Missouri Governor Mike Kehoe has signed House Bill 3231 into law, officially enacting the landmark Missouri Innovation, Public Safety, and Accountability Act. Designed to counter high commercial vacancy rates and spark metropolitan redevelopment, the new law introduces aggressive financial mechanisms, including a 30% office-to-residential conversion tax credit and the framework for dedicated urban Innovation Districts. This legislation directly targets massive, long-stalled redevelopments in downtown St. Louis, such as the vacant AT&T Tower and the historic Railway Exchange Building, while legally diverting 50% of net-new state tax revenues generated within these zones to fund local public safety infrastructure.
ST. LOUIS, MO – July 15, 2026 (STL.News) – In a monumental legislative victory engineered to permanently reshape the economic landscape of eastern Missouri, Governor Mike Kehoe signed House Bill 3231 into law. The signing officially establishes the Missouri Innovation, Public Safety, and Accountability Act. This transformative state-level tool leverages targeted tax incentives, infrastructure capital advances, and strict municipal accountability measures to breathe life back into major urban real estate markets, lower commercial vacancy rates, and fortify public safety systems.
The bipartisan legislation represents the culmination of more than three years of intense advocacy by the St. Louis business, civic, and regional development community. Championed by a diverse legislative coalition—including primary sponsors Representatives Brad Christ and Chad Perkins, alongside critical floor leadership from Senators Kurtis Gregory and Steven Roberts—the newly enacted law builds a robust public-private framework designed to unlock hundreds of millions of dollars in stalled private-sector capital.
MISSOURI HOUSE BILL 3231
???????????????????????????????????????????????????????
? Missouri Innovation, Public Safety, & Account. ?
???????????????????????????????????????????????????????
?
???????????????????????????????????????????????
? ? ?
???????????????? ???????????????? ????????????????
? 30% Office ? ? 50% New St. ? ? Move-To-MO ?
? Residential ? ? Revenue to ? ? Income Tax ?
? Tax Credits ? ? Safety Fund ? ? Exclusion ?
???????????????? ???????????????? ????????????????
Launching “Innovation Districts” & Shifting Revenue to Public Safety
At the structural core of HB 3231 is a program that permits eligible municipalities to formally apply to the Missouri Department of Economic Development (DED) for the designation of a distinct, geographically bounded Innovation District. To qualify, local governments must present a comprehensive development master plan mapping out targeted infrastructure investments, real estate stabilization goals, and commercial recruitment strategies.
For the city of St. Louis, this designation is poised to act as the primary engine for modernizing the central business district. The law addresses the critical intersection of economic growth and urban quality of life through several distinct, high-impact pillars:
- The Innovation Zone Public Safety Fund: Recognizing that economic vitality depends heavily on public safety, the law mandates that 50% of all net-new state sales and income tax revenue generated within an approved Innovation District be stripped from the state’s General Revenue Fund. Instead, this money is funneled directly back into a dedicated local public safety fund. By law, these funds must be spent entirely within the district to support law enforcement personnel, advanced municipal surveillance networks, enhanced street lighting, pedestrian safety infrastructure, and blighted property stabilization.
- Office-to-Residential Conversion Tax Credits: To structurally realign downtown real estate markets that have been altered by remote work, the bill creates an aggressive adaptive-reuse incentive. Beginning with tax years on or after January 1, 2027, developers can qualify for state tax credits covering up to 30% of eligible conversion expenditures when transforming vacant, blighted, or underutilized nonresidential commercial towers into modern multi-family housing.
- Construction-Phase Financial Advances: A historic barrier to executing massive urban projects has been the crushing cost of upfront capital. HB 3231 directly alleviates this bottleneck. Sponsor teams leading qualified projects with total hard construction costs exceeding $5 million can legally secure an advance of up to 25% of the project’s projected construction-phase state income tax withholdings, injecting vital liquidity into early-stage construction phases.
- Talent and Payroll Recruitment Incentives: To populate the newly established zones, the legislation creates the “Move-to-Missouri” program. Starting in 2027, out-of-state individuals who relocate their primary residence into a designated Innovation District can claim a substantial state income tax exclusion. Concurrently, a new employer withholding retention incentive allows companies to keep a percentage of state payroll taxes if they establish operations or materially expand corporate payrolls within the district.
Breaking the Stalled Real Estate Cycle: The AT&T Tower and Railway Exchange
Regional civic and economic growth organizations, including Greater St. Louis, Inc., have voiced strong praise for the bill, emphasizing that it provides the exact missing financial tools needed to rescue the city’s most challenging vacant properties.
Foremost among these targets is the massive, 44-story AT&T Tower at 909 Chestnut Street. Vacant since 2017, the single-use corporate monolith contains 1.4 million square feet of empty space that has proved stubbornly resistant to traditional market-rate redevelopment due to the extraordinary costs of updating utility, HVAC, and plumbing systems for residential use. Similarly, the historic Railway Exchange Building, which spans an entire city block and once served as the flagship home of Famous-Barr, represents a critical preservation priority. The 30% conversion tax credit drastically alters the financial modeling for these properties, transforming them from multi-million-dollar liabilities into highly viable mixed-use anchors.
Furthermore, the new state legislation modernizes the statutory rules governing the Missouri Downtown Economic Stimulus Act (MODESA). By stripping away outdated local household median income caps and building-age restrictions that previously limited application zones, the law allows St. Louis officials to loop historic industrial riverfront zones and aging manufacturing corridors directly into contemporary economic stimulus planning.
A Unified Federal, State, and Municipal Influx
The passage of HB 3231 marks a complete convergence of state-level policy with localized municipal action. The timing is particularly powerful: the state incentives will land right as St. Louis City deploys massive local public infusions. St. Louis Mayor Cara Spencer recently finalized Board Bill 22, which formally locks in $55 million in Rams settlement funds exclusively for downtown infrastructure, streetscape overhauls, and public realm improvements.
By layering the DED-administered state conversion tax credits and public safety revenue diversions directly on top of the city’s $55 million cash injection, the region has effectively insulated development teams from macroeconomic headwinds. Economists project that this combined toolkit will act as a major market accelerator, leveraging more than $2 billion in total public and private real estate investment throughout the urban core over the next decade.
With the stroke of Governor Kehoe’s pen, Missouri has moved away from passive recovery strategies. The state has instead pivoted to an aggressive, well-funded blueprint designed to convert vacant real estate into a dense, walkable, safe, and modern 24/7 neighborhood—safeguarding the economic engine of the entire St. Louis metropolitan region for a generation to come.
