0483S.03C
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SENATE COMMITTEE SUBSTITUTE
FOR
SENATE BILL NO. 35
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
six new sections, to be known as sections 99.720, 99.722,
99.724, 99.726, 99.728, and 99.730, to read as follows:
99.720. 1. Sections 99.720 to 99.730 shall be known
and may be cited as the "Revitalizing Missouri Downtowns and
Main Streets Act".
2. As used in sections 99.720 to 99.730, the following
terms mean, unless the context requires otherwise:
(1) "Department", the Missouri department of economic
development;
(2) "Qualified conversion expenditures", any amount
properly chargeable to capital account. The term "qualified
conversion expenditures" shall not include:
(a) The cost of acquisition;
(b) Any expenditure attributable to the enlargement of
an existing building; or
(c) Tax-exempt properties;
(3) "Qualified converted building", any building and
its structural components if:
(a) Prior to conversion, such building was
nonresidential real property, as defined in 26 U.S.C.
Section 168(e)(2)(B), as amended, which was leased, or
available for lease, to office tenants;
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(b) Such building has been substantially converted
from an office use to a predominantly residential use,
defined as more than fifty percent of the gross square
footage of the building, and may also include, retail, or
other commercial use, and may also include accessory on -site
parking; and
(c) Such building was initially placed in service at
least twenty-five years before the beginning of the
conversion;
(4) "Qualified Missouri main street district", an
accredited, associated, or affiliated main street district
of the Missouri main street program created pursuant to
sections 251.470 to 251.485;
(5) "Substantially converted", quali fied conversion
expenditures incurred during the twenty -four-month period
preceding final approval of tax credits that in total are
greater than:
(a) The adjusted basis of such building and its
structural components, as determined as of the begin ning of
the first day of such twenty -four-month period, or of the
holding period of the building, whichever is later; or
(b) Fifteen thousand dollars if the property is
located in a qualified Missouri main street district, or
five hundred thousan d dollars if the property is not located
in a qualified Missouri main street district.
In the case of any conversion which may reasonably be
expected to be completed in phases set forth in
architectural plans and specifications completed before the
conversion begins, qualified conversion expenditures shall
be totaled for the sixty -month period preceding final
approval of tax credits rather than the twenty -four-month
period preceding such final approval;
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(6) "Upper floor housing", any housing th at is
attached to or contained in the same building as commercial
property, whether located on the ground floor behind the
traditional storefront or on other floors of the property.
99.722. 1. For all tax years beginning on or after
January 1, 2026, the department shall issue a taxpayer a
credit against the taxpayer's state tax liability equal to
twenty-five percent of qualified conversion expenditures
with respect to a qualified converted building. If the
amount of such tax credi t exceeds the taxpayer's state tax
liability for the year in which tax credits are issued, the
amount that exceeds the state tax liability may be carried
back to any of the three preceding tax years or carried
forward for credit against state tax liabi lity for the
succeeding ten tax years, or until the full credit is used,
whichever occurs first.
2. Tax credits authorized pursuant to this section may
be transferred, sold, or assigned, and shall retain the same
attributes as in the hands of the assignor. Tax credits may
be transferred multiple times. In order to transfer a tax
credit authorized pursuant to this section, the assignor and
assignee shall complete and submit a tax credit transfer
form provided by the department of revenue. Such transfers
may be facilitated through an intermediary entity as
permitted by law without affecting the nature or attributes
of the tax credit.
3. Tax credits authorized for a partnership, a limited
liability company taxed as a partnership, or mu ltiple owners
of property shall be passed through to the partners,
members, or owners respectively pro rata, or pursuant to an
executed agreement among the partners, members, or owners
documenting an alternate distribution method.
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4. The assignee of a tax credit may use the acquired
tax credits to offset up to one hundred percent of the
taxpayer's state tax liability. The assignor shall perfect
such transfer by notifying the department in writing within
thirty calendar days following the effe ctive date of the
transfer and shall provide any information as may be
required by the department.
