Authorizes incentives for downtown redevelopment

Current law defines terms used under the Missouri Downtown and Rural Economic Stimulus Act (MODESA), including development project, economic activity taxes, and related financing mechanisms used for redevelopment. This act modifies the definition of "economic activity taxes" to expand the types of revenues that may be captured, including certain additional local taxes, fees, and other revenue sources generated within a project area. The act also modifies and adds definitions relating to "expanded development projects", allowing for broader project structures and eligibility.

Current law allows municipalities to establish a downtown economic stimulus authority to approve and oversee redevelopment projects within a defined downtown area. This act modifies the authority structure by allowing greater flexibility in how project areas are defined and administered, including permitting project areas to be not limited strictly to traditional downtown boundaries. The act also revises procedures for project approval and oversight.

Current law requires development plans to meet certain statutory requirements, including demonstrating eligibility, outlining project costs, and identifying anticipated revenues and financing structures. This act modifies development plan requirements by expanding eligibility criteria and allowing for expanded development projects. The act removes certain prior limitations and allows municipalities greater discretion in structuring redevelopment plans, including modifications and expansions of previously approved projects.

Current law allows redevelopment projects to be financed through a combination of payments in lieu of taxes (PILOTs), economic activity taxes (EATs), and a portion of state tax increments, generally subject to statutory limitations. The act also allows 100% of payments in lieu of taxes, economic activity taxes, and the municipal residential earnings tax increment from the fund for contributions to a development project or expanded development project from any private nonprofit organization or local contributions from tax abatement.

Current law provides that state tax increment financing is limited in scope and subject to various eligibility and structural requirements. This act modifies these provisions by expanding the categories of state tax revenues that may be captured. The act also authorizes a residential income tax increment of up to 70% based on wages earned by individuals residing within the project area.

Current law requires redevelopment projects to be reviewed and approved through a defined process, including submission to the Department of Economic Development. The act also allows for greater flexibility in amending or modifying approved projects over time.

Current law subjects redevelopment projects and associated financing mechanisms to statutory time limits. This act modifies the duration of redevelopment incentives by allowing projects to receive benefits for up to 30 years, including the repayment of project costs and obligations.

Current law provides for various administrative and procedural provisions for governing the implementation of redevelopment projects under MODESA. This act modifies these provisions by revising administrative procedures, and making conforming changes to reflect the expanded financing and incentive structure authorized under the act. (Sections 99.918 to 99.980)

These provisions are identical to provisions in SS#2/SCS/HCS/HBs 3231 & 2531 (2026) and are substantially similar to HCS/HB 3395 (2026).

MISSOURI WORKS (Section 620.2012) The Missouri Works program is currently authorized to provide various incentives for the creation and retention of new and existing jobs. This act authorizes the Department of Economic Development to issue tax credits to qualified companies that expend at least $30 million in new capital investments located in a certified Missouri innovation zone, or $50 million in new capital investments for a project located outside of a certified Missouri innovation zone, within two years of submitting a notice of intent with the Department.

The Department shall respond to a notice of intent within thirty days, provided, however, that a failure to respond within thirty days shall not be construed as an approval of a notice of intent.

Tax credits authorized by the act shall not exceed 2.5% of the new capital investment, and shall not exceed the least amount necessary to obtain the qualified company's commitment to initiate the project. Tax credits authorized by the act shall count toward the maximum amount of Missouri Works incentives allowed in a fiscal year as provided under current law. (Section 620.2012)

This provision is substantially similar to SB 1443 (2026) and HB 2654 (2026).

MISSOURI INNOVATION, PUBLIC SAFETY, AND ACCOUNTABILITY ACT (Sections 620.6000 to 620.6033) This act establishes the "Missouri Innovation, Public Safety, and Accountability Act" by authorizing the designation of Missouri innovation zones and the use of certain economic development incentives administered by the Department of Economic Development (DED) and local municipalities.

The act authorizes a city to apply to DED for designation of a Missouri innovation zone by submitting a master plan to the Department. The master plan shall describe the proposed district boundaries, identify vacant or under-utilized properties, identify infrastructure and public safety priorities, provide high-level projections of anticipated housing and employment growth, and other required planning elements as described in the act. A city may establish only one innovation district. The Department shall approve or deny a completed application within forty-five calendar days. The Department's authority shall extent only to determining whether the required materials have been submitted, whether they are facially sufficient, and that the proposed boundaries conform to the required criteria in the act.

Approval of a certified Missouri innovation zone shall be conditional, and shall not authorize the granting of any incentives, until the city adopts and implements certain local policies as required in the act. No other ordinance, resolution, legislative finding, or separate redevelopment area designation shall be required for a project within an innovation zone to qualify for incentives.

The act requires the Department to promulgate rules to establish a master scorecard for the purposes of evaluating the office-to-residential conversion incentive and local tax increment financing incentives for a given project. Such scorecard shall establish objective, measurable, performance-based criteria; a weighting methodology, a maximum score of one hundred points, no fewer than five incentive tiers, and other provisions as described in the act. Once a reviewing authority verifies that a project has achieved a tier threshold, the incentives shall be awarded consistent with such tier. (Section 620.6003)

The act requires a city to establish and maintain a "one stop shop" as a coordinated business, development, and incentive review process. Each city shall provide for electronic submission of applications for permits; zoning, rezoning, and variance approval; site plan approval; subdivision approval; and incentive, certificate, license, registration, or other prior authorization required for construction, alteration, repair, renovation, expansion, change of use, occupancy, or lawful business operation.

