FIRST REGULAR SESSION
SENATE COMMITTEE SUBSTITUTE FOR
SENATE BILL NO. 35
103RD GENERAL ASSEMBLY
0483S.03C 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 amo unt 8
properly chargeable to capital account. The term "qualified 9
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 SCS SB 35 2
(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; 20
(b) Such building has been substantially converted 21
from an office use to a predominantly residential use, 22
defined as more than fifty percent of the gross square 23
footage of the building, and may also inc lude, retail, or 24
other commercial use, and may also include accessory on -site 25
parking; and 26
(c) Such building was initially placed in service at 27
least twenty-five years before the beginning of the 28
conversion; 29
(4) "Qualified Missouri main str eet district", an 30
accredited, associated, or affiliated main street district 31
of the Missouri main street program created pursuant to 32
sections 251.470 to 251.485; 33
(5) "Substantially converted", qualified conversion 34
expenditures incurred during the twenty-four-month period 35
preceding final approval of tax credits that in total are 36
greater than: 37
(a) The adjusted basis of such building and its 38
structural components, as determined as of the beginning of 39
the first day of such twenty -four-month period, or of the 40
holding period of the building, whichever is later; or 41
(b) Fifteen thousand dollars if the property is 42
located in a qualified Missouri main street district, or 43
five hundred thousand dollars if the property is not located 44
in a qualified Missouri main street district. 45
In the case of any conversion which may reasonably be 46
expected to be completed in phases set forth in 47 SCS SB 35 3
architectural plans and specifications completed before the 48
conversion begins, qualified conversion expenditures shall 49
be totaled for the sixty -month period preceding final 50
approval of tax credits rather than the twenty -four-month 51
period preceding such final approval; 52
(6) "Upper floor housing", any housing that is 53
attached to or contained in the same build ing as commercial 54
property, whether located on the ground floor behind the 55
traditional storefront or on other floors of the property. 56
99.722. 1. For all tax years beginning on or after 1
January 1, 2026, the department shall issue a t axpayer 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 unt il 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 in termediary entity as 20
permitted by law without affecting the nature or attributes 21
of the tax credit. 22 SCS SB 35 4
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 th rough 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, 2026, 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 issu ed, 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
credit authorized pursuant to this section, the assignor and 18
assignee shall complete and submit a tax credit transfer 19 SCS SB 35 5
form provided by the department of revenue. Such transfers 20
may be facilitated through an intermediary entity as 21
permitted by law wit hout 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, except tax credits 3
authorized for a structure of more than seven hu ndred fifty 4
thousand gross square feet shall be subject to the limits 5
provided in subsection 2 of this section, provided that the 6
total amount of tax credits for such projects shall be 7
allocated to the annual limits provided in this section over 8
a period of six years, with one -sixth of such amount 9
allocated each year if: 10
(1) The project otherwise meets all the requirements 11
of sections 99.720 to 99.730; 12
(2) The project meets the ten percent incurred costs 13
test under subsection 6 of sectio n 99.728 within thirty -six 14
months after an award is issued; and 15 SCS SB 35 6
(3) The taxpayer agrees with the department of 16
economic development, on a form prescribed by the 17
department, to claim the entire award of initial tax credits 18
over a period of three f iscal years, with the initial year 19
being the fiscal year in which the tax credits are issued; 20
2. Twenty-five percent of the maximum amount of tax 21
credits available to be authorized to taxpayers in a fiscal 22
year pursuant to this section shall be au thorized solely for 23
upper floor housing projects located in a qualified Missouri 24
main street district. If the total amount of such reserved 25
tax credits have been authorized, upper floor housing 26
projects located in a qualified Missouri main street 27
district may receive tax credits from the remaining 28
unreserved amount of tax credits. If the total amount of 29
reserved tax credits have not been authorized by the 30
department, projects not located in a qualified Missouri 31
main street district may be authori zed tax credits from such 32
reserved amount. 33
3. If the maximum amount of tax credits allowed in any 34
fiscal year, as provided pursuant to this section, is 35
issued, the maximum amount of tax credits allowed pursuant 36
to subsection 1 of this section sha ll be adjusted by the 37
percentage increase in the Consumer Price Index for All 38
Urban Consumers, or its successor index, as such index is 39
defined and officially reported by the United States 40
Department of Labor, or its successor agency. Only one such 41
adjustment shall be made for each instance in which the 42
provisions of this subsection apply. The department shall 43
publish such adjusted amount. 44
4. In the event the department authorizes tax credits 45
equal to the total amount available pursuant to t his 46
section, or sufficient that when totaled with all other 47 SCS SB 35 7
approvals, the amount available pursuant to this section is 48
exhausted, all taxpayers with applications then awaiting 49
approval or thereafter submitted for approval shall be 50
notified by the department that no additional approvals 51
shall be granted during the fiscal year and shall be 52
notified of the priority given to such taxpayer's 53
application then awaiting approval. Such applications shall 54
