Report on Missouri Tax Credits 2008

30.7 MB·English

by  Missouri Department of Economic Development

Report on Missouri Tax Credits
Administered by the Department of
Economic Development
January 2008
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TABLE OF CONTENTS
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Research Memo on Economic Impact Assessments for DED Tax Credit Programs
Timclinc - Tax Credit Enactment and Legi lativc/Budgetary Proposals 3
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Affordable Housing 5
Brownfield Redevelopment (includes Demolition, Jobs/Investment and Remediation) 45
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BUILD (Business Use Incentives for Large-Scale Development) 17
] Business Facility 81
CAl) 0 (Certified Capital Company) 87
] Capital SBIC 91
Community College ew Jobs Training 33
I Community Development Bank 55
Development 95
] Dry Fire Hydrant 101
Enhanced Enterprise Zone 105
] Enterprise Zone III
Family Development Account 117
] Film Production 123
Hi toric Preservation 61
] Incubator 127
Job Retention Training Program 39
] Land Assemblage 67
Loan Guarantee Fee 131
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Low Income Housing II
MDFB Bond Guarantee and Infrastructure Development 23
Neighborhood Assistance 135
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Neighborhood Preservation Act 71
New Enterprise Creation Act 141
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New Markets 77
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Quality Jobs 145
Rebuilding Communities 149
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Research 153
Seed Capi tal 157
161
J Transportation Development
Wine & Grape Production 165
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169
Youth Opportunities
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MERle Economic Impact Analysis Overview
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REM] Missouri Economic Regional Model
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REMI Missouri Economic Model
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The REMI Missouri Regional Economic Model is used by lhe Missouri Department of Economic
Development (DED) to forecast economic and policy impacts statewide and across 17 economic
regions. DED uses the REMl model 10 assess the economic and fiscal impacts of new firms. layoffs,
I industrial restructuring. and lax credits.
REMI Features:
• It is calibrated to local conditions using a relatively large amount of local data, which improves
perfonnance, especially under conditions of structural economic change.
• It combines several analytical models (including input-outpul, general equilibrium, economic
geography and econometric models), allowing it to take advantage of each specific method's
1 strengths and compensate for its weaknesses.
• It allows the user to generate forecasts for any combination of future years, allowing the user special
flexibHity in analyzing the liming of economic impacts.
• It accounts for changes in prices. wage rates, migration patlems. labor participation, etc. that are
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generated from supply and demand movements.
• It is used by a large number of researcbers under diverse conditions and has proven to perform
acceptably.
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The REMI Missouri Economic Model is utilized to 17 Region REM 1 Model
forecast economic impacts at the regional and state
level. REMI includes a model that has been built for
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Missouri's 17 economic regions, which are based on
commuting and trade flows between counties. The
model-building system uses hundreds of programs
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developed over the last two decades to build
customized models for each area using data from the
Bureau of Economic Analysis, the Bureau of Labor
] Statistics, the Depanment of Energy, the Census
Bureau and other public sources. The model is based
on past and current research and development. which
is subject to peer review and published in academic
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journals. REM! is currently used by hundreds of
governmental agencies, universities, and others.
Anieles about the model equations and research
findings have been published in professional journals
J such as the American Economic Review, The Review
oj Ecollomic SWlislics, Ihe Journal oj Regional
Science, and the Internatiollal Regional Science Review.
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-"'''ME RIC
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TI M EL,( TARGETED IN IlliJGl..NT
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Although the model contains a large
number of equations, the five block I
illustrations on this page describe the
underlying structure of the REMI
model. Each block contains several
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components that are shown in
rectangular boxes. The lines and
arrows represent the interaction of
key components both within and
between blocks. Most interactions
flow both ways indicating a highly
simultaneous Structure. The Output
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Block linkages form the core of the
model. An input.-output Structure
represents the inter-industry and final
demand linkages by industry. The l
interaction between the Output Block
and the rest of the model is extensive.
