Missouri House members borrowed from the economic development strategy of some other states and endorsed legislation Tuesday aimed at attracting large projects with a new type of incentive that would use the additional tax revenues to help pay for the plan.
The new economic development tool would allow local officials to issue special obligation bonds to help pay for major projects. The bonds then could be paid off by tapping the additional state and local sales and use taxes generated by the development project, plus local hotel taxes.
The state House gave the measure first-round approval Tuesday with minimal debate. It needs another round of approval before moving to the state Senate.
Incentives would be targeted for projects with at least a $50 million capital investment and expectations to generate $50 million in sales per year. Developments away from larger cities also could qualify for the incentives if they have regional or statewide importance, or if they're planned a major tourism area - places where state officials conclude at least $100 million worth of capital improvements will be built.
"This is an economic development tool that our state does not have but our bordering states do have and they have employed with great success to our detriment," said House Majority Leader Tim Jones, R-Eureka. He added that the proposed incentives were intended to boost significant entertainment and tourism destinations that would attract visitors from outside Missouri.
"We are talking about destination spots, not moving the theater across town," Jones said.
Cities or counties planning to issue the bonds would need to conduct a public hearing and approve a resolution or ordinance within 30 days. Project developers would need to start work within two years and be finished within 20 years.
The incentives could not go to businesses seeking to relocate within Missouri or if a required marketing study shows that similar businesses in the area would be harmed by the project. Casinos could not be part of the development projects.
Local officials would be required to prepare a feasibility study that includes examining whether the incentives and project revenue would be sufficient to pay for the development; how jobs created by the project would contribute to economic development efforts; and the expected return for state and local investments. The director for the state Department of Economic Development would examine the study and any additional information.
The legislation, which has bipartisan backing by House leaders, would allow the incentives to go toward project expenses, such as buying property, preparing utilities, paving streets, landscaping, parking, museums and sports complexes.
Supporters say Missouri has lost out when similar incentives have been offered in other states, particularly Kansas.
House Minority Leader Mike Talboy, D-Kansas City, said he has seen firsthand how Missouri has lost out on new projects by not offering the incentives. For example, similar incentives were part of the package that Kansas officials used in securing a development project worth several hundred million dollars that included a soccer stadium for the Kansas City Wizards. The soccer team previously played at Arrowhead Stadium in Kansas City.
"Kansas is getting our tax dollars," Talboy said.