be kept on file by the department and shall be cons idered 55
for approval for tax credits in the order established in 56
this section in the event that additional tax credits become 57
available due to the rescission of approvals, or when a new 58
fiscal year's allocation of tax credits becomes available 59
for approval. 60
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 credits to the department. 3
The department shall have thirty days to review the 4
application and shall notify the applicant in writing within 5
thirty days of the decision of whether the application has 6
been approved or denied. Each application for approval, 7
including any applications received for supplemental 8
allocations of tax credits as provi ded pursuant to 9
subsection 2 of section 99.730, shall be reviewed in the 10
order of submission. Tax credit allocations shall be 11
prioritized based on a balanced consideration of the 12
project's score and date of application approval. While 13
higher scoring projects shall generally receive precedence, 14
the department shall ensure that earlier approved projects 15
are not unduly disadvantaged by the scoring process. 16
2. Each application shall be reviewed by the 17
department for approval. In order to receive approval, an 18
application shall include: 19 SCS SB 35 8
(1) Proof of ownership or site control. Proof of 20
ownership shall include evidence that the taxpayer is the 21
fee simple owner of the eligible property, such as a 22
warranty deed or a closing statement. Proof of site control 23
may be evidenced by a leasehold interest or an option to 24
acquire such an interest. If the taxpayer is in the process 25
of acquiring fee simple ownership, proof of site control 26
shall include an executed sales contract or an executed 27
option to purchase the eligible property; 28
(2) Floor plans of the existing structure, 29
architectural plans, and, where applicable, plans of the 30
proposed conversion of the structure, as well as proposed 31
additions; 32
(3) The estimated cost of conver sion, the anticipated 33
total costs of the project, the actual basis of the 34
property, as shown by proof of actual acquisition costs, the 35
anticipated total labor costs, the estimated project start 36
date, and the estimated project completion date; 37
(4) Proof that the property is an eligible property; 38
(5) A copy of all land use and building approvals 39
reasonably necessary for the commencement of the project; and 40
(6) Any other information which the department may 41
reasonably require to review the project for approval. 42
Only the property for which a property address is provided 43
in the application shall be reviewed for approval. Once 44
selected for review, a taxpayer shall not be permitted to 45
request the review of another property for approval i n the 46
place of the property contained in such application. Any 47
disapproved application shall be removed from the review 48
process. If an application is removed from the review 49
process, the department shall notify the taxpayer in writing 50 SCS SB 35 9
of the decision to remove such application. A disapproved 51
application, which is removed from the review process, may 52
be resubmitted, but shall be deemed to be a new submission 53
for purposes of the priority procedures described in this 54
section. If the department det ermines that a taxpayer has 55
failed to comply with the requirements of this subsection, 56
then the department shall notify the applicant of such 57
failure and the applicant shall have a thirty -day period 58
from the date of such notice to submit additional evi dence 59
to remedy the failure. 60
3. If the department deems the application sufficient, 61
the taxpayer shall be notified in writing of the approval 62
for an amount of tax credits equal to twenty -five percent of 63
qualified conversion expenditures, less any amount of tax 64
credits previously approved pursuant to this section. Tax 65
credits approved pursuant to this section shall be awarded 66
and administered independently and shall not be evaluated in 67
conjunction with any other state tax credit program. Such 68
approvals shall be granted to applications in the order of 69
priority established under this section and shall require 70
full compliance thereafter with all other requirements of 71
law as a condition to any claim for such tax credits. If 72
the department disapproves an application, the taxpayer 73
shall be notified in writing of the reasons for such 74
disapproval. A disapproved application may be resubmitted. 75
4. Following approval of an application, the identity 76
of the taxpayer contained in such applica tion shall not be 77
modified except: 78
(1) The taxpayer may add partners, members, or 79
shareholders as part of the ownership structure, so long as 80
the principal remains the same; provided, however, that 81
subsequent to the commencement of renovation and the 82 SCS SB 35 10
expenditure of at least ten percent of the proposed 83
rehabilitation budget, removal of the principal for failure 84
to perform duties and the appointment of a new principal 85
thereafter shall not constitute a change of the principal; or 86
(2) Where the ownership of the project is changed due 87
to a foreclosure, deed in lieu of a foreclosure or voluntary 88
conveyance, or a transfer in bankruptcy. 89
5. All taxpayers with applications receiving approval 90
shall submit within one hundred twenty days fol lowing the 91
award of credits evidence of the capacity of the applicant 92
to finance the costs and expenses for the conversion of the 93
eligible property in the form of a line of credit or letter 94
of commitment subject to the lender's termination for a 95
material adverse change impacting the extension of credit. 96
If the department determines that a taxpayer has failed to 97
comply with the requirements of this subsection, then the 98
department shall notify the applicant of such failure and 99
the applicant shall ha ve a thirty-day period from the date 100
of such notice to submit additional evidence to remedy the 101
failure. 102
6. All taxpayers with applications receiving approval, 103
