HB 3297 requires Missouri political subdivisions to permit multifamily rental and mixed-use residential projects in areas zoned commercial, industrial, or mixed use when the development dedicates at least 40% of rental units as affordable for at least 30 years (per Missouri statutory affordability definitions). The bill also sets minimum density and height floors, narrows local entitlement control by allowing administrative approval where the project otherwise meets multifamily development regulations, and tells localities to consider reduced parking near transit.
Separately, the bill creates an ad valorem property tax exemption for qualifying portions of newly constructed multifamily projects that dedicate more than 70 units to households meeting HUD-based income and rent limits: units at ≤80% AMI are fully exempt, and units >80%–≤120% AMI receive a 75% assessed-value exemption. The measure shifts the development calculus—entitlement certainty plus tax incentives—but raises questions about fiscal impact, enforcement of income and rent restrictions, and the loss of local discretionary land-use control.
At a Glance
What It Does
Requires local governments to allow multifamily rental and mixed-use residential uses in commercial/industrial/mixed zones when a project makes at least 40% of rental units affordable for 30 years; prevents local governments from imposing lower density or height limits than specified floors and limits local need for rezoning or special approvals. It also creates an ad valorem exemption for parts of newly constructed multifamily projects with more than 70 qualifying affordable units, using HUD MTSP income/rent limits and two exemption tiers.
Who It Affects
Developers of multifamily and mixed-use projects (especially those planning 70+ unit new construction), city and county planners and zoning boards whose discretionary control is curtailed, assessors and the Department of Revenue who must process exemption applications, and low- and moderate-income renters eligible under HUD income limits (≤80% and up to 120% AMI).
Why It Matters
The bill pairs statewide entitlements with targeted tax incentives to steer large-scale affordable development and reduce entitlement risk for developers, which may accelerate some projects and concentrate them near transit corridors. It also creates a new verification and enforcement burden for state and local tax authorities and could reduce property tax revenue for local taxing jurisdictions.
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What This Bill Actually Does
The bill creates two new sections in chapter 67 of the Missouri Revised Statutes. The first (67.5460) forces political subdivisions to treat multifamily rental and mixed-use residential as allowable uses in areas currently zoned commercial, industrial, or mixed use when developers commit at least 40% of rental units to long-term affordability (the bill points to the state's definition of affordable housing).
For mixed-use buildings the bill requires at least 65% of total square footage to be residential. Localities cannot require rezoning, variances, conditional uses, or comprehensive plan amendments for the heights, densities, and land uses authorized by the statute; instead eligible projects get administrative approval so long as they meet the county's multifamily land development regulations aside from the specified density/height/land-use provisions.
The statute sets floors for density and height: density may not be restricted below the highest allowed density that applies to any unincorporated land in the political subdivision where residential development is permitted, and height cannot be restricted below the greater of the highest currently allowed nearby commercial or residential height within one mile or three stories. The bill also directs political subdivisions to consider reducing parking if the development is within one-half mile of an accessible public transit system (and the bill gives a broad definition of transit-related facilities).
Otherwise, projects must comply with applicable state and local laws and land development rules.The second new section (67.5465) creates an ad valorem exemption for portions of newly constructed multifamily projects that dedicate more than 70 units to households that meet HUD multifamily rental program income and rent limits. The exemption is income-tiered: units serving households at 80% AMI or below are fully exempt from property taxes, while units serving households between greater than 80% and up to 120% AMI receive a 75% assessed-value exemption.
Owners must apply annually on a Department of Revenue form by March 1, report unit lists and rents (or published rent for vacant but held-for-affordable-use units), and swear to restrict the units for at least three years. Vacant units are eligible for the exemption on January 1 if the owner restricts their future use to affordable housing and has made reasonable leasing efforts.
Improperly claimed exemptions can be reclaimed with a 50% penalty on unpaid taxes and 15% interest per year; clerical mistakes are exempt from penalty and interest. The exemption statute takes effect for tax year 2027.
