Economic Development & Incentives
Economic Development & Incentives
Given the complexity of economic development incentives, a firm’s experience, knowledge and community relationships can make the difference between a development or real estate project being delayed, shelved or green lighted. White Goss is responsible for successfully negotiating billions of dollars in incentives for clients, which has advanced development throughout the Midwest.
Missouri and Kansas have numerous economic development incentive programs. Some of these, such as tax increment financing and urban redevelopment corporations are administered solely at the local government level. Others, like tax credits, income tax incentives and other job creation programs involve state agencies such as the Missouri Department of Economic Development and the Kansas Department of Commerce.
Having crafted many of the current policies and incentive programs, the attorneys at White Goss have in-depth knowledge of the intricate workings of state and local government incentive programs. Working closely with clients, our attorneys develop the best economic incentive package choosing from the myriad of programs available in Missouri and Kansas.
Tax Increment Financing
Tax Increment Financing (TIF) is available in Missouri and Kansas. TIF generally provides for redevelopment project cost financing in blighted areas, or areas which are becoming blighted, from the new taxes attributable to the increase in assessed valuation as a result of redevelopment and a portion of 50% of the increase in economic activity taxes (primarily sales taxes) as a result of the project. TIF can provide financing for any and all reasonable and necessary costs to implement the plan and is therefore a very viable and flexible development tool. In some situations, bond financing may be available to directly fund project costs. The head of our department acted as the first general counsel for the Kansas City TIF Commission and successfully defended the constitutionality of the TIF statute in the landmark case of The KC TIF Commission v. J.E. Dunn. He also authored many of the amendments to the statute.
Both Missouri and Kansas have economic development incentives programs based upon the granting of tax abatement on new improvements made to real property. The various incentive programs offer partial or total abatement for up to 25 years in Missouri and 10 years in Kansas. A careful analysis of each incentive program’s requirements and a client’s objectives must be made in order to determine which program is best suited for a project.
Industrial Revenue Bonds
Missouri and Kansas allow the issuance of Industrial Revenue Bonds (IRBs) to finance the purchase, construction and improvement of certain types of projects. IRB proceeds may be used to pay for all or part of the cost of the project. IRB financing may also provide for real and personal property tax abatement and sales tax exemptions for construction materials.
In some situations, Missouri and Kansas’s political subdivisions may issue bonds to assist the financing of project costs for development. Revenue bonds are repaid from a specified stream of future income. These bonds are generally secured by income, proceeds and revenues generated within a project area. If general obligation bonds are issued, they are guaranteed by the issuer and benefit a developer by providing lower interest rate financing.
Transportation Development Districts
Transportation Development Districts (TDDs) allow for the construction and financing of roadways, public parking lots and similar transit infrastructure within a TDD. In Missouri, the cost of improvements or services may be financed by special assessments, tolls, real property taxes and sales tax. Kansas allows the funding of projects through a special assessments and a sales tax.
Neighborhood Improvement Districts (NID)
In Missouri, Neighborhood Improvement Districts (NIDs) allow for the construction and financing of public improvements that confer a benefit upon property within the proposed improvement district. The improvements are paid for through the issuance of temporary notes or general obligation bonds, which are retired by annual special assessments on the property, benefited. “Improvements” under the NID statute include streets, sidewalks, lighting, landscaping and the ability to acquire and improve any other public facilities or improvements deemed necessary by the governing body of the city.
Community Improvement Districts (CID)
Community Improvement Districts (CIDs) provide a very flexible and creative tool for the financing and construction of public improvements that confer a benefit upon property in the proposed district. Depending upon structure, the method of financing and the nature of the improvements that can be financed with a CID are broader and much more flexible than a NID. In Missouri, the cost of improvements or services may be financed by special assessments, real property taxes, business licenses, and a sales tax of up to 1%. Kansas authorizes a sales tax of up to 2% of retail sales, special assessments and full faith and credit bonds to pay for project costs. In Kansas, project costs include the construction of private improvements.
Historic Tax Credits
Historic tax credit programs provide financial incentives for the redevelopment of historic structures. Missouri and Kansas offer an investment tax credit equal to 25% of approved costs associated with qualified rehabilitation. In Kansas, nonprofit entities are eligible for a 30% credit. Federal law provides an investment tax credit equal to 20% of approved costs for qualified rehabilitation of certain historic buildings for income-producing use. The federal and state credits can be used in combination for the rehabilitation of commercial or income-producing properties.
Tax Credit Programs
Missouri and Kansas have a variety of tax credit programs to promote economic development including credits for: relocating or expanding into a distressed community or enhanced enterprise zone; creating jobs; investing in research and development; purchasing or leasing machinery, conducting film production related activities; or making contributions to education or small business development.
Job Creation Programs
Missouri allows certain small or expanding businesses to retain 100% of state withholding tax for the creation and retention of quality, full-time jobs. These credits target technology and high-impact employment. Kansas offers a 10-year job Expansion and Investment credit in the amount of $100 per $100,000 of investment and $100 per net new job created and Enterprise Zone credit in the amount up to $2,500 per net new job and $1,000 for each new business facility investment of $100,000; and a High Performance Incentive. Kansas also offers a new incentive, Promoting Employment Across Kansas (PEAK), for companies relocating to Kansas. Companies may retain 95% of payroll withholding tax up to 10 years depending on the number of jobs created.
Job Training Programs
Companies may be eligible for tax credits or grants to help fund the costs of training new or retained existing employees to facilitate business expansion. Job training programs can cover the costs of the trainers, training materials and in some situations, employee payroll costs during training.
Research Tax Credits
Kansas offers an income tax credit equal to 6.5% of a company’s investment in research and development above the average expenditures from the previous three years. Up to 25% of the credit can be used annually. The credit can be carried forward for five years. The Kansas Bioscience Authority may also provide matching funds for businesses expanding and creating bioscience jobs in Kansas.
Wind and Solar Bond Financing
Kansas may issue up to $5 million in bond financing for businesses located in Kansas that engineer or manufacture wind and solar energy components. To qualify, projects must create 200 full time jobs within 5 years with wages greater than $32,500 and generate capital investments greater than $30 million.
White Goss Client Experience
- Briarcliff Development Company
- Carlyle Van Lines, Inc.
- CBS Outdoor, Inc.
- Christie Development Associates LLC
- City of Belton, Missouri
- City of Chillicothe, Missouri
- City of Gladstone, Missouri
- City of Liberty, Missouri
- Columbia Mall TDD
- Commerce Bank, N.A.
- CUNA Mutual Insurance Society
- Development District Association, Inc.
- Ford Motor Company
- Freightquote.com, Inc.
- Harley Davidson Motor Company
- Heartland Apartment Association
- Highwoods Properties
- Home Builders Association
- Hunt Midwest Enterprises, Inc.
- Jackson County Sports Complex Authority
- James Stowers III
- Kansas City Life Insurance Company
- Lamar Company
- Liberty Mutual Insurance
- M D Management, Inc.
- Master Realty Properties, Inc.
- McBride & Son Homes Kansas City, LLC
- Murphy-Hoffman Company
- North American Savings Bank
- Pinnacle Bank
- Platte County Economic Development Council, Incorporated
- Price Brothers Management Company
- Thrivent Financial for Lutherans
- Tower Properties Company
- Union Bank and Trust Company
- Valley View State Bank
- Village of Four Seasons, Missouri
- Zona Rosa Development, LLC