Predicted outputs [rom the Output
Block drive labor demand in the
Demand Block. Labor demand
interacts with labor supply in the
Supply Block to determine wages in J
the Wage Rates Block.
Combined with other factor costs, wages determine relative production costs and relative profitability in
the Wage Rates Block affecting the market shares and expons in the Market Shares Block. Market
shares determine the amount of demand supplied 10caUy, which feeds into the Output Block and again
runs through tbe above process. Concurrently, the Supply Block determines population changes based
on employment opportunity, which feeds back into output, wages and government spending.
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(1) Output
SlstQ ;'00 LotaJ Goyerrm{f'lt I <;0"""","011. 1
SQendffig 0_1 I I
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I ...J.. Re:ilIOi;poS1lbI.lnCOlT'li
Invil~tmerl I EICI>O(I' I
(3) Olmogra ~h1c (2) Labor & Capital (5) Market Sh. ...s J
rl Oemand 0>.,..,", In!ernalk/nal
1h1lg H~tlon UPOPU I8l~nl OCpatilp1'l.O") l E~IOfmenl \I:: :: MSahrakreel Msnil~keel
PartlCkl(llltn Labor" 51 ock LaborlOutput
Rata torce I R"~ ~
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(4) Wagle! Prices. and Production Costs
I EmpDYIT'I8nlOl:QortunilY L-.l Wdge Rale CompOSll~Wioe Rate P,od\Jctron CostS I
L--i
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'---. 7 HouSing Pnee COllOStUllTftiil6e1f0 1P ,lce RNI W3g(l RilI9 I COrrooslte P,lce$ I
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ER I C
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TIMEL.Y fARCimo /NTt:Ll..1GJ;NT'
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Tax Credit Accountability Act of 2004
Incentive Reform Bill
Administered
Requested funding of Tax Credit Accountability
Prepared recommendation for incentive bill
Tax Credits
Requested additional FTE to work with tax credit programs
Tax Credit Responsibility Act of 2001
Tax Credit Responsibility Act of 2000!
Requested funding for Independent CosVBenefit StU?y
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... ... ... ... ... ... ...
commuJty
!Land A~semblage
Bank !
e~( iNew Markets
Research (sun4et 01!05)
Brownfield Demolition
, '\~ Capital Small Busines~
. ! Neighborhood Preservation :
, c" tnvestment
SBNUSDA Loan Guarantee FeEl
I ~i~'lj .I Quality Jobs
New Enterprise Creation
Affordable Housing Assistance
Family Development Account
! 6~'1 Low Income Housing
Dry Fire Hydrant (sunset 8/03)
E'EZ
Mature Worker (sunset 08/04)
! r~flI! ·Devetopment Job Retention
, V ' Small Business Incubator
k~"' 1 Historic
Rebuilding Communities
! Community College New Job
Film Production
Training Program
Wine and Grape
Seed Capital Transportation Development (sunset 01/05)
Skills Development (sunset 08/04)
MDFB Bond Guarantee
MDFB BUILD
MDFB Infrastructure Development
CAPCO
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Enterprise Zone (sunset 01/05)
Brownfield Remediation
Business Facility (sunset 01/05)
Youth Opportunities
Neighborhood Assistance Program Brownfield Jobs & Investment
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AFFORDABLE HOUSING
ASSISTANCE PROGRAM
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MISSOURl HOUSING DEVELOPMENT COMMISSION
PURPOSE ApPLICATION PROCEDURE
] An incentive for businesses and individuals to Refer to the MHDC website for application
make donations to non-profit organizations that deadlines and forms.
assist in the production of affordable rental
I housing or homeownership for low-income SPECIAL PROGRAM REQU[REMENTS
families in Mi ouri. Proposals must:
./ Meet a demonstrated housing need;
AUTHORIZATION ./ Provide affordable housing for [ow-income
Sections 32.105 to 32.125, RSMo families by restricting rents and purchase
prices;
How THE PROGRAM WORKS ./ Target housing for persons below 50% of
To receive a tax credit a business firm or eligible area median income or provide market rate
individual must donate cash, professional housing in "rebuilding communities" as
I service, real or per onal property to a non-profit defined by state statute;
housing organization to a sist with the ./ Provide assistance for the administrative
acquisition, rehabilitation andlor new costs of a non-profit housing organ.ization.