The Five Things You Need to Know
The zoning entitlement requires at least 40% of units in a proposed multifamily rental development to be affordable for at least 30 years; mixed-use projects must allocate at least 65% of square footage to residential to qualify.
Local governments cannot force rezoning, special exceptions, conditional uses, variances, or comprehensive plan amendments for height, density, or land use if a project meets the bill's affordability and other multifamily development rules—such projects receive administrative approval instead.
Density cannot be restricted below the highest allowed density on any unincorporated land in the political subdivision where residential development is allowed; height cannot be restricted below the higher of (a) the highest currently allowed local commercial or residential height within one mile of the project or (b) three stories.
The property tax exemption only applies to newly constructed multifamily projects that dedicate more than 70 qualifying units; units at ≤80% AMI are fully exempt, and units >80%–≤120% AMI receive a 75% assessed-value exemption, using HUD Multifamily Tax Subsidy Projects income/rent limits.
Owners must apply by March 1 each year to the Department of Revenue, maintain a three-year restriction on exempted units for the exemption, and face repayment plus a 50% penalty and 15% annual interest if the exemption was improperly claimed (clerical mistakes excepted).
Section-by-Section Breakdown
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Mandatory allowance of multifamily/mixed-use when meeting affordability threshold
This subsection requires political subdivisions to authorize multifamily rental and mixed-use residential uses in commercial, industrial, or mixed zones when the proposed rental development dedicates at least 40% of its units to affordability for at least 30 years (and mixed-use projects are at least 65% residential by square footage). That language shifts entitlement control: local zoning maps must accommodate these projects rather than developers seeking zoning changes. Practically, this creates a conditional preemption keyed to developer commitments rather than geographic overlays.
Density floor tied to highest unincorporated residential allowance
The bill bars political subdivisions from imposing a density lower than the 'highest allowed density' on any unincorporated land in the jurisdiction where residential building is permitted. In effect, municipalities and counties must accept at least the most permissive density already allowed somewhere in their unincorporated territory, which can produce uneven outcomes where one remote parcel's zoning becomes the baseline for denser development elsewhere.
Minimum height standard based on nearby development
Localities cannot cap project height below either the highest permitted nearby commercial or residential development within one mile or three stories, whichever is greater. That creates a measurable but somewhat blunt ceiling that favors projects matching existing tall structures rather than nuanced neighborhood-scale allowances.
Administrative approval, parking consideration, and compliance with other rules
Projects qualifying under these rules are to be administratively approved—meaning no governing-board action is required—so long as they meet the county's multifamily development regulations (setbacks, parking, etc.) and are otherwise consistent with the comprehensive plan except for density/height/land-use provisions. The statute also instructs political subdivisions to consider lowering parking requirements when a project is within a half-mile of an accessible public transit system, which the bill defines broadly. Finally, the section clarifies that other state and local laws still apply, limiting the bill to specific zoning and tax-related changes.
Eligibility and income-tiered tax exemptions for new multifamily projects
This section makes portions of newly constructed multifamily projects eligible for ad valorem exemptions if more than 70 units are dedicated to households meeting HUD MTSP income and rent limits. It creates two tiers: full exemption for units serving households at or below 80% AMI, and a 75% assessed-value exemption for units serving households greater than 80% up to 120% AMI. This couples a developer incentive (tax relief) to HUD-defined rent/income ceilings rather than solely to local affordability metrics.
Application, vacancy rule, penalties, and effective date
Owners must apply annually to the Department of Revenue by March 1, provide unit lists and rent amounts (or published rent for vacant units held for affordable use), and file a sworn three-year restriction on the units. A unit vacant on January 1 still qualifies if the owner restricts its use to affordable housing and makes reasonable leasing efforts. Incorrectly claimed exemptions are recoverable with a 50% penalty on unpaid taxes plus 15% annual interest; clerical errors are excepted. The exemption regime begins with tax year 2027.
