Incentive Finacing
To assist in sustaining and strengthening the city’s employment and economic base, Nixa City Council supports full use of incentive financing, where permitted through Missouri Statutes.
Learn the definitions of the financing tools available!
Definitions
- Local Tax Increment Financing (TIF)
- A financial tool authorized under Section 99.800 to 99.865 of the Revised Statutes of Missouri that is used to stimulate economic development by offsetting development costs for public improvements through the appropriation of the incremental increase in property tax and 50% of the additional sales tax generated from the new development. A strict set of guidelines established in the State statutes control and limit the TIF application. The city is required to find that there exist conditions that cause the area to be classified as a blighted area, a conservation area, an economic development area, an enterprise zone, or a combination of these findings, where the area only includes those parcels of real property directly and substantially benefitted by the proposed development. The property must also pass the “but for” test, which simply means “but for” the TIF the development would not have occurred.
- A financial tool authorized under Section 99.800 to 99.865 of the Revised Statutes of Missouri that is used to stimulate economic development by offsetting development costs for public improvements through the appropriation of the incremental increase in property tax and 50% of the additional sales tax generated from the new development. A strict set of guidelines established in the State statutes control and limit the TIF application. The city is required to find that there exist conditions that cause the area to be classified as a blighted area, a conservation area, an economic development area, an enterprise zone, or a combination of these findings, where the area only includes those parcels of real property directly and substantially benefitted by the proposed development. The property must also pass the “but for” test, which simply means “but for” the TIF the development would not have occurred.
- Community Improvement District (CID)
- A financial tool authorized under Section 67.1401-67.1571 of the Revised Statutes of Missouri. Either a political subdivision with the power to impose a special assessment, a real property tax, and a sales tax, or a non-profit corporation, with the power to impose special assessments to pay for public improvements. Unlike a neighborhood improvement district (NID) a CID is a separate legal entity that is distinct and apart from the municipality or county that creates the district. A CID is created by petition within the geographical area it is intended to pay for improvements or services to be provided. The entity may use the CID to afford improvements such as but not limited to: pedestrian or shopping malls and plazas, parks, lawns, trees, and any other landscaping, sidewalks, streets, alleys, bridges, ramps, tunnels, overpasses, and underpasses, traffic signs and signals, utilities, drainage, water and sewer systems, and other site improvements.
Following its establishment, the CID district may impose a real property tax, sales tax, or both to pay for the improvement or service to be provided. There is no limit on the amount of real property tax. The sales tax may be imposed at a rate of 1/8, 1/4, 3/8, 1/2, or 1 percent.
- A financial tool authorized under Section 67.1401-67.1571 of the Revised Statutes of Missouri. Either a political subdivision with the power to impose a special assessment, a real property tax, and a sales tax, or a non-profit corporation, with the power to impose special assessments to pay for public improvements. Unlike a neighborhood improvement district (NID) a CID is a separate legal entity that is distinct and apart from the municipality or county that creates the district. A CID is created by petition within the geographical area it is intended to pay for improvements or services to be provided. The entity may use the CID to afford improvements such as but not limited to: pedestrian or shopping malls and plazas, parks, lawns, trees, and any other landscaping, sidewalks, streets, alleys, bridges, ramps, tunnels, overpasses, and underpasses, traffic signs and signals, utilities, drainage, water and sewer systems, and other site improvements.
- Transportation Development District (TDD)
- A financial tool authorized under Section 238.200-238.275 of the Missouri Statutes. The district may be created to fund, promote, plan, design, construct, improve, maintain and operate one or more projects or assist in such activity (RSMo 238.207) Projects included in a TDD must be related to transportation, such as streets, highways, interchanges, traffic signage, bridge, etc. The petition calling for the TDD creation must be filed by one of the following: 50% of the registered voters in the district’s boundaries, the governing body of any transportation authority, or owners of record. Funding of the TDD projects may be accomplished through a district-wide special assessment of property or sales taxes with a required majority of the voter or petition approval.
