Missouri Revives MODESA, Adds Innovation Zones

On July 13, 2026, Missouri Governor Mike Kehoe signed House Bill 3231, the "Missouri Innovation, Public Safety, and Accountability Act." The final version, SS#2 SCS HCS HBs 3231 & 2531, sponsored by Rep. Brad Christ (R-St. Louis County) and carried in the Senate by Sen. Kurtis Gregory (R-Marshall), cleared the Senate 25-7 on May 13, 2026 and the House 119-24 on May 14, in the session's closing days.

The law creates Missouri Innovation Zones, revives MODESA after a 13-year dormancy, and adds six incentive tools. It takes effect August 28, 2026, and its new credit programs open with tax years beginning January 1, 2027.

KCUR has named the Royals' $1.9 billion Crown Center ballpark, announced April 22, 2026, as a likely MODESA candidate. The announcement came six days after Kansas City's council passed a $600 million bond-backed financing plan. A June initiative petition seeks a public vote on stadium subsidies of that kind. The Innovation Zone framework and its six tools reach far more companies than one ballpark. This alert covers both.

How Innovation Zones Work

A certified zone is the entry point for most of the bill's new tools. Participation is voluntary and each city is limited to one zone. Once DED certifies a zone, the six tools in Exhibit 1 become available inside its boundary or apply there on better terms, and the zone automatically qualifies as a redevelopment area for local tax increment financing under Chapter 99 and Chapter 353 property tax abatement. DED may charge application, participation, or administrative fees of up to 2.5% of tax credits issued, and the zone program sunsets 10 years after the effective date.

The capital investment credit is where the zone premium is largest. Under § 620.2012, a qualified company earns a credit of up to 2.5% of new capital investment at a project facility if it invests at least $30 million within two years inside a certified zone, or at least $50 million outside one. Investment made before the notice of intent does not count, and data storage centers are not eligible.

The retention benefit is unusual because it pays for jobs a company already has. Under § 620.6018, a company with at least three covered employees can be authorized for a withholding benefit of up to 3% of aggregate gross wages paid to new and retained jobs, for three to 10 years. Payroll moved from elsewhere in Missouri does not qualify, and DED faces the same 45-day clock with deemed approval.

A worked example. "Gateway Components" weighs a $30 million plant expansion with 50 jobs relocated from out of state at a $100,000 average salary. In-zone, the capital investment credit is worth up to $750,000 ($30 million times 2.5%). Outside a zone the same project earns $0, because the minimum there is $50 million. The retention benefit adds up to $150,000 per year (3% of $5.0 million payroll) for 3 to 10 years: $450,000 to $1.5 million. A $125,000 angel investment in a zone startup draws up to $75,000 (60%) versus $50,000 (40%) elsewhere, and $75,000 is the most one investor can claim for a single business.

MODESA Returns with Broader Capture Rules

The reauthorized MODESA (§§ 99.918 to 99.980) differs from the 2003 statute in several ways. "Central business district" drops the old median-income and building-age screens and now expressly reaches a municipality's riverfront, including riverfront land with an industrial history. Development areas may span up to three noncontiguous parcels capped at 10% of the municipality's area, and any area approved after August 28, 2026 must sit at least a half-mile from an existing district. DED may approve up to four new applications from each municipality, with no new development area approved after December 31, 2032 and no new expanded development project after January 1, 2037. The State Supplemental Downtown Development Fund still receives the first $150 million of "other net new revenues" each year, now including expanded development projects, and the completion window for a project stretches from 25 to 30 years. Exhibit 2 sets out the capture rules.

The Crown Center ballpark is the likely first MODESA project. Royals owner John Sherman announced on April 22, 2026 that "the Kansas City Royals are staying in the state of Missouri," with a $1.9 billion ballpark on the Hallmark headquarters site at Crown Center anchoring a promised $3 billion, 85-acre redevelopment. The city's $600 million plan, approved by the City Council on April 16, would repay bonds from new sales and earnings tax revenue in a stadium district, and Mayor Quinton Lucas has said the project will be built with no new taxes and no large special taxing districts. MODESA gives that district a state revenue leg. Separately, under § 99.919, revenue from a business relocating into a MODESA area from outside Missouri counts in full, without netting out baseline-year revenues.

