Incentives offered in bill to redevelop downtowns

JEFFERSON CITY, Mo. -- Local governments and private developers would both benefit under a House-endorsed bill providing state incentives for improvements to older downtown areas.

Under the Downtown Economic Stimulus Act, the state would distribute up to $150 million a year for development projects in downtown sections with a majority of buildings at least 35 years old. Cities would have to create economic stimulus authorities to be apply for the money.

The bill received initial House approval on a voice vote Wednesday and needs final passage before moving to the Senate.

Republicans and Democrats alike, including Democratic Gov. Bob Holden, are supporting the bill, saying it would promote economic growth and create jobs.

Projects could qualify for the funding by hitting various benchmarks in job creation and by surpassing cost thresholds.

For cities with more than 300,000 residents, projects must cost at least $10 million and create at least 100 jobs. For cities with 50,000 or fewer people, projects would need to cost at least $500,000 and create at least five jobs.

The Missouri Development Finance Board would be responsible for awarding funds because it is "bipartisan and ensures that projects are going to happen not because of politics or any reason," Dempsey said.

The bill is estimated to cost the state nothing in the next fiscal year and anywhere from zero to $150 million in future years.

But the long-term cost would be negligible, Dempsey said, because the funded projects would create revenue-producing neighborhoods.

Under the bill, each city could choose whether to allow its local authority to issue bonds to finance development projects. But the state would not take on the bonds as its debt.

Dempsey said incentives are necessary because businesses sometimes shy away from downtown areas in deciding where to locate.

"There's a higher cost associated with projects that are in downtown areas," he said. "It's a lot cheaper to go to a green field. So we understand the difficulty in going to downtown areas.