Establishes the Revitalizing Missouri Downtowns and Main Streets Act

SECOND REGULAR SESSION
SENATE BILL NO. 869
103RD GENERAL ASSEMBLY
INTRODUCED BY SENATOR ROBERTS.
4781S.01I KRISTINA MARTIN, Secretary
AN ACT
To amend chapter 99, RSMo, by adding thereto six new sections relating to tax credits for
downtown revitalization.
Be it enacted by the General Assembly of the State of Missouri, as follows:
Section A. Chapter 99, RSMo, is amended by adding thereto 1
six new sections, to be known as sections 99.720, 99.722, 2
99.724, 99.726, 99.728, and 99.730, to read as follows:3
99.720. 1. Sections 99.720 to 99.730 shall be known 1
and may be cited as the "Revitalizing Missouri Downtowns and 2
Main Streets Act". 3
2. As used in sections 99.720 to 99.730, the following 4
terms mean, unless the context requires otherwise: 5
(1) "Department", the Missouri department of economic 6
development; 7
(2) "Qualified conversion expenditures", any amount 8
properly chargeable to a capital account. The term 9
"qualified conversion expenditures" shall not include: 10
(a) The cost of acquisition; 11
(b) Any expenditure attributable to the enlargement of 12
an existing building; or 13
(c) Tax-exempt properties; 14
(3) "Qualified converted building", any building and 15
its structural components if: 16
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(a) Prior to conversion, such building was 17
nonresidential real property, as defined in 26 U.S.C. 18
Section 168(e)(2)(B), as amended, which was leased, or 19
available for lease, to office tenants, or utilized for 20
office purposes by the owner-occupant; 21
(b) Such building has been substantially converted 22
from an office use to a predominantly residential use, 23
defined as more than fifty percent of the gross square 24
footage of the building, and may also include retail, or 25
other commercial use, and may also include accessory on-site 26
parking; and 27
(c) Such building was initially placed in service at 28
least twenty-five years before the beginning of the 29
conversion; 30
(4) "Qualified Missouri main street district", an 31
accredited, associated, or affiliated main street district 32
of the Missouri main street program created pursuant to 33
sections 251.470 to 251.485; 34
(5) "Substantially converted", qualified conversion 35
expenditures incurred during the twenty-four-month period 36
preceding final approval of tax credits that in total are 37
greater than: 38
(a) The adjusted basis of such building and its 39
structural components, as determined as of the beginning of 40
the first day of such twenty-four-month period, or of the 41
holding period of the building, whichever is later; or 42
(b) Fifteen thousand dollars if the property is 43
located in a qualified Missouri main street district, or 44
five hundred thousand dollars if the property is not located 45
in a qualified Missouri main street district. 46
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In the case of any conversion which may reasonably be 47
expected to be completed in phases set forth in 48
architectural plans and specifications completed before the 49
conversion begins, qualified conversion expenditures shall 50
be totaled for the sixty-month period preceding final 51
approval of tax credits rather than the twenty-four-month 52
period preceding such final approval; 53
(6) "Upper floor housing", any housing that is 54
attached to or contained in the same building as commercial 55
property, whether located on the ground floor behind the 56
traditional storefront or on other floors of the property. 57
99.722. 1. For all tax years beginning on or after 1
January 1, 2027, the department shall issue a taxpayer a 2
credit against the taxpayer's state tax liability equal to 3
twenty-five percent of qualified conversion expenditures 4
with respect to a qualified converted building. If the 5
amount of such tax credit exceeds the taxpayer's state tax 6
liability for the year in which tax credits are issued, the 7
amount that exceeds the state tax liability may be carried 8
back to any of the three preceding tax years or carried 9
forward for credit against state tax liability for the 10
succeeding ten tax years, or until the full credit is used, 11
whichever occurs first. 12
2. Tax credits authorized pursuant to this section may 13
be transferred, sold, or assigned, and shall retain the same 14
attributes as in the hands of the assignor. Tax credits may 15
be transferred multiple times. In order to transfer a tax 16
credit authorized pursuant to this section, the assignor and 17
assignee shall complete and submit a tax credit transfer 18
form provided by the department of revenue. Such transfers 19
may be facilitated through an intermediary entity as 20
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permitted by law without affecting the nature or attributes 21
of the tax credit. 22
3. Tax credits authorized for a partnership, a limited 23
