SB 1104 — AN ACT CONCERNING COMMUNITY RESTORATION FUNDS.

LCO(6) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0111Advise community development corporations, community development credit unions, state agencies and other entities with respect to the core purposes of 33community R01-SB.docxdevelopment }corporations Substituteand Billcommunity No.development credit unions;

1104sSB1104 (6)/ AdviseFile communityNo. development corporations, community development credit unions, state agencies and other entities with respect to the core purposes of community development corporations and community development credit unions;

(7)663 Review11 thesSB1104 disbursementFile ofNo. funds to, and contracts entered into by, community development corporations and community development credit unions, to evaluate the impact and effectiveness of such disbursements and ensure that decisions made by such corporations and credit unions regarding services or grants provided or other financial instruments issued are based solely on the purposes set forth in sections 1 and 2 of this act;

663 (7) Review the disbursement of funds to, and contracts entered into by, community development corporations and community development credit unions, to evaluate the impact and effectiveness of such disbursements and ensure that decisions made by such corporations and credit unions regarding services or grants provided or other financial instruments issued are based solely on the purposes set forth in sections 1 and 2 of this act;

(e)The(e)Thecouncilshalldesignate councilshalldesignate community development corporations in accordance with the provisions of this subsection.

In addition to the requirements set forth in section 1 of this act, such criteria shall take into consideration the goals, purposes and requirements set forth in said section and shall include, but not be limited to, (A) whether the applicant has broad community representation in its leadership and governance, with an emphasis on ethnicandeconomicdiversityreflectiveofthemunicipality inwhichthe applicant is located, and (B) the professional competence and relevant LCOexperienceoftheapplicant'smanagementandstaff.Eachapplicant {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0112shall include (i) a letter of 33support R01-SB.docxfrom }the Substitutechief Billelected No.official of the municipality in which the applicant is located, and (ii) a statement that the applicant agrees to locate its office in a community impact zone once such zones are designated.

1104The experienceoftheapplicant'smanagementandstaff.Eachapplicantcouncil shall includeaccept (i)applications aon letteror ofsSB1104 support/ fromFile theNo. chief elected official of the municipality in which the applicant is located, and (ii) a statement that the applicant agrees to locate its office in a community impact zone once such zones are designated.

The663 council12 shallsSB1104 acceptFile applicationsNo. on or after October 1, 2021, until and including January 31, 2022.

663 after October 1, 2021, until and including January 31, 2022.

(2)NotlaterthanAugust1,2021,thesecretaryshallreleasethecensus tractsthat are eligiblefor consideration,basedonademonstrationofthe greatest socio-economic need as indicated by subparagraphs (A) to (J), LCOinclusive, {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0113 of 33subdivision R01-SB.docx(1) }of Substitutethis Billsubsection. No.

1104 inclusive, of subdivision (1) of this subsection.

(B) the existencesSB1104 of/ anFile earlyNo. childhood center within the area;

663 13 sSB1104 File No.

663 existence of an early childhood center within the area;

The council may designate one community impact zone for a municipality with a populationofonepopulationof hundredthousandorlessandtwoonehundredthousandorlessandtwo community impact zones for a municipality with a population of greater than one hundred thousand.

(g) The council shall establish an annual budget that sets forth the LCOamounts {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0114in the Community Development Corporation Trust Fund to be invested, the amounts in the fund to be disbursed for programs, services, activities and expenses for the purposes of 33sections R01-SB.docx1 }and Substitute2 Billof No.this act and the amount to be set aside for the purposes of subsections (h) and (i) of this section.

1104The amountscouncil, in theconsultation Communitywith Development Corporation Trust Fund to be invested, the amountsTreasurer in the fund to be disbursed for programs, services, activities and expenses for the purposeschief ofexecutive sectionsofficer 1 and 2 of thisthe actConnecticut andGreen theBank amountestablished tounder besection set16-245n asideof for the purposesgeneral ofstatutes, subsectionsshall (h)adopt andan (i)sSB1104 of/ thisFile section.No.