99.724. 1. For all tax years beginning on or after
January 1, 2026, the department shall issue a taxpayer a
credit against the taxpayer 's state tax liability equal to
thirty percent of qualified conversion expenditures with
respect to upper floor housing located in a qualified
Missouri main street district. If the amount of such tax
credit exceeds the taxpayer's state tax liability f or the
year in which tax credits are issued, the amount that
exceeds the state tax liability may be carried back to any
of the three preceding tax years or carried forward for
credit against state tax liability for the succeeding ten
tax years, or until the full credit is used, whichever
occurs first.
2. Tax credits authorized pursuant to this section may
be transferred, sold, or assigned, and shall retain the same
attributes as in the hands of the assignor. Tax credits may
be transferred multiple times. In order to transfer a tax
credit authorized pursuant to this section, the assignor and
assignee shall complete and submit a tax credit transfer
form provided by the department of revenue. Such transfers
may be facilitated through an in termediary entity as
permitted by law without affecting the nature or attributes
of the tax credit.
3. Tax credits authorized for a partnership, a limited
liability company taxed as a partnership, or multiple owners
of property shall be passed th rough to the partners,
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members, or owners respectively pro rata, or pursuant to an
executed agreement among the partners, members, or owners
documenting an alternate distribution method.
4. The assignee of a tax credit may use the acquired
tax credits to offset up to one hundred percent of the
taxpayer's state tax liability. The assignor shall perfect
such transfer by notifying the department in writing within
thirty calendar days following the effective date of the
transfer and shall provide any information as may be
required by the department.
99.726. 1. The total amount of tax credits authorized
pursuant to sections 99.720 to 99.730 shall not exceed fifty
million dollars in any fiscal year, except tax credits
authorized for a structure of more than seven hundred fifty
thousand gross square feet shall be subject to the limits
provided in subsection 2 of this section, provided that the
total amount of tax credits for such projects shall be
allocated to the annual limi ts provided in this section over
a period of six years, with one -sixth of such amount
allocated each year if:
(1) The project otherwise meets all the requirements
of sections 99.720 to 99.730;
(2) The project meets the ten percent incurred c osts
test under subsection 6 of section 99.728 within thirty -six
months after an award is issued; and
(3) The taxpayer agrees with the department of
economic development, on a form prescribed by the
department, to claim the entire award of initia l tax credits
over a period of three fiscal years, with the initial year
being the fiscal year in which the tax credits are issued;
2. Twenty-five percent of the maximum amount of tax
credits available to be authorized to taxpayers in a fiscal
year pursuant to this section shall be authorized solely for
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upper floor housing projects located in a qualified Missouri
main street district. If the total amount of such reserved
tax credits have been authorized, upper floor housing
projects located in a qualified Missouri main street
district may receive tax credits from the remaining
unreserved amount of tax credits. If the total amount of
reserved tax credits have not been authorized by the
department, projects not located in a qualified Missou ri
main street district may be authorized tax credits from such
reserved amount.
3. If the maximum amount of tax credits allowed in any
fiscal year, as provided pursuant to this section, is
issued, the maximum amount of tax credits allowed pursua nt
to subsection 1 of this section shall be adjusted by the
percentage increase in the Consumer Price Index for All
Urban Consumers, or its successor index, as such index is
defined and officially reported by the United States
Department of Labor, or its successor agency. Only one such
adjustment shall be made for each instance in which the
provisions of this subsection apply. The department shall
publish such adjusted amount.
4. In the event the department authorizes tax credits
equal to the total amount available pursuant to this
section, or sufficient that when totaled with all other
approvals, the amount available pursuant to this section is
exhausted, all taxpayers with applications then awaiting
approval or thereafter submitted for approval shall be
notified by the department that no additional approvals
shall be granted during the fiscal year and shall be
notified of the priority given to such taxpayer's
application then awaiting approval. Such applications shall
be kept on file by the department and shall be considered
for approval for tax credits in the order established in
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this section in the event that additional tax credits become
available due to the rescission of approvals, or when a new
fiscal year's allocation of tax credits becomes available
for approval.
99.728. 1. To obtain approval for tax credits
pursuant to sections 99.720 to 99.730, a taxpayer shall
submit an application for tax credits to the department.