liability company taxed as a partnership, or multiple owners 24
of property shall be passed through to the partners, 25
members, or owners respectively pro rata, or pursuant to an 26
executed agreement among the partners, members, or owners 27
documenting an alternate distribution method. 28
4. The assignee of a tax credit may use the acquired 29
tax credits to offset up to one hundred percent of the 30
taxpayer's state tax liability. The assignor shall perfect 31
such transfer by notifying the department in writing within 32
thirty calendar days following the effective date of the 33
transfer and shall provide any information as may be 34
required by the department. 35
99.724. 1. For all tax years beginning on or after 1
January 1, 2027, the department shall issue a taxpayer a 2
credit against the taxpayer's state tax liability equal to 3
thirty percent of qualified conversion expenditures with 4
respect to upper floor housing located in a qualified 5
Missouri main street district. If the amount of such tax 6
credit exceeds the taxpayer's state tax liability for the 7
year in which tax credits are issued, the amount that 8
exceeds the state tax liability may be carried back to any 9
of the three preceding tax years or carried forward for 10
credit against state tax liability for the succeeding ten 11
tax years, or until the full credit is used, whichever 12
occurs first. 13
2. Tax credits authorized pursuant to this section may 14
be transferred, sold, or assigned, and shall retain the same 15
attributes as in the hands of the assignor. Tax credits may 16
be transferred multiple times. In order to transfer a tax 17
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credit authorized pursuant to this section, the assignor and 18
assignee shall complete and submit a tax credit transfer 19
form provided by the department of revenue. Such transfers 20
may be facilitated through an intermediary entity as 21
permitted by law without affecting the nature or attributes 22
of the tax credit. 23
3. Tax credits authorized for a partnership, a limited 24
liability company taxed as a partnership, or multiple owners 25
of property shall be passed through to the partners, 26
members, or owners respectively pro rata, or pursuant to an 27
executed agreement among the partners, members, or owners 28
documenting an alternate distribution method. 29
4. The assignee of a tax credit may use the acquired 30
tax credits to offset up to one hundred percent of the 31
taxpayer's state tax liability. The assignor shall perfect 32
such transfer by notifying the department in writing within 33
thirty calendar days following the effective date of the 34
transfer and shall provide any information as may be 35
required by the department. 36
99.726. 1. The total amount of tax credits authorized 1
pursuant to sections 99.720 to 99.730 shall not exceed fifty 2
million dollars in any fiscal year. 3
2. Fifty percent of the maximum amount of tax credits 4
available to be authorized to taxpayers in a fiscal year 5
pursuant to this section shall be authorized solely for 6
structures of more than seven hundred fifty thousand gross 7
square feet. If the total amount of such reserved tax 8
credits have been authorized, structures of more than seven 9
hundred fifty thousand gross square feet may receive tax 10
credits from the remaining unreserved amount of tax 11
credits. If the total amount of reserved tax credits have 12
not been authorized by the department, structures of less 13
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than seven hundred fifty thousand gross square feet may be 14
authorized tax credits from such reserved amount. The total 15
amount of tax credits for a structure of more than seven 16
hundred fifty thousand gross square feet may be allocated to 17
the annual limits provided in this section over a period of 18
up to ten years, if: 19
(1) The project otherwise meets all the requirements 20
of sections 99.720 to 99.730; and 21
(2) The project meets the ten percent incurred costs 22
test under subsection 6 of section 99.728 within thirty-six 23
months after an award is authorized. 24
3. Twenty-five percent of the maximum amount of tax 25
credits available to be authorized to taxpayers in a fiscal 26
year pursuant to this section shall be authorized solely for 27
upper floor housing projects located in a qualified Missouri 28
main street district. If the total amount of such reserved 29
tax credits have been authorized, upper floor housing 30
projects located in a qualified Missouri main street 31
district may receive tax credits from the remaining 32
unreserved amount of tax credits. If the total amount of 33
reserved tax credits have not been authorized by the 34
department, projects not located in a qualified Missouri 35
main street district may be authorized tax credits from such 36
reserved amount. 37