The663 council,14 insSB1104 consultationFile withNo. the Treasurer and the chief executive officer of the Connecticut Green Bank established under section 16-245n of the general statutes, shall adopt an investment plan with the goals of yielding investment returns over the long-termtosupporttheprograms,services,activitiesandeffortsforthe purposes of sections 1 and 2 of this act and supporting a substantial portion of the fund's annual expenditures from the investment returns.

663 investment plan with the goals of yielding investment returns over the long-termtosupporttheprograms,services,activitiesandeffortsforthe purposes of sections 1 and 2 of this act and supporting a substantial portion of the fund's annual expenditures from the investment returns.

The council shall establish forms and LCOcriteria {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0115to ofapply 33for R01-SB.docxsuch }moneys Substituteand Billshall No.give primary priority to applications from schools located in a community impact zone, provided all such schools submit an application.

1104 criteria to apply for such moneys and shall give primary priority to applications from schools located in a community impact zone, provided all such schools submit an application.

The council shall give secondary priority to applications from schools located in a distressed municipalitysSB1104 on/ theFile basisNo. of the level of student reading achievement, as determined by the Commissioner of Education.

663 15 sSB1104 File No.

663 municipality on the basis of the level of student reading achievement, as determined by the Commissioner of Education.

LCO(l) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0116Not later than February 1, 2024, and annually thereafter, the council shall submit a report to the Governor and to the General Assembly, in accordance with the provisions of 33section R01-SB.docx11-4a }of Substitutethe Billgeneral No.statutes.

1104Such (l)report Notshall laterinclude, thanbut Februarynot 1,be 2024,limited andto, annuallya thereafter,list of the councilcommunity shalldevelopment submitcorporations, acommunity reportdevelopment credit unions and community impact zones designated to date, a summary of the Governorprograms, services, activities and toefforts theundertaken Generalby Assembly,such incorporations accordanceand withcredit theunions provisionspursuant ofto sectionsections 11-4a1 and 2 of thethis generalsSB1104 statutes./ File No.

Such663 report16 shallsSB1104 include,File butNo. not be limited to, a list of the community development corporations, community development credit unions and community impact zones designated to date, a summary of the programs, services, activities and efforts undertaken by such corporations and credit unions pursuant to sections 1 and 2 of this act and the disbursements made from the Community Development Corporation Trust Fund to support such programs, services, activities and efforts.

663 act and the disbursements made from the Community Development Corporation Trust Fund to support such programs, services, activities and efforts.

The assets of the fund shall be continuously invested LCOand {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0117reinvested in a manner consistent with the objectives of 33the R01-SB.docxfund }until Substitutedisbursed Billfor No.the purposes set forth in sections 1 and 2 of this act.

1104(c) andOn reinvestedor inbefore December thirty-first, annually, the Treasurer shall submit a mannerfinancial consistentreport, in accordance with the objectivesprovisions of section 11-4a of the fundgeneral untilstatutes, disbursedto forthe community development corporation oversight council and the purposesjoint setstanding forthcommittee inof sectionsthe 1General andAssembly 2having cognizance of thismatters act.relating to finance, revenue and bonding, setting forth the receipts, disbursements, assets, sSB1104 / File No.

(c)663 On17 orsSB1104 beforeFile DecemberNo. thirty-first, annually, the Treasurer shall submit a financial report, in accordance with the provisions of section 11-4a of the general statutes, to the community development corporation oversight council and the joint standing committee of the General Assembly having cognizance of matters relating to finance, revenue and bonding, setting forth the receipts, disbursements, assets, investments, liabilities and administrative costs of the fund for the prior fiscal year.

663 investments, liabilities and administrative costs of the fund for the prior fiscal year.

(NEW) (Effective from passage) Any entity that is exempt from tax pursuant to Section 501(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, asamendedfromtime to time, and exempt frompayingfrom paying property tax and any municipality and the state may make a deposit with a community development credit union, to be invested by such credit union to further the community restoration and revitalization purposes set forth in sections 1 to 4, inclusive, of this act.

(1)"Cannabis" means "marijuana",asdefined ininsection21a-240 section21a-240 ofthe general statutes.

"Cannabis product" does not LCOinclude {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0118the ofraw 33cannabis R01-SB.docxplant; } Substitute Bill No.