The city shall designate a one stop review authority responsible for receiving and coordinating development applications, applications for locally administered development incentives, and business applications, and for issuing consolidated determinations or approvals by relevant departments and governing bodies. (Section 620.6006)

The act establishes the "Rural Missouri Development Fund", to be administered by the Department, for the purpose of supporting economic development, infrastructure, housing, workforce development, and related community-building activities in rural and smaller communities in the state. Any city with a certified Missouri innovation zone and ranking within the highest five percent of all cities in terms of assessed valuation of real property shall be required to annually contribute to the Fund an amount equal to ten percent of net-new state sales tax revenue retain for the Innovation Zone Public Safety Fund, which is created by the act.

Moneys in the fund shall be awarded to rural and smaller cities or local or regional development corporations, community development corporations, or similar entities. Such moneys shall be used for rural education, public infrastructure improvements or public safety, housing development, workforce development, health care or community service facilities, and other economic purposes consistent with the act.

The Department shall annually submit a report to the Budget Committee of the House of Representatives indicating the process used to determine disbursements, including the amount and recipients of such disbursements. (Section 620.6009)

The act establishes the "Innovation Zone Public Safety Fund" for the purpose of reinvesting a portion of net-new state economic activity generated in a certified Missouri innovation zone into public safety, public infrastructure, and related improvements.

The Fund shall receive fifty percent of net-new state revenue, as defined in the act, generated within the certified Missouri innovation zone that would otherwise be deposited into the state General Revenue Fund.

Moneys in the Fund shall be used for capital or operating expenditures related to public safety and infrastructure improvements within the district, including law enforcement personnel, lighting and surveillance systems, streets and sidewalks, traffic and pedestrian safety improvements, landscaping and public space improvements, property stabilization or demolition, and other improvements consistent with the district master plan. No less than forty percent of such moneys shall be used for public safety purposes and no less than forty percent shall be used for public infrastructure purposes. (Section 620.6012)

The act establishes an employer retention and reinvestment incentive within the Missouri Works program, providing withholding benefits to qualified companies that maintain a continued presence in a certified Missouri innovation zone and reinvest in their operations.

For all tax years beginning on or after January 1, 2027, the act authorizes a qualified company to retain state income tax withholdings or receive a withholding tax credit. A qualified company shall apply to the Department for a benefit agreement, and the Department shall approve or deny such application within forty-five calendar days. The benefits authorized in this act shall be determined based on the amount of state income tax withholdings attributable to employees in new and retained jobs at the certified Missouri innovation zone location, provided that no benefit shall exceed three percent of the aggregate gross wages paid to such new and retained jobs. The withholding benefit shall be authorized for not less than three years and not more than ten years.

Any withholding benefit received under the act shall be used solely for qualifying reinvestment expenditures, defined as expenses incurred for capital improvements or other investments at or for the benefit of the certified Missouri innovation zone location, as described in the act. (Section 620.6018)

The act establishes an employer relocation incentive within the Missouri One-Start Program for eligible qualified companies that create new jobs in a certified Missouri innovation zone. For all tax years beginning on or after January 1, 2027, an eligible qualified company shall be authorized to claim a tax credit in an amount equal to the eligible relocation expenses incurred and paid by the company on behalf of a relocated employee, not to exceed five thousand dollars per employee. (Section 620.6021)

The act establishes an office-to-residential conversion incentive for the purpose of converting nonresidential real property to a predominantly residential use, as defined in the act.

For all tax years beginning on or after January 1, 2027, this act authorizes a taxpayer to claim a tax credit equal to 25% of qualified conversion expenditures, as defined in the act, for a qualified converted building or upper-floor housing located within a certified Missouri innovation zone or a qualified Missouri main street district, or 30% of qualified conversion expenditures with respect to upper floor housing, as described in the act, incurred for converting nonresidential real property from office use to predominantly residential use, which may include retail or other commercial use. Tax credits authorized by the act shall not be refundable, but may be carried forward ten years. Tax credits may also be transferred, sold, or assigned, as described in the act.

The total amount of tax credits authorized pursuant to this act shall not exceed $50 million in any fiscal year. Fifty percent of such maximum amount shall be reserved for qualified converted buildings of more than 750,000 square feet and shall be allocated to the annual limit over a period of ten years, provided that such project meets criteria described in the act.

Twenty-five percent of the maximum amount of tax credits available to be authorized shall be authorized solely for projects located in a qualified Missouri main street district, as defined in the act. If the total amount of such reserved tax credits have been authorized, projects located in a qualified Missouri main street district may receive tax credits from the remaining unreserved amount of tax credits.