4. If the maximum amount of tax credits allowed in any 38
fiscal year, as provided pursuant to this section, is 39
authorized, the maximum amount of tax credits allowed 40
pursuant to subsection 1 of this section shall be adjusted 41
by the percentage increase in the Consumer Price Index for 42
All Urban Consumers, or its successor index, as such index 43
is defined and officially reported by the United States 44
Department of Labor, or its successor agency. Only one such 45
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adjustment shall be made for each instance in which the 46
provisions of this subsection apply. The department shall 47
publish such adjusted amount. 48
5. In the event the department authorizes tax credits 49
equal to the total amount available pursuant to this 50
section, or sufficient that when totaled with all other 51
approvals, the amount available pursuant to this section is 52
exhausted, all taxpayers with applications then awaiting 53
approval or thereafter submitted for approval shall be 54
notified by the department that no additional approvals 55
shall be granted during the fiscal year and shall be 56
notified of the priority given to such taxpayer's 57
application then awaiting approval. Such applications shall 58
be kept on file by the department and shall be considered 59
for approval for tax credits in the order established in 60
this section in the event that additional tax credits become 61
available due to the rescission of approvals, or when a new 62
fiscal year's allocation of tax credits becomes available 63
for approval. 64
99.728. 1. To obtain approval for tax credits 1
pursuant to sections 99.720 to 99.730, a taxpayer shall 2
submit an application for tax credit authorization to the 3
department. The department shall have sixty days to review 4
the application and shall notify the applicant in writing 5
within thirty days of the decision of whether the 6
application has been authorized for tax credits. Each 7
application for approval, including any applications 8
received for supplemental allocations of tax credits as 9
provided pursuant to subsection 2 of section 99.730, shall, 10
if approved, be authorized for tax credits in the order of 11
submission. 12
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2. Each application shall be reviewed by the 13
department for approval. In order to receive approval, an 14
application shall include: 15
(1) Proof of ownership or site control. Proof of 16
ownership shall include evidence that the taxpayer is the 17
fee simple owner of the eligible property, such as a 18
warranty deed or a closing statement. Proof of site control 19
may be evidenced by a leasehold interest or an option to 20
acquire such an interest. If the taxpayer is in the process 21
of acquiring fee simple ownership, proof of site control 22
shall include an executed sales contract or an executed 23
option to purchase the eligible property; 24
(2) Floor plans of the existing structure, 25
architectural plans, and, where applicable, plans of the 26
proposed conversion of the structure, as well as proposed 27
additions; 28
(3) The estimated cost of conversion, the anticipated 29
total costs of the project, the actual basis of the 30
property, as shown by proof of actual acquisition costs, the 31
anticipated total labor costs, the estimated project start 32
date, and the estimated project completion date; 33
(4) Proof that the property is an eligible property; 34
(5) A copy of all land use and building approvals 35
reasonably necessary for the commencement of the project; and 36
(6) Any other information which the department may 37
reasonably require to review the project for approval. 38
Only the property for which a property address is provided 39
in the application shall be reviewed for approval. Once 40
selected for review, a taxpayer shall not be permitted to 41
request the review of another property for approval in the 42
place of the property contained in such application. Any 43
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disapproved application shall be removed from the review 44
process. If an application is removed from the review 45
process, the department shall notify the taxpayer in writing 46
of the decision to remove such application. The taxpayer 47
may subsequently submit a revised application. For the 48
purposes of determining the order of submission and 49
authorization of credits, the revised application shall be 50
considered a new application. 51
3. If the department determines that the application 52
meets the requirements of sections 99.720 to 99.730 to 53
receive an authorization of tax credits, the taxpayer shall 54
be notified in writing of the approval for an amount of tax 55
credits equal to the amounts provided in sections 99.722 and 56
99.724, less any amount of tax credits previously approved 57
pursuant to this section. Tax credits approved pursuant to 58