1104 include the raw cannabis plant;

and (6) "Municipality" means any town, city or borough, consolidated townsSB1104 and/ cityFile orNo. consolidated town and borough.

663 18 sSB1104 File No.

663 town and city or consolidated town and borough.

Moneys in the account shall be expended by the Commissioner of Revenue Services for the purpose of providing moneys in accordance with this section to municipalities in which LCOcannabis {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0119retailers ofare 33selling R01-SB.docxcannabis }and Substitutecannabis Billproducts No.to consumers.

1104 cannabis retailers are selling cannabis and cannabis products to consumers.

(2) Commencing in the second calendar quarter following the initial deposit into the account, the commissioner shall distribute on a quarterlysSB1104 basis/ aFile sum,No. calculated on a point-of-sale basis, to each municipality in which a cannabis retailer is located and for which a point-of-sale can be determined.

663 19 sSB1104 File No.

663 quarterly basis a sum, calculated on a point-of-sale basis, to each municipality in which a cannabis retailer is located and for which a point-of-sale can be determined.

(g) Each person, other than a cannabis retailer, who is required, on behalf of such retailer, to collect, truthfully account for and pay over a tax imposed on such retailer under this section and who wilfully fails to collect, truthfully account for and pay over such tax or who wilfully LCOattempts {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-01120in any manner to evade or defeat the tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty equal to the total amount of 33the R01-SB.docxtax }evaded, Substituteor Billnot No.collected, or not accounted for and paid over, including any penalty or interest attributable to such wilful failure to collect or truthfully account for and pay over such tax or such wilful attempt to evade or defeat such tax, provided such penalty shall only be imposed against such person in the event that such tax, penalty or interest cannot otherwise be collected from such retailer.

1104The attempts in any manner to evade or defeat the tax or the payment thereof, shall, in addition to other penalties provided by law, be liable for a penalty equal to the total amount of thesuch tax evaded, or not collected, or not accounted for and paid over, including any penalty orwith interestrespect attributable to suchwhich wilfula failureperson tomay collectbe orpersonally truthfullyliable accountunder forthis andsection pay over such tax or such wilful attempt to evade or defeat such tax, provided such penalty shall only be imposedcollected against such person in thesSB1104 event/ thatFile suchNo. tax, penalty or interest cannot otherwise be collected from such retailer.

The663 amount20 ofsSB1104 suchFile penaltyNo. with respect to which a person may be personally liable under this section shall be collected in accordance with the provisions of section 12-555a of the general statutes and any amount so collected shall be allowed as a credit against the amount of such tax, penalty or interest due and owing from the retailer.

663 accordance with the provisions of section 12-555a of the general statutes and any amount so collected shall be allowed as a credit against the amount of such tax, penalty or interest due and owing from the retailer.

LCO(j) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-011021The commissioner may adopt regulations, in accordance with the provisions of 33chapter R01-SB.docx54 }of Substitutethe Billgeneral No.statutes, to implement the provisions of this section.

1104(k) (j)At Thethe commissionerclose mayof adopteach regulations,fiscal year in accordancewhich withthe tax imposed under the provisions of chapterthis 54section ofare received by the generalcommissioner, statutes,the Comptroller is authorized to implementrecord as revenue for such fiscal year the provisionsamountsofsuchtax that arereceived by thecommissioner not laterthan five business days from the last day of thisJuly section.immediately following the end of such fiscal year.

(k)sSB1104 At/ theFile closeNo. of each fiscal year in which the tax imposed under the provisions of this section are received by the commissioner, the Comptroller is authorized to record as revenue for such fiscal year the amountsofsuchtax that arereceivedby thecommissioner not laterthan five business days from the last day of July immediately following the end of such fiscal year.

Sec.663 21 sSB1104 File No.

