253.559. Procedure for approval of tax credit — eligibility, how determined — rehabilitation of property, evidence of capacity to finance required — commencement of rehabilitation, when — issuance of credits. — 1. To obtain approval for tax credits allowed under sections 253.544 to 253.559 , a taxpayer shall submit an application for tax credits to the department. The department shall establish an application cycle that allows for year-round submission and year-round receipt and review of such applications. Each application for approval, including any applications received for supplemental allocations of tax credits as provided under subsection 11 of this section, shall be prioritized for review and approval in the order of the date on which the application was postmarked, with the oldest postmarked date receiving priority. Applications postmarked on the same day shall go through a lottery process to determine the order in which such applications shall be reviewed.
2. Each application shall be reviewed by the department for approval. In order to receive approval, an application, other than applications submitted under the provisions of subsection 11 of this section, 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 county assessor record as proof of ownership. 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 executed sales contract or an executed option to purchase the eligible property;
(2) Floor plans of the existing structure, architectural plans, and, where applicable, plans of the proposed alterations to the structure, as well as proposed additions;
(3) The estimated cost of rehabilitation, 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 estimated project completion date;
(4) Proof that the property is an eligible property and a certified historic structure or a structure in a certified historic district or part 1 of a federal application or a draft National Register of Historic Places nomination has been submitted to the state historic preservation office. In such instances, the application may proceed as a preliminary application concurrent with the associated federal process for nomination to the National Register of Historic Places;
(5) A copy of land use plans; and
(6) Any other information the department 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. Disapproved applications shall lose priority in the review process. 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 this section.
3. (1) In evaluating an application for tax credits submitted under this section, the department shall also consider:
(a) The amount of projected net fiscal benefit of the project to the state and local municipality as calculated based on reasonable methods;
(b) The overall size and quality of the proposed project, including, but not limited to:
a. The estimated number of new jobs or housing units, or both, to be created by the project;
b. The estimated number of construction jobs and professional jobs associated with the project that are included in total project costs;
c. Capital improvements created by a project and the potential of future community investments and improvements;
d. Increased revenues from sales or property taxes;
e. The potential multiplier effect of the project; and
f. Other similar factors; and
(c) Input from the local elected officials in the local municipality in which the proposed project is located as to the importance of the proposed project to the municipality.
(2) The provisions of this subsection shall not apply to historic schools or theaters or applications for projects to receive less than two hundred seventy-five thousand dollars in tax credits.
4. (1) The department shall promptly notify the state historic preservation office of each preliminary application for tax credits. After receipt of such notice, the state historic preservation office shall determine whether a rehabilitation satisfies the qualified rehabilitation standards within sixty days of a taxpayer filing an initial application for tax credits. The determination shall be based upon evidence that the rehabilitation will meet qualified rehabilitation standards, and that evidence shall consist of one of the following:
(a) Preliminary approval by the state historic preservation office; or
(b) An approved part 2 of the federal application, which the state historic preservation office shall forward directly to the department without any additional review by such office.
(2) If the state historic preservation office approves the application for tax credits within the sixty-day determination period established in subdivision (1) of this subsection, such office shall forward the application with any review comments to the National Park Service and shall forward any such review comments to the applicant. If such office fails to approve the application within the sixty-day determination period, such office shall forward the application without any comments to the National Park Service and shall have no further opportunity to submit any comments on such application.
(3) Conditions on a state preliminary application or on part 2 of a federal application shall not delay preliminary state approval but shall be addressed by the applicant for final approval of such application.
(4) Any application for state tax credits that does not include an application for federal tax credits or a nomination to the federal National Register of Historic Places shall be reviewed by the state historic preservation office within sixty days of a notice received under subdivision (1) of this subsection.
(5) (a) An application for state tax credits may provide information indicating that the project is a phased rehabilitation project as described under 26 U.S.C. Section 47, as amended. Such application for a phased rehabilitation project shall include at least the following:
a. A schedule of the phases of the project with a beginning and end date for each phase and the expected costs for the whole project. The applicant may submit detailed plans for the project at a later time within the application process;
b. The adjusted total basis of such project, which shall be submitted with the schedule of phases of the project; and
c. A statement that the applicant agrees to begin each phase of such project within twelve months of the start date for such phase listed in the schedule of the phases.
(b) The applicant may submit a preliminary certification of costs upon the completion of each phase of the project.
