Mar. 23, 2019

Mallory Herrmann

While city councilmembers, commissioners and staff often give a brief explanation of economic development incentives when they come up during public meetings, all those acronyms can become confusing in a hurry.

This continues a series from the Tribune to help members of the public better understand what these tools are and how they’re used by communities like ours.

Unlike programs like CID and TDD, where revenues from an additional sales tax are used to reimburse a developer, Chapter 100 is a tax exemption.

The use of Chapter 100 industrial development bonds allows for a tax abatement to help decrease costs for developers as they proceed with a project. Often, developers will continue to pay property taxes on the value of the undeveloped property for the duration of the Chapter 100 program. The increase in taxes (or a portion of that increase) that the developer would have paid, based on the increased valuation of the property resulting from the development, will be abated for a certain amount of time.

Chapter 100 can also be used as a sales tax exemption on the purchase of materials, machinery or equipment used in the construction of the development or rehabilitation.

According to Missouri state statute, Chapter 100 may only be used for “industrial development” projects, but the definition is broad. It includes warehouses, distribution facilities, research and development facilities, office industries, agricultural processing industries, service facilities which provide interstate commerce, and industrial plants.

Per Lee’s Summit’s economic development incentive policy, Chapter 100 can be used for projects that will invest at least $5 million in new development or $3 million in existing redevelopment. The incentive can abate up to 50 percent of real property taxes for up to 10 years. To qualify for incentives exceeding these terms, the applicant must demonstrate “extraordinary qualifications.”

The city council votes on all Chapter 100 applications.