663 Sec.

(C) With respect to the sale of a motor vehicle to any individual who is a member of the armed forces of the United States and is on full-time LCOactive {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0122duty in Connecticut and who is considered, under 50 App USC 574, a resident of 33another R01-SB.docxstate, }or Substituteto Billany No.such individual and the spouse thereof, at a rate of four and one-half per cent of the gross receipts of any retailer from such sales, provided such retailer requires and maintains a declaration by such individual, prescribed as to form by the commissioner andbearing notice totheeffect that false statementsmade in such declaration are punishable, or other evidence, satisfactory to the commissioner, concerning the purchaser's state of residence under 50 App USC 574;

1104(D) active(i) dutyWith inrespect Connecticut and who is considered, under 50 App USC 574, a resident of another state, or to any such individual and the spousesales thereof, at a rate of fourcomputer and one-halfdata perprocessing centsSB1104 of/ theFile grossNo. receipts of any retailer from such sales, provided such retailer requires and maintains a declaration by such individual, prescribed as to form by the commissioner andbearing notice totheeffect that false statementsmade in such declaration are punishable, or other evidence, satisfactory to the commissioner, concerning the purchaser's state of residence under 50 App USC 574;

(D)663 (i)22 WithsSB1104 respectFile toNo. the sales of computer and data processing services occurring on or after July 1, 2001, at the rate of one per cent, and (ii) with respect to sales of Internet access services, on and after July 1, 2001, such services shall be exempt from such tax;

663 services occurring on or after July 1, 2001, at the rate of one per cent, and (ii) with respect to sales of Internet access services, on and after July 1, 2001, such services shall be exempt from such tax;

LCO(G) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0123With respect to the rental or leasing of 33a R01-SB.docxpassenger }motor Substitutevehicle Billfor No.a period of thirty consecutive calendar days or less, at a rate of nine and thirty-five-hundredths per cent;

1104(H) (G) With respect to the rentalsale or leasing of (i) a passenger motor vehicle for a periodsales price exceeding fifty thousand dollars, at a rate of thirtyseven consecutiveand calendarthree-fourths daysper cent on the entire sales price, (ii) jewelry, whether real or less,imitation, for a sales price exceeding five thousand dollars, at a rate of nineseven and thirty-five-hundredthsthree-fourths per cent;cent on the entire sales price, and (iii) an article of clothing or footwear intended to be worn on or about the human body, a handbag, luggage, umbrella, wallet or watch for a sales price sSB1104 / File No.

(H)663 With23 respectsSB1104 toFile theNo. sale of (i) a motor vehicle for a sales price exceeding fifty thousand dollars, at a rate of seven and three-fourths per cent on the entire sales price, (ii) jewelry, whether real or imitation, for a sales price exceeding five thousand dollars, at a rate of seven and three-fourths per cent on the entire sales price, and (iii) an article of clothing or footwear intended to be worn on or about the human body, a handbag, luggage, umbrella, wallet or watch for a sales price exceeding one thousand dollars, at a rate of seven and three-fourths per cent on the entire sales price.

663 exceeding one thousand dollars, at a rate of seven and three-fourths per cent on the entire sales price.

LCO[(J)] {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0124(K) The rate of 33tax R01-SB.docximposed }by Substitutethis Billchapter No.shall be applicable to all retail sales upon the effective date of such rate, except that a new rate that represents an increase in the rate applicable to the sale shall not apply to any sales transaction wherein a binding sales contract without an escalator clause has been entered into prior to the effective date ofthe new rate and delivery is made within ninety days after the effective date of the new rate.

1104For [(J)]the (K)purposes Theof ratepayment of the tax imposed byunder this chaptersection, shallany beretailer applicableof toservices alltaxable retailunder salessubdivision upon(37) theof effectivesubsection date(a) of suchsection rate,12-407, exceptwho thatcomputes ataxable newincome, ratefor thatpurposes representsof antaxation increaseunder in the rateInternal applicableRevenue toCode theof sale1986, shallor not apply to any salessubsequent transactioncorresponding whereininternal arevenue bindingcode salesof contract without an escalator clause has been entered into prior to the effectiveUnited dateStates, ofthesSB1104 new/ rateFile andNo. delivery is made within ninety days after the effective date of the new rate.