(c) Upon approval of the cost certification submitted and the work completed on each phase of such project, the department shall issue eighty percent of the amount of the state tax credit for which the taxpayer is approved under this section. The remaining twenty percent of the amount of the state tax credit for which the taxpayer is approved under this section shall be issued upon the final approval of the project under this section.
(6) If the department determines that the amount of tax credits issued to a taxpayer under subdivision (5) of this subsection is in excess of the total amount of tax credits such taxpayer is eligible to receive, the department shall notify such taxpayer, and such taxpayer shall repay the department an amount equal to such excess.
5. 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 the amount provided under section 253.550 less any amount of tax credits previously approved. 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 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. If the scope of a project for which an application has been approved under this section materially changes, the taxpayer shall be eligible to receive additional tax credits in the year in which the department is notified of and approves of such change in scope, subject to the provisions of subsection 2 of section 253.550 and subsection 7 of this section, if applicable; however, if such project was originally approved prior to August 28, 2018, the department shall evaluate the change in scope of the project under the criteria in effect prior to such date. A change in project scope shall be considered material under this subsection if:
(1) The project was not previously subject to a material change in scope for which additional tax credits were approved; and
(2) The requested amount of tax credits for the project after the change in scope is higher than the originally approved amount of tax credits.
6. 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 a principal of the taxpayer, 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 of 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.
7. In the event that the department grants approval for tax credits equal to the total amount available or authorized, as applicable, under subsection 2 of section 253.550 , or sufficient that when totaled with all other approvals, the amount available or authorized, as applicable, under subsection 2 of section 253.550 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 this section in the event that additional credits become available due to the rescission of approvals or when a new fiscal year's allocation of credits becomes available for approval or authorized, as applicable.
8. All taxpayers with applications receiving approval on or after July 1, 2019, 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 rehabilitation of the eligible property in the form of a line of credit or letter of commitment subject to the 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 under 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.
9. All taxpayers with applications receiving approval on or after the effective date of this act shall commence rehabilitation within twenty-four months of the date of issuance of the letter from the department granting the approval for tax credits. "Commencement of rehabilitation" 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. Taxpayers shall notify the department of any loss of site control or of any failure to exercise any option to obtain site control within the prescribed time period within ten days of such loss or failure. If the department determines that a taxpayer has lost or failed to obtain site control of the eligible property or otherwise failed to comply with the requirements provided under this section, the approval for the amount of tax credits for such taxpayer shall be rescinded. A taxpayer may voluntarily forfeit such approval at any time by written notice to the department. Any approval rescinded or forfeited under this subsection shall then be included in the total amount of tax credits available in the year of such rescission or forfeiture, provided under subsection 2 of section 253.550 , from which approvals may be granted. Any taxpayer whose approval is rescinded or forfeited under this subsection shall be notified of such from the department and, upon receipt of such notice, may submit a new application for the project. If a taxpayer's approval is rescinded or forfeited under this subsection and such taxpayer later submits a new application for the same project, any expenditures eligible for tax credits under section 253.550 that are incurred by such taxpayer from and after the date of the rescinded or forfeited approval shall remain eligible expenditures for the purposes of determining the amount of tax credits that may be approved under section 253.550 .
10. (1) (a) To claim the credit authorized under sections 253.544 to 253.559 , a taxpayer with approval shall apply for final approval and issuance of tax credits from the department, which shall determine the final amount of eligible rehabilitation costs and expenses and whether the completed rehabilitation meets the qualified rehabilitation standards.
(b) Evidence that the completed rehabilitation meets the qualified rehabilitation standards shall be shown by one of the following:
a. Final approval by the state historic preservation office; or
b. An approved part 3 of the federal application.
(c) The state historic preservation office shall review each final application within sixty days and then forward the application to the National Park Service and send copies of any review comments to the applicant. If the state historic preservation office fails to review the application within sixty days, the application shall be forwarded without comments to the National Park Service and the state historic preservation office shall have no further opportunity to submit comments on such application.
(d) An award of tax credits under sections 253.544 to 253.559 shall be contingent on and awarded upon the listing of such eligible property on the National Register of Historic Places.