The state's other stadium tool sits alongside MODESA. The 2025 Show-Me Sports Investment Act lets the state redirect to the team, for up to 30 years, a baseline of the tax revenue its current stadium generates, a subsidy KCUR estimates at $450 million to $510 million in total. That statute pays for the building, and MODESA captures the new increment around it. How DED reconciles the two revenue bases for a single Crown Center district is the open drafting question, and the certificate of approval will answer it.

The financing plan is not free of political risk. In early June, the Missouri Workers Center submitted about 4,500 signatures, against 2,068 required, for an initiative ordinance that would require a public vote on any city "material support" for a stadium, arena or similar venue of more than 2,500 seats. If certified, the Council has 60 days to adopt the ordinance or send it to voters, pointing to a November 2026 or April 2027 election. Mayor Lucas has said the deal will likely be closed before any vote occurs.

What We Found in the Bill Text

Two provisions that have drawn little coverage do the real de-risking. First, § 99.918(32) lets DED lock the state income tax increment to the marginal rate under § 143.011 in effect when a project's certificate of approval is issued, "even in the event the state personal income tax rate is subsequently reduced, or the tax is eliminated." In a state whose majority party wants to eliminate the income tax, the rate lock protects the 30-year increment revenue that backs bonds. Second, under § 99.930, the window to sue to set aside a development plan, project, area, or MODESA tax falls from 90 days to 30 days after the enabling ordinance or resolution. KCUR's 2,000-word explainer on the revival mentions neither.

The zone program also carries its own guardrails. Each zone's public safety and infrastructure fund receives 50% of the net-new state revenue that would otherwise flow to general revenue, and at least 40% of it must go to public safety and at least 40% to public infrastructure (§ 620.6012). Contributing cities, those with a certified zone and taxable assessed valuation in the top 5% of all Missouri cities, must send 10% of the net-new state sales tax they retain to the Rural Missouri Development Fund (§ 620.6009). For Kansas City and St. Louis, that is a condition of certification.

The rate lock and the 30-day litigation window make stadium-district increment easier to finance. Both are in place before Missouri's income-tax phase-down debate resumes. We expect Kansas City to file the first MODESA-era application for the Crown Center district within 12 months of the August 28 effective date, with St. Louis close behind on Innovation Zone certification. Exhibit 3 lists the key dates.

What to Do Now

This is for companies weighing a Missouri expansion or relocation, cities considering an Innovation Zone master plan, and developers and municipalities eyeing a MODESA district. The act takes effect August 28, 2026, the new credits open with tax years beginning January 1, 2027, and DED has a 45-day clock with deemed approval on zone filings. If you want a read on fit before August 28, reach out to our team.

References

1. Office of Governor Mike Kehoe, Governor Kehoe Signs Missouri Innovation, Public Safety and Accountability Act into Law, July 13, 2026.
2. Missouri 103rd General Assembly, SS#2 SCS HCS HBs 3231 & 2531, Truly Agreed and Finally Passed (enrolled text), 2026.
3. Missouri House Research, HB 3231 Truly Agreed bill summary, 2026.
4. Missouri House of Representatives, HB 3231 bill page; action history via LegiScan.
5. Missouri Revisor of Statutes, RSMo § 99.963, State Supplemental Downtown Development Fund, as amended by HBs 3231 & 2531 (effective Aug. 28, 2026).
6. KCUR, Missouri revived a massive tax incentive that could aid Royals and Current stadium projects, June 18, 2026.
7. KCUR, Kansas City Royals announce Crown Center as new ballpark location, in deal with Hallmark, April 22, 2026.
8. KCUR, What the Royals stadium petition means for Kansas City's plan to subsidize a new ballpark, June 14, 2026.

© Copyright 2026 TC Policy Group, LLC (d/b/a Crawford Partners). The views expressed herein are those of the author(s) and not necessarily the views of Crawford Partners, its management, its subsidiaries, its affiliates, or its other professionals. Crawford Partners is not a law firm and cannot provide legal advice.