The department shall have thir ty days to review the
application and shall notify the applicant in writing within
thirty days of the decision of whether the application has
been approved or denied. Each application for approval,
including any applications received for supplemental
allocations of tax credits as provided pursuant to
subsection 2 of section 99.730, shall be reviewed in the
order of submission. Tax credit allocations shall be
prioritized based on a balanced consideration of the
project's score and date of applicat ion approval. While
higher scoring projects shall generally receive precedence,
the department shall ensure that earlier approved projects
are not unduly disadvantaged by the scoring process.
2. Each application shall be reviewed by the
department for approval. In order to receive approval, an
application shall include:
(1) Proof of ownership or site control. Proof of
ownership shall include evidence that the taxpayer is the
fee simple owner of the eligible property, such as a
warranty deed or a closing statement. Proof of site control
may be evidenced by a leasehold interest or an option to
acquire such an interest. If the taxpayer is in the process
of acquiring fee simple ownership, proof of site control
shall include an execut ed sales contract or an executed
option to purchase the eligible property;
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(2) Floor plans of the existing structure,
architectural plans, and, where applicable, plans of the
proposed conversion of the structure, as well as proposed
additions;
(3) The 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 estimate d project completion date;
(4) Proof that the property is an eligible property;
(5) A copy of all land use and building approvals
reasonably necessary for the commencement of the project; and
(6) Any other information which the departmen t may
reasonably require to review the project for approval.
Only the property for which a property address is provided
in the application shall be reviewed for approval. Once
selected for review, a taxpayer shall not be permitted to
request the review of another property for approval in the
place of the property contained in such application. Any
disapproved application shall be removed from the review
process. If an application is removed from the review
process, the department shall notify the taxpayer in writing
of the decision to remove such application. A disapproved
application, which is removed from the review process, may
be resubmitted, but shall be deemed to be a new submission
for purposes of the priority procedures described in t his
section. If the department determines that a taxpayer has
failed to comply with the requirements of this subsection,
then the department shall notify the applicant of such
failure and the applicant shall have a thirty -day period
from the date of such notice to submit additional evidence
to remedy the failure.
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3. If the department deems the application sufficient,
the taxpayer shall be notified in writing of the approval
for an amount of tax credits equal to twenty -five percent of
qualified conversion expenditures, less any amount of tax
credits previously approved pursuant to this section. Tax
credits approved pursuant to this section shall be awarded
and administered independently and shall not be evaluated in
conjunction with any o ther state tax credit program. Such
approvals shall be granted to applications in the order of
priority established under this section and shall require
full compliance thereafter with all other requirements of
law as a condition to any claim for such tax credits. If
the department disapproves an application, the taxpayer
shall be notified in writing of the reasons for such
disapproval. A disapproved application may be resubmitted.
4. Following approval of an application, the identity
of the taxpayer contained in such application shall not be
modified except:
(1) The taxpayer may add partners, members, or
shareholders as part of the ownership structure, so long as
the principal remains the same; provided, however, that
subsequent to the commencement of renovation and the
expenditure of at least ten percent of the proposed
rehabilitation budget, removal of the principal for failure
to perform duties and the appointment of a new principal
thereafter shall not constitute a change o f the principal; or
(2) Where the ownership of the project is changed due
to a foreclosure, deed in lieu of a foreclosure or voluntary
conveyance, or a transfer in bankruptcy.
5. All taxpayers with applications receiving approval
shall submit within one hundred twenty days following the
award of credits evidence of the capacity of the applicant
to finance the costs and expenses for the conversion of the
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eligible property in the form of a line of credit or letter
of commitment subject to t he lender's termination for a
material adverse change impacting the extension of credit.
If the department determines that a taxpayer has failed to
comply with the requirements of this subsection, then the
department shall notify the applicant of such failure and
the applicant shall have a thirty -day period from the date
of such notice to submit additional evidence to remedy the
failure.
6. All taxpayers with applications receiving approval,
excluding projects described in subdivision (1) of
subsection 1 of section 99.726, shall commence conversion
within twelve months of the date of issuance of the letter
from the department granting the approval for tax credits.