this section shall be approved and administered 59
independently and shall not be evaluated in conjunction with 60
any other state tax credit program. Such approvals shall be 61
granted to applications in the order of priority established 62
under this section and shall require full compliance 63
thereafter with all other requirements of law as a condition 64
to any claim for such tax credits. 65
4. Following approval of an application, the identity 66
of the taxpayer contained in such application shall not be 67
modified except: 68
(1) The taxpayer may add partners, members, or 69
shareholders as part of the ownership structure, so long as 70
the principal remains the same; provided, however, that 71
subsequent to the commencement of renovation and the 72
expenditure of at least ten percent of the proposed 73
rehabilitation budget, removal of the principal for failure 74
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to perform duties and the appointment of a new principal 75
thereafter shall not constitute a change of the principal; or 76
(2) Where the ownership of the project is changed due 77
to a foreclosure, deed in lieu of a foreclosure or voluntary 78
conveyance, or a transfer in bankruptcy. 79
5. All taxpayers with applications receiving approval 80
shall submit within one hundred twenty days following the 81
award of credits evidence of the capacity of the applicant 82
to finance the costs and expenses for the conversion of the 83
eligible property in the form of a line of credit or letter 84
of commitment subject to the lender's termination for a 85
material adverse change impacting the extension of credit. 86
If the department determines that a taxpayer has failed to 87
comply with the requirements of this subsection, then the 88
department shall notify the applicant of such failure and 89
the applicant shall have a thirty-day period from the date 90
of such notice to submit additional evidence to remedy the 91
failure. 92
6. All taxpayers with applications receiving approval, 93
excluding projects described in subsection 2 of section 94
99.726, shall commence conversion within twelve months of 95
the date of issuance of the letter from the department 96
granting the approval for tax credits. For the purposes of 97
this subsection, "commence conversion" shall mean that, as 98
of the date in which actual physical work, contemplated by 99
the architectural plans submitted with the application, has 100
begun, the taxpayer has incurred no less than ten percent of 101
the estimated costs of rehabilitation provided in the 102
application. Taxpayers with approval of a project shall 103
submit evidence of compliance with the provisions of this 104
subsection. If the department determines that a taxpayer 105
has failed to comply with the requirements of this 106
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subsection, the approval for the amount of tax credits for 107
such taxpayer shall be rescinded and such amount of tax 108
credits shall then be included in the total amount of tax 109
credits from which approvals may be granted. Any taxpayer 110
whose approval shall be subject to rescission shall be 111
notified of such from the department and, upon receipt of 112
such notice, may submit a new application for the project. 113
99.730. 1. To claim a tax credit authorized pursuant 1
to sections 99.720 to 99.730, a taxpayer with approval 2
shall, except with respect to a tax credit authorized 3
pursuant to subsection 2 of section 99.726, apply for final 4
approval and issuance of tax credits from the department, 5
which shall determine the final amount of qualified 6
conversion expenditures and whether the completed 7
rehabilitation meets the requirements of this section. A 8
taxpayer shall submit to the department a final application 9
demonstrating: 10
(1) That the taxpayer has substantially converted a 11
qualified converted building or upper floor housing; 12
(2) Satisfactory evidence of any qualified conversion 13
expenditures for the structure, as determined by the 14
department; and 15
(3) Any other information reasonably requested by the 16
department relating to verifying qualified conversion 17
expenditures or compliance with the requirements of sections 18
99.720 to 99.730. 19
For financial institutions, tax credits authorized pursuant 20
to sections 99.720 to 99.730 shall be deemed to be 21
redevelopment tax credits for the purposes of sections 22
135.800 to 135.830. The approval of all applications and 23
the issuing of certificates of eligible tax credits to 24
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taxpayers shall be performed by the department. The 25
department shall inform a taxpayer of final approval by 26
letter and shall issue, to the taxpayer, tax credit 27
certificates. The taxpayer shall attach the certificate to 28
all Missouri income tax returns on which the credit is 29