(2) Within seventy-five days of the department's receipt of all materials required by the department for an application for final approval and issuance of tax credits, which shall include a state approval by the state historic preservation office or an approved part 3 of the federal application for projects receiving federal rehabilitation credits, the department shall issue to the taxpayer tax credit certificates in the amount of seventy-five percent of the lesser of:
(a) The total amount of the tax credits for which the taxpayer is eligible as provided in the taxpayer's certification of qualified expenses submitted with an application for final approval; or
(b) The total amount of tax credits approved for such project under subsection 3 of this section, including any amounts approved in connection with a material change in the scope of the project.
(3) Within one hundred twenty days of the department's receipt of all materials required by the department for an application of final approval and issuance of tax credits for a project, the department shall, unless such project is under appeal under subsection 13 of this section:
(a) Make a final determination of the total costs and expenses of rehabilitation and the amount of tax credits to be issued for such costs and expenses;
(b) Notify the taxpayer in writing of its final determination; and
(c) Issue to the taxpayer tax credit certificates in an amount equal to the remaining amount of tax credits such taxpayer is eligible to receive, as determined by the department, but was not issued in the initial tax credit issuance under subdivision (2) of this subsection.
(4) If the department determines that the amount of tax credits issued to a taxpayer in the initial tax credit issuance under subdivision (2) of this subsection is in excess of the total amount of tax credits such taxpayer is eligible to receive, the department shall notify such taxpayer, and such taxpayer shall repay the department an amount equal to such excess.
(5) For financial institutions credits authorized pursuant to sections 253.544 to 253.559 shall be deemed to be economic development credits for purposes of section 148.064 . The approval of all applications and the issuing of certificates of eligible 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 returns on which the credit is claimed.
11. Except as expressly provided in this subsection, tax credit certificates shall be issued in the final year that costs and expenses of rehabilitation of the project are incurred, or within the twelve-month period immediately following the conclusion of such rehabilitation. In the event the amount of eligible rehabilitation costs and expenses 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 under subsection 5 of this section, such taxpayer may apply to the department 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 this section.
12. The department shall determine, on an annual basis, the overall economic impact to the state from the rehabilitation of eligible property.
13. (1) With regard to an application submitted under sections 253.544 to 253.559 , an applicant or an applicant's duly authorized representative may appeal any official decision, including all preliminary or final approvals, denials of approvals, or dollar amounts of issued tax credits, made by the department of economic development or the state historic preservation office. Such an appeal shall constitute an administrative review of the decision and shall not be conducted as an adjudicative proceeding.
(2) The department shall establish an equitable appeals process.
(3) The appeals process shall incorporate an independent review panel consisting of members of the private sector and the department.
(4) The department shall name an independent appeals officer as chair.
(5) An appeal shall be submitted to the designated appeals officer or review panel in writing within thirty days of receipt by the applicant or the applicant's duly authorized representative of the decision that is the subject of the appeal and shall include all information the appellant wishes the appeals officer or review panel to consider in deciding the appeal.
(6) Within fourteen days of receipt of an appeal, the appeals officer or review panel shall notify the department of economic development or the state historic preservation office that an appeal is pending, identify the decision being appealed, and forward a copy of the information submitted by the appellant. The department of economic development or the state historic preservation office may submit a written response to the appeal within thirty days.
(7) The appellant shall be entitled to one meeting with the appeals officer or review panel to discuss the appeal, and the appeals officer or review panel may schedule additional meetings at the officer's or panel's discretion. The department of economic development or the state historic preservation office may appear at any such meeting.
(8) The appeals officer or review panel shall consider the record of the decision in question; any further written submissions by the appellant, department of economic development, or state historic preservation office; and other available information and shall deliver a written decision to all parties as promptly as circumstances permit but no later than ninety days after the initial receipt of an appeal by the appeals officer or review panel.
(9) The appeals officer and the members of the review panel shall serve without compensation.
14. The provisions of sections 253.544 to 253.559 are intended to and shall be retroactive from the effective date and shall apply to all applications for tax credits under sections 253.544 to 253.559 received by or approved by the department at any time on or after August 28, 2024.
(L. 1997 2d Ex. Sess. S.B. 1, A.L. 1998 S.B. 827, A.L. 2009 H.B. 191, A.L. 2018 S.B. 590 merged with S.B. 773, A.L. 2024 H.B. 2062, A.L. 2026 H.B. 3080)
CROSS REFERENCE:
Tax Credit Accountability Act of 2004, additional requirements, 135.800 to 135.830