For663 the24 purposessSB1104 ofFile paymentNo. of the tax imposed under this section, any retailer of services taxable under subdivision (37) of subsection (a) of section 12-407, who computes taxable income, for purposes of taxation under the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as amended from time to time, on an accounting basis that recognizes only cash or other valuable consideration actually received as income and who is liable for such tax only due to the rendering of such services may make payments related to such tax for the period during which such income is received, without penalty or interest, without regard to when such service is rendered;

663 as amended from time to time, on an accounting basis that recognizes only cash or other valuable consideration actually received as income and who is liable for such tax only due to the rendering of such services may make payments related to such tax for the period during which such income is received, without penalty or interest, without regard to when such service is rendered;

and LCO[(M)](N)(i)For {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-011025calendar monthscommencing onorafterJuly 1, 2017, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 seven and nine-tenths per cent of 33the R01-SB.docxamounts }received Substituteby Billthe No.state from the tax imposed under subparagraph (A) of this subdivision;

1104(ii) [(M)](N)(i)ForFor calendar monthscommencingmonths onorafterJulycommencing on or after July 1, 2017,2018, but prior to July 1, 2019, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 seveneight and nine-tenths per cent of the amounts received by the state from the tax imposed under subparagraphsubparagraphs (A) and (H) of this subdivision;subdivision on the sale of a motor sSB1104 / File No.

(ii)663 For25 calendarsSB1104 monthsFile commencingNo. on or after July 1, 2018, but prior to July 1, 2019, the commissioner shall deposit into the Special Transportation Fund established under section 13b-68 eight per cent of the amounts received by the state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

663 vehicle;

and (vi) For calendar months commencing on or after July 1, 2022, the commissioner shall deposit into the Special Transportation Fund LCOestablished {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0126under section 13b-68 one hundred per cent of 33the R01-SB.docxamounts }received Substituteby Billthe No.state from the tax imposed under subparagraphs (A) and (H) of this subdivision on the sale of a motor vehicle;

1104[.] and (O) For calendar quarters ending on or after the initial remittance of the tax on the sale of cannabis and cannabis products, each as defined in section 6 of this act, the commissioner shall deposit into the Community Development Corporation Trust Fund established under section 13b-684 of this act one hundred per cent of the amounts received and retained by the state from the tax imposed under subparagraphssubparagraph (A)(J) and (H) of this subdivisionsubdivision. on the sale of a motor vehicle;

andsSB1104 (O)/ ForFile calendarNo. quarters ending on or after the initial remittance of the tax on the sale of cannabis and cannabis products, each as defined in section 6 of this act, the commissioner shall deposit into the Community Development Corporation Trust Fund established under section 4 of this act one hundred per cent of the amounts received and retained by the state from the tax imposed under subparagraph (J) of this subdivision.

Sec.663 26 sSB1104 File No.

663 Sec.

(2) (A) Issue shares to its members and receive payments on shares from its members and from those nonmembers specified in subsection (e) of section 36a-456a, subject to the provisions of sections 36a-290 to 36a-297, inclusive, 36a-330 to 36a-338, inclusive, and 36a-456a, (B) receive deposits of members and nonmembers subject to provisions of sections 36a-456a and 36a-456b, (C) reduce the amount of its member LCOand {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-01127nonmember ofshares 33and R01-SB.docxdeposits, }(D) Substituteexpel Billmembers No.and cancel shares in accordance with section 36a-439a, and (E) provide check cashing and wire and electronic transfer services to nonmembers who are within such credit union's field of membership;

1104 and nonmember shares and deposits, (D) expel members and cancel shares in accordance with section 36a-439a, and (E) provide check cashing and wire and electronic transfer services to nonmembers who are within such credit union's field of membership;

(6)sSB1104 Act/ asFile aNo. finder or agent for the sale of insurance and fixed and variable rate annuities directly, sell insurance and such annuities indirectly through a Connecticut credit union service organization, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut credit union or to members of the Connecticut credit union, provided:

663 27 sSB1104 File No.