claimed. 30
2. (1) The department shall issue seventy-five 31
percent of the approved tax credits within sixty days of 32
receiving all required final application materials. Within 33
sixty days, the department shall make a final determination 34
of costs and issue the remaining twenty-five percent of 35
approved tax credits, or request repayment from the 36
applicant if the final determination results in an over- 37
issuance of tax credits. In the event the amount of 38
qualified conversion expenditures incurred by a taxpayer 39
would result in the issuance of an amount of tax credits in 40
excess of the amount authorized pursuant to subsection 3 of 41
section 99.728, such taxpayer may apply to the department 42
for issuance of tax credits in an amount equal to such 43
excess. Applications for issuance of tax credits in excess 44
of the amount provided under a taxpayer's application shall 45
be made on a form prescribed by the department. Such 46
applications shall be subject to all provisions regarding 47
priority provided under subsection 1 of section 99.728. 48
(2) For tax credits authorized pursuant to subsection 49
2 of section 99.726, the applicant may submit to the 50
department an application for the issuance of tax credits 51
annually prior to final completion of the project. Upon 52
approval of the annual application for issuance, the 53
department shall issue eighty percent of the amount of tax 54
credits that would result from the qualified expenditures, 55
provided the total amount of credits issued to date does not 56
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exceed the total amount of credits authorized for the 57
project to date. Any remaining authorized tax credits shall 58
be issued upon the final approval of the project. The 59
department shall issue eighty percent of the approved 60
credits within sixty days of receiving all required 61
application materials. Within sixty days, the department 62
shall make a final determination of costs and issue any 63
remaining authorized tax credits upon the final completion 64
of the phased project, or request repayment if an over- 65
issuance of credits is determined. 66
3. The department shall determine, on an annual basis, 67
the overall economic impact to the state from the 68
rehabilitation of eligible property pursuant to sections 69
99.720 to 99.730. 70
4. No taxpayer shall be issued tax credits for 71
qualified conversion expenditures on a qualified converted 72
building within twenty-seven years of a previous issuance of 73
tax credits pursuant to sections 99.720 to 99.730 on such 74
qualified converted building. 75
5. The department may promulgate any rules and 76
regulations necessary to administer the provisions of 77
sections 99.720 to 99.730. Any rule or portion of a rule, 78
as that term is defined in section 536.010, that is created 79
under the authority delegated in this section shall become 80
effective only if it complies with and is subject to all of 81
the provisions of chapter 536 and, if applicable, section 82
536.028. This section and chapter 536 are nonseverable and 83
if any of the powers vested with the general assembly 84
pursuant to chapter 536 to review, to delay the effective 85
date, or to disapprove and annul a rule are subsequently 86
held unconstitutional, then the grant of rulemaking 87
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authority and any rule proposed or adopted after August 28, 88
2026, shall be invalid and void. 89
6. Notwithstanding the provisions of section 23.253 of 90
the Missouri sunset act to the contrary: 91
(1) The program authorized pursuant to sections 99.720 92
to 99.730 shall automatically sunset on December 31, 2034, 93
unless reauthorized by an act of the general assembly; and 94
(2) If such program is reauthorized, the program 95
authorized pursuant to sections 99.720 to 99.730 shall 96
automatically sunset twelve years after the effective date 97
of the reauthorization; 98
(3) Sections 99.720 to 99.730 shall terminate on 99
September first of the calendar year immediately following 100
the calendar year in which the program authorized pursuant 101
to sections 99.720 to 99.730 is sunset; and 102
(4) The provisions of this subsection shall not be 103
construed to limit or in any way impair: 104
(a) A taxpayer's ability to complete a project and 105
receive authorization for tax credits pursuant to sections 106
99.720 to 99.730 for any project for which the taxpayer has 107
submitted an initial application on or before the date the 108
program authorized pursuant to sections 99.720 to 99.730 109
expires; or 110
(b) The department of revenue's ability to redeem tax 111
credits authorized on or before the date the program 112
authorized pursuant to sections 99.720 to 99.730 expires, or 113
a taxpayer's ability to redeem such tax credits. 114
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