of incentives for the mega-project relative to the projected new local tax revenues created by the mega-project;
11. There is at least one other state or foreign country that the taxpayer verifies is being considered for the project, and receiving mega-project tax credits is a major factor in the taxpayer's decision to go forward with the project and not receiving the credit will result in the applicant not creating new jobs in Missouri;
12. The mega-project will be located in an enhanced enterprise zone which constitutes an economic or social liability and a detriment to the public health, safety, morals, or welfare in its present condition and use;
13. The completion of the mega-project will serve an essential public municipal purpose by creating a substantial number of new jobs for citizens, increasing their purchasing power, improving their living conditions, and relieving the demand for unemployment and welfare assistance thereby promoting the economic development of the enhanced enterprise zone, the municipality, and the state; and
14. The creation of new jobs will assist the state in providing the services needed to protect the health, safety, and social and economic well-being of the citizens of the state.

If approved by DED, the employer in the mega project would be allowed up to $40 million in income tax credits. The total amount of credits that may be issued annually is also $40 million. The maximum percentage of actual new payroll of the mega-project employer that may be approved is:

• 80% for the first three years that tax credits will be issued for the mega-project;
• 60% for the next two subsequent years;
• 50% for the next two subsequent years;
• 30% for the next two subsequent years; and
• 25% for all subsequent years.

Upon approval of an application by the department, tax credits shall be issued annually for a period not to exceed 22 years from the commencement of commercial operations of the mega-project. This 22-year period may extend beyond the expiration of the enhanced enterprise zone. The certificates of tax credit may be transferred, sold, or assigned but may not be carried forward past the year of issuance. Tax credits authorized by this section may not be pledged or used to secure any bonds or other indebtedness issued by the state or any political subdivision of the state. Once such tax credits have been issued, nothing shall prohibit the owner of the tax credits from pledging the tax credits to any lender or other third-party.

The mega-project employer must provide an annual report to the DED showing the number of new jobs located at the mega-project, the new annual payroll of such new jobs, and such other information as may be required by the department to document the basis for benefits.

This precedent-setting legislation was the result of some very hard work by the DED and Kansas City area economic development professionals as they continue to work on a deal to attract a large aircraft manufacturer from Canada to the Kansas City area. Our thanks to these economic development professionals for developing a creative tool that will provide a template for future mega-project attraction in Missouri.

Telecommunications and Economic Development

The Legislature is on Spring Break this week, meaning we have a little break while we try to work out the details of the economic development bill.

Those of you attending the MEDC conference should have received a DVD produced and distributed by the Missouri Telecommunications Industry Association (MTIA). If you missed it for some reason, here is a link to the video online.

The video emphasizes the connection between telecommunication infrastructure and our core mission of economic development. In fact, the video points out that telecommunications infrastructure and access to the internet is just as important as adequate utilities, streets, sewer, and other infrastructure as businesses decide where to locate and create jobs.

Check out the video and distribute it to those that need to see that telecommunications is important to all our communities if we want to attract and retain quality employers in the state.

Missouri Right To Life Letter May Endanger Economic Development Bill

March 12, 2008 - A letter circulated by Missouri Right to Life (MRL) in opposition to one part of the economic development bill threatens to endanger the swift passage of the bill. Click here for a copy of the letter. If you are in favor of an increase in the Quality Jobs and Enhanced Enterprise Zone caps and are supportive of the other provisions of the bill, including the Angel Investment Tax Credit, you need to let your legislators know as soon as possible.

The MRL letter mentions various provisions of the Angel Investment Tax Credit that is part of the Grow Me State Initiative and included in HB 2058. The MRL letter states they oppose the bill because the Missouri Technology Corporation is in charge of the tax credit and they imply the tax credit may be used for Somatic Cell Nuclear Transfer cloning. Nothing in the bill promotes or references cloning. Though misguided, this strategy has been effective in derailing legislation totally unrelated to cloning. We do not want this to happen to the economic development bill.

The Missouri Right to Life's recent legislative scorecard has been the topic of public discussion in the Senate this session. The scorecard showed many legislators that are noted as pro-choice on the NARAL website as voting more in favor of pro-life legislation than other legislators that are considered by NARAL to be pro-life.

House Takes Up Economic Development Bill - Briefly

March 10, 2008 - The Missouri House today took up the House omnibus economic development bill, HB 2058, sponsored by Rep. David Pearce (R-121, Warrensburg). After explaining the bill, Rep. Pearce laid the bill over. It will be taken up another day, probably soon.

Check back here often for updates and please let your representatives know how you feel about HB 2058 that boosts the Quality Jobs program limit by $20 million, increases the Enhanced Enterprise Zone program limit by $10 million, increases the Development Tax Credit from $4 million to $6 million, extends the Quality Jobs retention program to 2013, and various other changes (see earlier posts below for more information).

The Senate bill is awaiting referral to a House committee.