excluding projects described in subdivision (1) of 104
subsection 1 of section 99.726, sha ll commence conversion 105
within twelve months of the date of issuance of the letter 106
from the department granting the approval for tax credits. 107
For the purposes of this subsection, "commence conversion" 108
shall mean that, as of the date in which actual phy sical 109
work, contemplated by the architectural plans submitted with 110
the application, has begun, the taxpayer has incurred no 111
less than ten percent of the estimated costs of 112
rehabilitation provided in the application. Taxpayers with 113
approval of a project shall submit evidence of compliance 114 SCS SB 35 11
with the provisions of this subsection. If the department 115
determines that a taxpayer has failed to comply with the 116
requirements of this subsection, the approval for the amount 117
of tax credits for such taxpayer sha ll be rescinded and such 118
amount of tax credits shall then be included in the total 119
amount of tax credits from which approvals may be granted. 120
Any taxpayer whose approval shall be subject to rescission 121
shall be notified of such from the department and, upon 122
receipt of such notice, may submit a new application for the 123
project. 124
99.730. 1. To claim a tax credit authorized pursuant 1
to sections 99.720 to 99.730, a taxpayer with approval shall 2
apply for final approval and issuance of tax credits from 3
the department, which shall determine the final amount of 4
qualified conversion expenditures and whether the completed 5
rehabilitation meets the requirements of this section. A 6
taxpayer shall submit to the department a final application 7
demonstrating: 8
(1) That the taxpayer has substantially converted a 9
qualified converted building or upper floor housing; 10
(2) Satisfactory evidence of any qualified conversion 11
expenditures for the structure, as determined by the 12
department; and 13
(3) Any other information reasonably requested by the 14
department relating to verifying qualified conversion 15
expenditures or compliance with the requirements of sections 16
99.720 to 99.730. 17
For financial institutions, tax credits authorized pursu ant 18
to sections 99.720 to 99.730 shall be deemed to be 19
redevelopment tax credits for the purposes of sections 20
135.800 to 135.830. The approval of all applications and 21 SCS SB 35 12
the issuing of certificates of eligible tax credits to 22
taxpayers shall be performed by the department. The 23
department shall inform a taxpayer of final approval by 24
letter and shall issue, to the taxpayer, tax credit 25
certificates. The taxpayer shall attach the certificate to 26
all Missouri income tax returns on which the credit is 27
claimed. 28
2. (1) The department shall issue seventy -five 29
percent of the approved tax credits within sixty days of 30
receiving all required final application materials. Within 31
sixty days, the department shall make a final determination 32
of costs and issue the remaining twenty -five percent of 33
approved tax credits, or request repayment from the 34
applicant if the final determination results in an over - 35
issuance of tax credits. In the event the amount of 36
qualified conversion expenditures incurred by a ta xpayer 37
would result in the issuance of an amount of tax credits in 38
excess of the amount provided under such taxpayer's approval 39
granted pursuant to subsection 3 of section 99.728, such 40
taxpayer may apply to the department for issuance of tax 41
credits in an amount equal to such excess. Applications for 42
issuance of tax credits in excess of the amount provided 43
under a taxpayer's application shall be made on a form 44
prescribed by the department. Such applications shall be 45
subject to all provisions rega rding priority provided under 46
subsection 1 of section 99.728. 47
(2) For tax credits authorized pursuant to subdivision 48
(1) of subsection 1 of section 99.726, the applicant shall 49
submit a cost certification for each project phase. All 50
expenses that relate to the phase shall be included in the 51
cost certification form for that phase. Upon approval of 52
the cost certification submitted and the work completed on 53 SCS SB 35 13
each phase of the project, the department shall issue eighty 54
percent of the amount of tax credits for which the applicant 55
is approved for the phase. The remaining twenty percent 56
shall be issued upon the final conclusion of the phased 57
project. The department shall issue eighty percent of the 58
approved credits within sixty days of receiving all required 59
application materials. Within sixty days, the department 60
shall make a final determination of costs and issue the 61
remaining twenty percent of approved tax credits upon the 62
final completion of the phased project, or request repayment 63
if an over-issuance of credits is determined. 64
3. The department shall determine, on an annual basis, 65
the overall economic impact to the state from the 66
rehabilitation of eligible property pursuant to sections 67
99.720 to 99.730. 68
4. No taxpayer shall be issued tax credits for 69
qualified conversion expenditures on a qualified converted 70
building within twenty -seven years of a previous issuance of 71
tax credits pursuant to sections 99.720 to 99.730 on such 72
qualified converted building. 73
5. The department may promulgate any rules and 74
regulations necessary to administer the provisions of 75
sections 99.720 to 99.730. Any rule or portion of a rule, 76
as that term is defined in section 536.010, that is created 77
under the authority delegated in this sect ion shall become 78
effective only if it complies with and is subject to all of 79
the provisions of chapter 536 and, if applicable, section 80
536.028. This section and chapter 536 are nonseverable and 81
if any of the powers vested with the general assembly 82
pursuant to chapter 536 to review, to delay the effective 83
date, or to disapprove and annul a rule are subsequently 84
held unconstitutional, then the grant of rulemaking 85 SCS SB 35 14
authority and any rule proposed or adopted after August 28, 86
2025, shall be invalid and void. 87