In August of 2018 new legislation took effect in Missouri allowing special taxing districts greater control to recoup greater amounts from tax abated projects within district boundaries. The changes enacted by SB 870 apply to RSMO chapters 99, 100 and 353 projects, subject to certain conditions. Despite the legislation being several years old I continue to speak with Districts that are not aware of the legislation, or don’t know how to protect themselves.
In order to take advantage of the greater degree of control allowed for these projects fire districts must annually review and set a “reimbursement rate” (expressed as a percentage of the expected revenue from the project should it not be tax abated) for the upcoming year. Timing is important–This must be done prior to the determination of assessed valuation each year. It is also important to note there is no retroactivity provision (no mulligans!) so an approved reimbursement rate cannot be applied to previously approved projects within a District. The get-out-of-jail-free card for previously approved projects is amendments—any Chapter 99, 100, or 353 project amended after the passage of a reimbursement rate resolution would then be subject to the adopted reimbursement rate. Once the reimbursement rate is set all jurisdictions with the power to approve a tax abated project within the District must be notified.
I generally suggest Districts set their reimbursement rate for tax abated projects by resolution no later than May of each calendar year. This reimbursement rate adoption will then take effect upon adoption for a twelve (12) month period. Typical of statutory language, the statute does not specify either time frame—when to adopt, or start date of effectiveness—beyond clearly stating the rate must be adopted annually prior to the determination of the District’s assessed valuation.
Once adopted the rate is set, and cannot be modified, waived, or negotiated for individual projects. This is why it is important to consider the reimbursement rate each year. Should the District wish to support a specific tax abated project it would be important to modify the reimbursement rate and the appropriate timing to accommodate any project identified by the District as worthy of a lowered reimbursement rate.
Finally, all three sections of statute explicitly state a special district must review and consider their reimbursement rate annually. Based on the plain language of the statutes it is my belief a self-renewing resolution or reimbursement rate determination is a bad idea, would prove problematic if challenged. I would assume at some point it will be litigated, but I prefer none of my Districts to be the test case. With that in mind I counsel everyone of the importance of this issue being calendared properly for annual renewal so as not to put the reimbursement at risk. A mistake could literally put millions of dollars of funding at risk.
As always, stay safe, and send your questions my way!