] construction of affordable housing. There is also
a set-aside for donations that assist non-profit Approved proposals for rental or for-sale
housing organizations with their ba ic operating housing must follow income and rent/resale
expenses. The amount of tax credit allocated is restrictions for a period of ten years.
equal to 55% of the value of the contribution.
CONTACT
MISS URI
ELIGIBLE AREAS
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Statewide.
DEPARTMENT OF ECONOMIC DEVELOPMENT
Missouri Housing Development Commission
ELIGIBLE ApPLICANTS
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3435 Broadway
Non-profit housing organizations are eligible to
Kansas City, MO 6411 1-2403
apply for tax credit.
Phone: 8[6-759-6824 Fax: [phone]
E-mai[: kwansla1mhdc.com
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ELIGIBLE USE OF TAX CREDITS
This tax credit can be applied to:
ADDITIONAL RESOURCES
./ Ch. 143 - Income tax
j Go to the MHDC home page at www.mhdc.com
./ Ch. 147-Corporation Franchise Tax
and choose the ReDla[ Production link to obtain
./ Ch. 148-
guidelines and forms for the Affordab[e Housing
./ Bank Tax
] Assistance Tax Credit Program as well as
./ Insurance Premium Tax
information regarding other MHDC housing
./ Other Financial Institutions Tax
programs .
./ Ch. I 53-Express Company Tax
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This credit's special attributes:
./ Carryforward 10 years
./ Sellable or transferable
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TAX CREDIT ANALYSIS
Program Name: Affordable Housing Assistance Tax Credit Program Department: Economic Development pate: November 2007
Program Category: Housing Type: Tax Credit X Other (specify)
Statutory Authority: Sections 32.105·32.125. RSMo Applicable Taxes: Income Tax: Bank Tax; Financial Institutions Tax; Corporate Franchise
Tax; Tax on Gross Receipts of Express Companies; Insurance Premium Tax
Program Description and Eligibility Requirements:
The Affordable Housing Assistance Tax Credit Program (AHAP) is an incentive for buSinesses and Qualified individuals In Missouri to participate in the production of affordable housing for
low-income families. The credit can be used by a business firm or Qualified individual as a reduction in their state tax obligation. To receive the AHAP Cladit a business firm or qualified
individual must donate cash, professional services or real or personal property to a non·profit housing organization to assist with the acquisition, rehabilitation and/or new ronstruction of a
specific affordable housing development. There is also a set-aside of AHAP credit for the basic operating expenses of non-profit organizations ..mose primary purpose is to provide
affordabte housing for low-income families.
Explanation of How Award is Computed: Entitlement -- Discretionary~
The amount of Affordable Housing Assistance Tax Credit allocated is equal to 55% of the amount of the contribution. Non-profit organizations make application to the Missouri Housing
Oevelopment Commission (MHOC) for a reservation of AHAP credit. The non-profit organization then solk;its oontributions from businesses or Qualified individuals to assist in the
production of a specific affordable housing development. After MHDC receives the necessary documentaUon of a Qualified contribution to the non-profit organization that meets all of the
criteria set out in the statute and program regulations, a tax credit is granted to the donor in the amount of 55% of the value of the contribution. There are t'NO application cydes during the
fiscal year.
Program Cap: Cumulative $ (remainder of cumulative cap) $ Annual ~11 000 000 None
Explanation of cap:
The cap on the Affordable Housing Assistance Credit is set by statute at $11 million annually. Once MHDC has made reservations totaling $11 million in AHAP credit in a fiscal year, the
application cycle Is closed.