If approved by at least 4/7 of the qualified voters, the district may collect a property tax in an amount not to exceed $0.10/$100 assessed valuation. The district sales tax may be collected at a rate of 1/8, 1/4, 3/8, 1/2, or 1 percent of the receipts from the sales within the district boundaries.
- A financial tool authorized under Section 238.200-238.275 of the Missouri Statutes. The district may be created to fund, promote, plan, design, construct, improve, maintain and operate one or more projects or assist in such activity (RSMo 238.207) Projects included in a TDD must be related to transportation, such as streets, highways, interchanges, traffic signage, bridge, etc. The petition calling for the TDD creation must be filed by one of the following: 50% of the registered voters in the district’s boundaries, the governing body of any transportation authority, or owners of record. Funding of the TDD projects may be accomplished through a district-wide special assessment of property or sales taxes with a required majority of the voter or petition approval.
- Land Clearance for Redevelopment Authority (LCRA)
- Although it is not necessarily a financial tool, it is a means of assisting in addressing blight or unsanitary conditions within the community. The tool is authorized under Section 99.300-99.715 of the Missouri Statutes. It is intended for use to curb blight and encourage the redevelopment of real property. The provisions of the LCRA law must be approved by a majority vote in any community with a population of less than 75,000. The authority must be approved, either by resolution or ordinance, by the governing body of the community. The Authority must be based on two findings: that one or more “blighted” or “unsanitary” areas exist within the community and that redevelopment of such area is necessary for the interest of public health, safety, morals, or welfare of the residents of the community. At this time, the City of Nixa does not have an LCRA in place.
Following an election, the authority would have the power to acquire property deemed necessary or incidental to an urban renewal or redevelopment project and dispose of both real and personal property by purchase, lease, eminent domain, grant, bequest, devise, or gift. The authority may also make improvements, including roads, streets, and public utilities.
- Although it is not necessarily a financial tool, it is a means of assisting in addressing blight or unsanitary conditions within the community. The tool is authorized under Section 99.300-99.715 of the Missouri Statutes. It is intended for use to curb blight and encourage the redevelopment of real property. The provisions of the LCRA law must be approved by a majority vote in any community with a population of less than 75,000. The authority must be approved, either by resolution or ordinance, by the governing body of the community. The Authority must be based on two findings: that one or more “blighted” or “unsanitary” areas exist within the community and that redevelopment of such area is necessary for the interest of public health, safety, morals, or welfare of the residents of the community. At this time, the City of Nixa does not have an LCRA in place.
- Neighborhood Improvement District (NID)
- A financial tool authorized under Section 67.453-67.475 of the Missouri Statutes. Its primary use is in making public improvements which in turn would stimulate private development. The NID affords the opportunity of purchasing property, opening, extending, or improving streets, curbs, crosswalks, waterworks, lift stations, landscaping, recreational facilities, etc. The District is established through either a vote or proper petition, of no less than 2/3 of all property located within the proposed district, to the governing body. NIDs are limited to the collection of real property tax assessments for the purpose of retiring the NID development proposal. The governing body may issue temporary notes to pay the improvement costs in an amount not to exceed the estimated cost of the improvement. These notes are general obligations of the city.
- A financial tool authorized under Section 67.453-67.475 of the Missouri Statutes. Its primary use is in making public improvements which in turn would stimulate private development. The NID affords the opportunity of purchasing property, opening, extending, or improving streets, curbs, crosswalks, waterworks, lift stations, landscaping, recreational facilities, etc. The District is established through either a vote or proper petition, of no less than 2/3 of all property located within the proposed district, to the governing body. NIDs are limited to the collection of real property tax assessments for the purpose of retiring the NID development proposal. The governing body may issue temporary notes to pay the improvement costs in an amount not to exceed the estimated cost of the improvement. These notes are general obligations of the city.