A taxpayer shall apply to the Department of Economic Development to receive tax credits pursuant to this act. Such application shall include proof of ownership or site control, floor plans of the existing structure, architectural plans, and, where applicable, plans of the proposed conversion of the structure, as well as proposed additions, estimated cost of conversion, the anticipated total costs of the project, the actual basis of the property, as shown by proof of actual acquisition costs, the anticipated total labor costs, the estimated project start date, and the estimated project completion date, proof that the property is an eligible property, a copy of all land use and building approvals reasonably necessary for the commencement of the project, and any other information which the Department may reasonably require to review the project for approval.

All taxpayers with applications receiving approval shall submit within 120 days following the award of credits evidence of the capacity of the applicant to finance the costs and expenses for the conversion of the eligible property. All taxpayers with applications receiving approval, excluding projects of more than 750,000 square feet, shall commence conversion within twelve months of the date of issuance of the letter from the Department granting the approval for tax credits.

To claim a tax credit authorized by this act, a taxpayer with approval shall apply for final approval and issuance of tax credits from the Department, which shall determine the final amount of qualified conversion expenditures and whether the completed rehabilitation meets the requirements of the act. The final application shall demonstrate that the taxpayer has substantially converted a qualified converted building; satisfactory evidence of any qualified conversion expenditures for the structure, as determined by the Department; and any other information reasonably requested by the Department.

The Department shall determine, on an annual basis, the overall economic impact to the state from the rehabilitation of eligible property pursuant to this act. No taxpayer shall be issued tax credits for qualified conversion expenditures on a qualified converted building within 27 years of a previous issuance of tax credits pursuant to this act on such qualified converted building. (Section 620.6024)

The act establishes the "Missouri Opportunity Zone" program to encourage long-term private investment by allowing the deferral of Missouri income tax liability if the amount of the tax liability is invested in a qualifying property or business located in such zones.

The deferral ends upon certain inclusion events, including disposition of the investment, loss of qualification, ten years after the investment, failure of an operating business to commence substantial operations within twenty-four months, or failure to place investment property into active use or make qualifying improvements within thirty months, as described in the act.

If an investment results in net income prior to the expiration of the deferral period, the amount of tax liability for which payment was previously deferred shall be included in Missouri income tax for such tax year in an amount equal to 4.7% of the taxpayer's share of net income so generated. (Section 620.627)

The act establishes an angel investment incentive.

For all tax years beginning on or after January 1, 2027, this act allows an investor, as defined in the act, to claim a tax credit in an amount equal to forty percent of the investor’s investment in the qualified securities of a qualified Missouri business, as defined in the act, or fifty percent of the investor's investment if the qualified Missouri business is located in a rural county, as defined in the act, or sixty percent of the investment if the qualified Missouri business is located in a Missouri innovation zone. If the amount of the tax credit exceeds the investor’s tax liability in any one tax year, the credit may be carried forward for up to five subsequent tax years. No investor shall receive more than seventy-five thousand dollars in tax credits in a single year for contributions to a single qualified Missouri business, and shall not receive more than three hundred thousand dollars in tax credits in total in a single tax year. A tax credit may be transferred by a qualified investor. The total amount of tax credits authorized in a single tax year by the Missouri Technology Corporation (MTC) shall not exceed six million dollars for the 2027 and 2028 calendar years. Thereafter, the maximum amount of tax credits that may be authorized shall be increased annually by 20%, provided that the maximum amount of tax credits was authorized in the previous year.

To be designated as a qualified Missouri business, a business shall apply to the MTC, as described in the act. The designation of a business as a qualified Missouri business shall be made annually by the MTC. In addition to other requirements described in the act, a qualified Missouri business shall not have had annual gross revenues of more than five million dollars in the most recent tax year of the business, and the business shall not have been in operation longer than five years if the business is not a bioscience business, or longer than ten years if the business is a bioscience business.

Each business that has been allocated tax credits by the MTC shall submit a report containing certain information, as described in the act, to the MTC before such tax credits are issued.

The state of Missouri shall not be held liable for any damages to an investor that makes an investment in any qualified security of a qualified Missouri business, any business that applies to be a qualified Missouri business but is turned down, or any investor that makes an investment in a business that applies to be a qualified Missouri business but is turned down.

The MTC shall annually review the activities undertaken by this act to ensure they are in compliance with the provisions of the act. If the MTC determines that a business is not in substantial compliance, it may inform the business that such business will lose its designation if it does not come into compliance within one hundred twenty days. If the business does not come into compliance, the MTC may revoke its designation. If a business loses its designation as a qualified Missouri business, it shall be precluded from being allocated any additional tax credits. However, investors in such a business shall be entitled to keep all of the tax credits properly issued prior to the loss of designation by the business.

The MTC shall report certain information annually, as described in the act, to the Department of Economic Development, the Governor, the President Pro Tempore of the Senate, and the Speaker of the House of Representatives. (Section 620.6030 and 620.6033)

This act shall sunset 10 years after the effective date unless reauthorized by the General Assembly.

These provisions are identical to provisions in HCS/SS/SCS/SBs 1694 & 1688 (2026) and are substantially similar to SB 1668 (2026).

SEVERABILITY The act contains a severability clause. JOSH NORBERG