REDI begins process of creating enhanced enterprise zone in Columbia

Saturday, November 12, 2011 | 4:23 p.m. CST; updated 9:34 p.m. CST, Saturday, November 12, 2011

COLUMBIA — Columbia may soon approve of a special zone that would bring in more business and money through tax abatements.

Regional Economic Development Inc. has started the process of creating an enhanced enterprise zone in the city. Within these zones new or expanding businesses receive a 50 percent real estate tax abatement, in the expectation of attracting enterprise. 

Bernie Andrews, executive vice president of REDI, said that such a zone would increase Columbia's ability to draw in new industries over other cities.

"Most cities we're competing against already have this in place," he said, making them more fiscally attractive to start-up enterprises.

There are currently 101 enhanced enterprise zones in Missouri. The program was established in 2004 and includes several criterion on the zone and the types of businesses that can receive benefits:

  • Applicants that deal in gambling, retail, educational services, religion, public administration and food service are ineligible to participate.
  • The zone must be placed in locations with "pervasive poverty, high unemployment and general distress," according to the application. 
  • New and expanded businesses must hire two new employees and invest $100,000 in order to receive the benefits.

REDI has recommended that specific areas of enterprise be eligible for the benefits of the zone. The list of eligible businesses includes enterprises, such as agriculture, utilities, scientific and technical services; management, and manufacturing, among others.

REDI chose these business types because it has continually focused on attracting them to the city, Andrews said. For example, scientific and biotechnology enterprises would coincide with MU's research facilities and manufacturing would create many high-paying positions. 

"It should help us be more competitive for high tech, high-paying jobs," he said. 

The zone should also help make Columbia more competitive to businesses that sell outside of the city and therefore bring new revenue into the economy, Andrews said. 

Bob Black, chairman of the enhanced enterprise zone subcommittee, said that he thinks the zone will encourage entrepreneurs and small-business owners to open or expand their operations. 

The planned area of the zone covers much of the city, including the downtown and most industry-centric regions, such as Discovery Ridge and the Business Loop. The city and county plan to finalize the total acreage when they host work sessions early next year.

The shape of the zone is unusual because REDI wanted to include several regions of industry in different parts of the city, Black said. The state regulations require the area of the zone to connect.

IBM, MU Life Science Incubator, Carfax, Linen King and 3M will be covered by the proposed zone. By covering these businesses, REDI hopes to encourage them to expand, according to a REDI report.

The tax abatement is funded by the county, which gives a tax credit to the city, allowing it to provide the 50 percent real estate tax reduction. Under REDI's recommendation, this abatement would last for 10 years. 

The city currently has a similar policy called Chapter 100. This policy, in effect since 2005, covers the entire city and requires businesses to apply for approval by both the tax districts and the Boone County Commission before receiving the tax reductions. 

Under this policy, the county owns the assets of the company and leases them back to the company. Because it is a complicated and expensive application process, Andrews said, only one company, Analytical Bio-Chemistry Labs, has taken advantage of it in the six years since its approval. 

Because of Chapter 100's deterrents, companies have greater incentives to expand elsewhere in the state, Andrews said.

"Our (policy) is too costly and complex. (The zone) should help us be more competitive," he said. 

Greg Williams, the Discovery Ridge director of research parks for the UM System, worked to create an enhanced enterprise zone in Springfield.

The zone there created new jobs and investment in the community, he said. Kraft Foods expanded there in 2010, adding 50 jobs and investing $9 million. 

While he doesn't think the zone alone will solve an economic problem, he said that it can support a strong community with other attractive qualities that need one last incentive to attract enterprise. 

"It's an additional tool in the toolbox," he said.

Discovery Ridge will certainly use it as a marketing implement to enterprises they hope to draw to the area, he said. 

REDI expects the city and county to hold work sessions on the potential zone in January. They will both then have to pass resolutions to establish a seven-member enhanced enterprise zone board and hold a public hearing on the application, which will be turned into the state Department of Economic Development for final approval. 

The entire process takes between six and 12 months, according to a REDI report. 

Black expects a positive response from the city and county, given the potential benefits to not only businesses but the city as well.  

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