- Chapter 353 Tax Abatement
- An incentive that can be used by cities to encourage the redevelopment of blighted areas within the community. By definition, blight is interpreted differently than it is for LCRA or TIFs. Authority to use Chapter 353 Tax abatement is given in Chapter 353 of the Missouri Revised Statutes. The incremental property tax refers to the amount of increase in taxes due to the higher property valuations occurring after the completion of the redevelopment project. Qualification for tax abatement requires the establishment of an urban redevelopment authority; a public hearing must be held before the governing body; and, the development area must be in accordance with Section 353.020(2) RSMo.
Chapter 353 provides the opportunity of abating 100% of the incremental taxes during the first 10 years, and 50% during the next 15 years.
- An incentive that can be used by cities to encourage the redevelopment of blighted areas within the community. By definition, blight is interpreted differently than it is for LCRA or TIFs. Authority to use Chapter 353 Tax abatement is given in Chapter 353 of the Missouri Revised Statutes. The incremental property tax refers to the amount of increase in taxes due to the higher property valuations occurring after the completion of the redevelopment project. Qualification for tax abatement requires the establishment of an urban redevelopment authority; a public hearing must be held before the governing body; and, the development area must be in accordance with Section 353.020(2) RSMo.
- Neighborhood Assistance Program (NAP)
- An incentive program authorized under Section 32.10-32.125 of the Missouri Statutes. NAP provides assistance to community-based organizations that enable them to implement community or neighborhood projects in the areas of community service, education, crime prevention, job training, and physical revitalization. Eligible applicants consist of non-profit corporations (501c3) and Missouri businesses. The Department of Economic Development will issue 50% to 70% tax credits to an eligible taxpayer that makes a qualified contribution to an approved NAP project. NAP application is made directly to the Missouri Department of Economic Development.
- An incentive program authorized under Section 32.10-32.125 of the Missouri Statutes. NAP provides assistance to community-based organizations that enable them to implement community or neighborhood projects in the areas of community service, education, crime prevention, job training, and physical revitalization. Eligible applicants consist of non-profit corporations (501c3) and Missouri businesses. The Department of Economic Development will issue 50% to 70% tax credits to an eligible taxpayer that makes a qualified contribution to an approved NAP project. NAP application is made directly to the Missouri Department of Economic Development.
- Chapter 100 Industrial Development
- Issued pursuant to Chapter 100 RSMo and may be used to provide real and personal property tax exemption and to provide sales tax exemption on purchases. Industrial development bonds may be issued to finance the land, buildings, fixtures, and machinery for warehouses, distribution facilities, research and development facilities, office industries, service industries engaged in interstate commerce, and industrial plants. Retail and service industries in intrastate commerce are not eligible.
Chapter 100, RSMo allows local government to issue bonds to finance industrial development projects for private corporations, partnerships, and individuals. Upon issuance of the bonds, the company transfers ownership of the development site and/or equipment to the local government. The bond proceeds are then used to fund the construction of the development project. The company buys the bonds and repays them over a set period. Once the bonds are completely repaid, the local government conveys the title of the site and/or equipment back to the company.
The property is owned by the city during the bond term and thus is exempt from taxes. A payment in lieu of taxes (PILOT) agreement may be required to modify the level of abatement. As with real property, the city owns the equipment during the bond term; therefore, the equipment is not assessed as a personal property tax. Equipment purchases may also be structured such that the city’s sales tax exemption is used. Chapter 100 bonds may be tax-exempt, which makes it possible to issue the bonds at a lesser interest rate compared to conventional financing.
- Issued pursuant to Chapter 100 RSMo and may be used to provide real and personal property tax exemption and to provide sales tax exemption on purchases. Industrial development bonds may be issued to finance the land, buildings, fixtures, and machinery for warehouses, distribution facilities, research and development facilities, office industries, service industries engaged in interstate commerce, and industrial plants. Retail and service industries in intrastate commerce are not eligible.
View the City of Nixa Economic Development Incentives Policy
Developers are required to schedule a pre-application meeting with city staff in order to identify all aspects of the development proposal and to gauge where these financial incentives are beneficial.