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Explore Housing in Codify Search →Who Benefits and Who Bears the Cost
Every bill creates winners and losers. Here's who stands to gain and who bears the cost.
Who Benefits
- Large multifamily developers: Gain entitlement certainty (administrative approval, limited need for rezoning) and a sizable property tax incentive for newly constructed projects exceeding 70 qualifying units, improving project pro formas and bankability.
- Low- and moderate-income renters meeting HUD MTSP limits: Stand to gain access to new units priced at HUD rent limits and protected by statutory affordability commitments (the zoning mechanism requires 30‑year affordability for qualifying projects).
- Owners of newly built qualifying projects: Reduce operating tax burden on exempted units—either full exemption or 75% assessed-value reduction—lowering effective carrying costs and potentially enabling deeper affordability or higher returns.
- Transit-oriented development corridors and landowners near transit: Could capture denser redevelopment as the bill explicitly contemplates parking reductions and higher allowed densities/heights near transit-accessible sites.
Who Bears the Cost
- Local taxing jurisdictions (counties, school districts, municipalities): Face potential reductions in property tax revenues from exempted portions of large new developments, with uncertain net fiscal effects depending on timing, offsets, and development patterns.
- City and county planning boards and local elected bodies: Lose discretionary approval authority over height, density, and land use for qualifying projects and may see increased workload from administrative permitting and compliance checks.
- Smaller developers and community-scale infill projects: Are disadvantaged by the exemption's >70-unit threshold and may find themselves unable to compete with larger projects that receive tax advantages and faster entitlements.
- Department of Revenue and local assessors: Must build procedures to verify unit eligibility, rent levels, and tenant incomes (including handling vacancy eligibility and annual filings), creating administrative costs and potential privacy/data-management burdens.
- Adjacent property owners and neighborhoods: May face increased density, taller buildings, and changed neighborhood character where qualifying projects are sited, with limited local discretionary recourse.
Key Issues
The Core Tension
The central tension is between accelerating affordable housing supply by removing local land‑use barriers and offering tax incentives, and preserving local fiscal health and land-use discretion: HB 3297 privileges state-directed entitlements and developer incentives to spur large-scale affordable construction but does so in ways that shift tax burden, limit local tailoring, and create verification and enforcement gaps that may undermine both affordability goals and local service funding.
The bill swaps local discretion for statewide entitlements tied to developer commitments, but it does so imprecisely in places that invite litigation and implementation headaches. The density benchmark—tying allowable density to the 'highest allowed density' on any unincorporated land where residential development is permitted—can import permissive zoning from one part of a county to another part with very different infrastructure and planning contexts.
Similarly, the height floor (highest allowed nearby or three stories) is a blunt instrument that does not account for site-specific constraints, historic districts, or infrastructure capacity.
The tax-exemption design and the zoning entitlement are not perfectly aligned. Entitlement requires a 30-year affordability commitment; the tax exemption requires only a three-year sworn restriction for eligibility and depends on annual applications and HUD MTSP income/rent limits.
That differential can produce perverse incentives—developers may structure projects to capture tax benefits for a shorter period while meeting a longer zoning obligation in form but not in enforceable operation, or conversely, large projects could be built chiefly to secure tax relief without broad community benefits. Verification is another open question: the statute mandates owner-submitted rent lists and sworn statements but does not create a clear, ongoing tenant-income verification process, leaving assessors and the Department of Revenue to develop standards for audits, privacy protection, and enforcement.
Finally, fiscal impacts are uncertain and concentrated. Exemptions are limited to newly constructed projects with more than 70 qualifying units, so the revenue loss is not uniform and may push developers toward building larger complexes to realize the tax break.
Localities that rely heavily on property taxes for schools and services may see material revenue shifts, and the bill does not specify state reimbursements or mitigation mechanisms. Parking reductions are only discretionary ('shall consider'), so transit-oriented benefits may be inconsistent in practice.
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