ENTERPRISE ZONES ATTRACT BUSINESSES

For decades, Missouri offered few incentives to lure business ventures and their accompanying jobs into the state.

That changed 10 years ago when state legislators made a huge impact on economic development in Missouri. They created enterprise zones, areas of cities and counties where new businesses could receive tax credits from the state and tax abatements from local government.

Cape Girardeau County got its first enterprise zone -- the 31st in the state -- on Dec. 4, 1986. The zone was expanded in 1987 and again in 1988.

Today, the zone takes in downtown Cape Girardeau, Nash Road, Cape Girardeau Regional Airport, Cape West Business Park and the Town Plaza area.

City and state officials call Cape Girardeau's enterprise zone a success. The Missouri Department of Economic Development says the 24-square-mile area is responsible for 117 new businesses and 2,111 new jobs.

John Kleindienst, manager of tax-benefit programs for the state economic development department, said the special zones were formed as a tool to fight blighted areas in Missouri.

The criteria is strict and somewhat complicated. An enterprise zone must have at least 1,000 but not more than 20,000 people living in it. The unemployment rate must be 1.5 times that of the state average, and 65 percent of the residents must have incomes below 80 percent of the state average.

If the unemployment rate is too low, areas with a certain number of people working part-time instead of full-time may qualify. All the enterprise zones in the state were based on figures from the 1980 census.

The 1990 census figures show Cape Girardeau's enterprise zone still qualifies under state criteria. Kleindienst said the law allows an area to be "decertified" if the program successfully alleviates unemployment and poverty, but that hasn't happened yet anywhere in Missouri.

The state grants various tax credits to businesses that settle in the zone, with owners who hire the unemployed or welfare recipients receiving the biggest credits. The state has invested a total of $12 million in Cape Girardeau's zone alone, and there are 60 others in the state.

In return, the state asks local governments to make certain sacrifices. They must provide law enforcement to the zone, remove cumbersome ordinances and, most importantly, abate taxes on improvements by at least 50 percent for at least 10 years.

Any business that moves into an enterprise zone and builds or remodels automatically gets the tax abatement. The county assessor simply notes the improvements from year to year. In Cape Girardeau, every qualifying business gets a 50 percent tax abatement on improvements for 10 years. The city may choose to grant an extension on the benefits for a total of 25 years.

However, businesses must alert the state to their presence in the zone and fill out forms to get tax credits, Kleindienst said.

There have been changes in the enterprise zone law since 1986. In the beginning, any business qualified for the special credits. In 1992, the city ruled out everything but manufacturing, wholesale and warehousing businesses. Some retail businesses kept their status, but the first of them will start going off the tax abatement rolls in 1997.

Cape Girardeau officials recently turned their attention to the enterprise zone law to accommodate a customer-service business interested in the city. The city council is considering rewriting the enterprise-zone ordinance to include such a business, offering it 100 percent tax abatement on improvements for 10 years instead of 50 percent.

The council also may expand the enterprise zone to take in the business, should it choose to locate outside of current boundaries. Local government has the right to apply for such an expansion, as long as the zone is contiguous and still meets state criteria.

Joe Driskill, Department of Economic Development director in Jefferson City, has final say over whether a zone or expansion is approved or not.

If the council makes this expansion, it only has two more opportunities to do so. After that, the enterprise zone parameters are permanent.

Officials who were around when the zone was established agree that it has been beneficial for Cape Girardeau. Former city manager J. Ronald Fischer was a county commissioner in 1986 and voted on allowing the zone.

"It was a very good economic development tool," he said. "What you have here is a real incentive for business."

Today, there are 117 Cape Girardeau and Cape Girardeau County businesses inside the enterprise zone.