663 (6) Act as a finder or agent for the sale of insurance and fixed and variable rate annuities directly, sell insurance and such annuities indirectly through a Connecticut credit union service organization, or enter into arrangements with third-party marketing organizations for the sale by such third-party marketing organizations of insurance or such annuities on the premises of the Connecticut credit union or to members of the Connecticut credit union, provided:

(7) Borrow money to an amount not exceeding fifty per cent of the total assets of the Connecticut credit union provided the credit union shall give prior notice to the commissioner in writing of its intention to LCOborrow {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0128amounts in excess of 33thirty-five R01-SB.docxper }cent Substituteof Billits No.total assets;

1104 borrow amounts in excess of thirty-five per cent of its total assets;

(10) Provide finder services to its members, including the offering of thirdsSB1104 party/ productsFile andNo. services through the sale of advertising space onitswebsite,account statementsandreceipts,andthesaleofstatistical or consumer financial information to outside vendors in accordance with sections 36a-40 to 36a-45, inclusive, in order to facilitate the sale of such products to the members of such Connecticut credit union;

663 28 sSB1104 File No.

663 third party products and services through the sale of advertising space onitswebsite,account statementsandreceipts,andthesaleofstatistical or consumer financial information to outside vendors in accordance with sections 36a-40 to 36a-45, inclusive, in order to facilitate the sale of such products to the members of such Connecticut credit union;

LCO(15) {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0129Issue and sell securities which (A) are guaranteed by the Federal National Mortgage Association or any other agency or instrumentality authorized by state or federal law to create a secondary market with respect to extensions of 33credit R01-SB.docxof }the Substitutetype Billoriginated No.by the Connecticut credit union, or (B) subject to the approval of the commissioner, relate to extensions of credit originated by the Connecticut credit union and are guaranteed or insured by a financial guaranty insurance company or comparable private entity;

1104(16) (15)Establish Issuea andcharitable sellfund, securitieseither whichin (A) are guaranteed by the Federalform Nationalof Mortgagea Associationcharitable ortrust any other agency or instrumentalitya authorizednonprofit bycorporation state or federal law to createassist ain secondarymaking marketcharitable withcontributions, respectprovided to(A) extensions of credit of the typetrust originatedor bynonprofit thecorporation Connecticutis creditexempt union,from orfederal (B)income subjecttaxation toand themay approvalaccept ofcharitable thecontributions commissioner,under relateSection to501 extensions of credit originated by the ConnecticutInternal creditRevenue unionCode andof are1986, guaranteed or insuredany bysubsequent asSB1104 financial/ guarantyFile insuranceNo. company or comparable private entity;

(16)663 Establish29 asSB1104 charitableFile fund,No. either in the form of a charitable trust or a nonprofit corporation to assist in making charitable contributions, provided (A) the trust or nonprofit corporation is exempt from federal income taxation and may accept charitable contributions under Section 501 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations are disclosed fully to the commissioner upon request, and (C) the trust department of the credit union or one or more directors or members of senior management of the credit union act as trustees or directors of the fund;

663 corresponding internal revenue code of the United States, as from time to time amended, (B) the trust or nonprofit corporation's operations are disclosed fully to the commissioner upon request, and (C) the trust department of the credit union or one or more directors or members of senior management of the credit union act as trustees or directors of the fund;

(18) Subject to the provisions of section 36a-455b, sell, pledge or assign any or all of its outstanding extensions of credit to any other lending institution, credit union service organization or quasi- governmentalentity andany government-sponsoredenterprise, andact LCOas {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-01130collecting, remitting and servicing agent in connection with any such extensionofcreditandchargeforitsactsasagent.Anysuchcreditunion may purchase the minimum amount of 33capital R01-SB.docxstock }of Substitutesuch Billentity No.or enterprise if required by that entity or enterprise to be purchased in connection with the sale, pledge or assignment of extensions of credit to that entity or enterprise and may hold and dispose of such stock, providedthat withrespect to purchasesofstock ofacredit unionservice organization, the Connecticut credit union shall not exceed the limitations of section 36a-459a.

1104 as collecting, remitting and servicing agent in connection with any such extensionofcreditandchargeforitsactsasagent.Anysuchcreditunion may purchase the minimum amount of capital stock of such entity or enterprise if required by that entity or enterprise to be purchased in connection with the sale, pledge or assignment of extensions of credit to that entity or enterprise and may hold and dispose of such stock, providedthat withrespect to purchasesofstock ofacredit unionservice organization, the Connecticut credit union shall not exceed the limitations of section 36a-459a.