Explanation of Expiration of Authority: NfA
Specific Provisions: (if applicable)
Carry forward~ears Carry Back~ears Refundable--.ML SellableJAssignable~ Additional Federal Deductions Available~
Comments on Specific Provisions:
FY 2005 FY 2006 FY 2007 FY 2008 FY 2009
ACTUAL ACTUAL ACTUAL (current year) (budget year)
Certificates Issued (# 245 221 269 225 225
PrO'eets #) 50 50 59 50 50
Amount Authorized S11,000.000 $11.000,000 $11,000,000 5tt.000.000 S11.000,000
Amount Issued S10.468.941 S6.131,705 $7,985,100 $11,000,000 St 1,000,000
Amount Redeemed $7,702,660 $4,080,564 $10.497.793 $11,000,000 511.000,000
EST. Amount Outstanding N/A N/A $15,000.000 N/A NJA
TAX CREDIT ANALYSIS
Program Name: Affordable Housing Assistance Tax Credit Program Department: Economic Development Date: November 2007
HISTORICAL AND PROJECTED INFORMATION
8 8 8 8
8- ~
-8- -- l~i'- -8- -8- IIFY 2005
$12,000,000 -~- ~ ;; ;; ~ .:.',? - ;; ;;
.9. " "'-
S1 0 ,000,000 .,:: 2 {i' ElFY 2006
.i k-
56,000,000
56,000,000 OFY2007
$4,000.000
IIFY 2008
S2,000,000
SO
IIlIFY 2009
Amount Authorized Amount Issued Amount Redeemed
Comments on Historical and Projected Information:
BENEFIT: COST ANALYSIS (Includes only stat. r.venue Impacts)
----::::=== ___ (15 Derivation of Benefits:
f-__ + ___- '-"'=='--__- --'_ ___= ='-__- ---l
nvestment: $145,276,062 in construction demand between 2007-2008_
Employment: nla_
/n;=""=::;-;;-:::=;;;:----t---,;:;-c;;;;;i<C=----,---S'"7"9'"9", 1"1"1'-----l0ther Assumptions: n/a.
E'iE::::;--;E::=.:-~5b--+----''#~;;:;;;~----t-----fS3;;6;,8''',7'8':0,;------1lncenuvesiCredits: $11,000,000 in authorized AHAP tax credits between 2006-2016 (80%
F======'-=:::;t---~ie':;~:.-----+---.$"'1,e1;'6if7~,6"'9;';1c-------ibetween 208-2011, 20% between 2012-2016),
t----::::::::::::-----'-="t-----'==="'----'---====----1lmpacts occur in the Stalev.ide Region. Assumptions provided by DED_ Eslimated using
/n;=:-r;=77:=:----+-----,;;;,------,---==;o.=,----1REMI-9-Regional Model (remi-fiscal-9-juI07).
$10,046,799
so
$10,046.799
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Other Benefits; The Affordable Housing Assistance Tax Credit Program (AHAP) increases the availability of rental housing and for·sale housing that is affordable to low-income families.
Other benefits indude the removal of blight in communities and illCfeased local tax revenues such as property taxes. The AHAP credit also increases the capacity of non-profit housing
organizations to build or renovate affordable housing for low-income families. Lastly. the AHAP credit increases the amount of dis~sable income for low-income famities by providing
housing that is affordable to them. This improves the overall quality of their lives by providing additional income for other basic necessities such as food. clothing. healthcare and education.
In FY-2007. every dollar of authorized program tax credits returns: Over 15 years, every dollar of authorized program tax credits relurns:
NJA in new personal Income totaling 5 31.8 million 55.41 In new personal Income totaling 581.20 million
NJA in new value-added/GSP totaling $ 46.06 million $6.49 in new vafue·added/GSP totaling $97.36 million
N/A in new economic output totaling 582.40 million $10.83 in new economic output totaling $162.39 million
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