For the purposes of this subsection, "commence conversion"
shall mean that, as of the date in which actual physical
work, contemplated by the architectural plans submitted with
the application, has begun, the taxpayer has incurred no
less than ten percent of the estimated costs of
rehabilitation provided in the application. Taxpayers with
approval of a project shall submit evidence of compliance
with the provisions of this subsection. If the department
determines that a taxpayer has failed to comply with the
requirements of this subsection, the approval for the amount
of tax credits for such taxpayer shall be rescinded and such
amount of tax credits shall then be included in the total
amount of tax credits from which approvals may be granted.
Any taxpayer whose approval shall be subject to rescission
shall be notified of such from the department and, upon
receipt of such notice, may submit a new application for the
project.
99.730. 1. To claim a tax credit authorized pursuant
to sections 99.720 to 99.730, a taxpayer with approval shall
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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 this section. A
taxpayer shall submit to th e department a final application
demonstrating:
(1) That the taxpayer has substantially converted a
qualified converted building or upper floor housing;
(2) Satisfactory evidence of any qualified conversion
expenditures for the structure, as determined by the
department; and
(3) Any other information reasonably requested by the
department relating to verifying qualified conversion
expenditures or compliance with the requirements of sections
99.720 to 99.730.
For financial institutio ns, tax credits authorized pursuant
to sections 99.720 to 99.730 shall be deemed to be
redevelopment tax credits for the purposes of sections
135.800 to 135.830. The approval of all applications and
the issuing of certificates of eligible tax credits to
taxpayers shall be performed by the department. The
department shall inform a taxpayer of final approval by
letter and shall issue, to the taxpayer, tax credit
certificates. The taxpayer shall attach the certificate to
all Missouri income tax ret urns on which the credit is
claimed.
2. (1) The department shall issue seventy -five
percent of the approved tax credits within sixty days of
receiving all required final application materials. Within
sixty days, the department shall make a fina l determination
of costs and issue the remaining twenty -five percent of
approved tax credits, or request repayment from the
applicant if the final determination results in an over -
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issuance of tax credits. In the event the amount of
qualified conversion expenditures incurred by a taxpayer
would result in the issuance of an amount of tax credits in
excess of the amount provided under such taxpayer's approval
granted pursuant to subsection 3 of section 99.728, such
taxpayer may apply to the departmen t for issuance of tax
credits in an amount equal to such excess. Applications for
issuance of tax credits in excess of the amount provided
under a taxpayer's application shall be made on a form
prescribed by the department. Such applications shall be
subject to all provisions regarding priority provided under
subsection 1 of section 99.728.
(2) For tax credits authorized pursuant to subdivision
(1) of subsection 1 of section 99.726, the applicant shall
submit a cost certification for each pr oject phase. All
expenses that relate to the phase shall be included in the
cost certification form for that phase. Upon approval of
the cost certification submitted and the work completed on
each phase of the project, the department shall issue eigh ty
percent of the amount of tax credits for which the applicant
is approved for the phase. The remaining twenty percent
shall be issued upon the final conclusion of the phased
project. The department shall issue eighty percent of the
approved credits within sixty days of receiving all required
application materials. Within sixty days, the department
shall make a final determination of costs and issue the
remaining twenty percent of approved tax credits upon the
final completion of the phased pro ject, or request repayment
if an over-issuance of credits is determined.
3. The department shall determine, on an annual basis,
the overall economic impact to the state from the
rehabilitation of eligible property pursuant to sections
99.720 to 99.730.
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4. No taxpayer shall be issued tax credits for
qualified conversion expenditures on a qualified converted
building within twenty -seven years of a previous issuance of
tax credits pursuant to sections 99.720 to 99.730 on such
qualified converted building.
5. The department may promulgate any rules and
regulations necessary to administer the provisions of
sections 99.720 to 99.730. Any rule or portion of a rule,
as that term is defined in section 536.010, that is created
under the authority delegated in this section shall become
effective only if it complies with and is subject to all of
the provisions of chapter 536 and, if applicable, section
536.028. This section and chapter 536 are nonseverable and
if any of the powers vest ed with the general assembly
pursuant to chapter 536 to review, to delay the effective
date, or to disapprove and annul a rule are subsequently
held unconstitutional, then the grant of rulemaking
authority and any rule proposed or adopted after August 28,
2025, shall be invalid and void.