(19)sSB1104 Subject/ toFile theNo. provisions of section 36a-455b, sell a participating interest in any or all of its outstanding extensions of credit to and purchase a participating interest in any or all of the outstanding extensions of credit of any financial institution or credit union service organization pursuant to an appropriate written participation and servicing agreement to be signed by all parties involved in such transaction;

663 30 sSB1104 File No.

663 (19) Subject to the provisions of section 36a-455b, sell a participating interest in any or all of its outstanding extensions of credit to and purchase a participating interest in any or all of the outstanding extensions of credit of any financial institution or credit union service organization pursuant to an appropriate written participation and servicing agreement to be signed by all parties involved in such transaction;

(22) With the prior written approval of the commissioner, engage in closely related activities, unless the commissioner determines that any such activity shall be conducted by a credit union service organization of the Connecticut credit union, utilizing such organizational, structural LCOor {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0131other ofsafeguardsasthecommissioner 33may R01-SB.docxrequire, }inorder Substituteto Billprotect No.the Connecticut credit union from exposure to loss.

1104 or other safeguardsasthecommissioner may require, inorder to protect the Connecticut credit union from exposure to loss.

(23) Engage in any activity that a federal credit union or out-of-state credit union may be authorized to engage in under state or federal law, provided the Connecticut credit union file with the commissioner prior writtennoticeofitsintentiontoengageinsuchactivity.Suchnotice shall includesSB1104 a/ descriptionFile ofNo. the activity, a description of the financial impact of the activity on the Connecticut credit union, citation of the legal authority to engage in the activity under state or federal law, a description of any limitations or restrictions imposed on such activity under state or federal law, and any other information that the commissioner may require.

663 31 sSB1104 File No.

663 include a description of the activity, a description of the financial impact of the activity on the Connecticut credit union, citation of the legal authority to engage in the activity under state or federal law, a description of any limitations or restrictions imposed on such activity under state or federal law, and any other information that the commissioner may require.

[.] (24) (A) Partner with a community development corporation, as described in section 1 of this act, and be designated as a community development credit union in accordance with the provisions of section 2 of this act, (B) if so designated, engage in any activity authorized for a community development credit union under sections 1 and 2 of this act, LCOand {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-0132(C) issue social impact bonds in accordance with subdivision (5) of 33subsection R01-SB.docx(c) }of Substitutesection Bill2 No.of this act.

1104 and (C) issue social impact bonds in accordance with subdivision (5) of subsection (c) of section 2 of this act.

in Sections 2(c)(5) and 3(j), references to "federalsSB1104 qualified/ opportunityFile zones"No. were changed to "federally designated opportunity zones" and "federal opportunity zones", respectively, for statutory consistency;

663 32 sSB1104 File No.

663 "federal qualified opportunity zones" were changed to "federally designated opportunity zones" and "federal opportunity zones", respectively, for statutory consistency;

-LCO LCOsSB1104 {\\PRDFS1\SCOUSERS\FORZANOF\WS\2021SB-01104-/ 33File ofNo. 33 R01-SB.docx }

663 33 sSB1104 File No.

663 The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose.

In general, fiscal impacts are based upon a variety of informational sources, including the analyst’s professional knowledge.

Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note State Impact:

Agency Affected Fund-Effect FY 22 $ FY 23 $ Department of Revenue Services GF - Potential 286,189 490,547 Cost State Comptroller - Fringe GF - Potential 97,546 202,596 Benefits1 Cost Treasurer GF - Potential 75,000 None Cost Treasurer Community See Below See Below Development Trust Fund – Potential Revenue / Potential Cost Note:

GF=General Fund Municipal Impact:

Municipalities Effect FY 22 $ FY 23 $ Various Municipalities Potential See Below See Below Revenue Gain Explanation Conditional upon enactment of legalized recreational cannabis, the bill imposes a 20% state sales tax and 3% local sales tax on cannabis and cannabis products.

Projected annual revenues are anticipated to be $116 million (state) and $18 million (municipal) by FY 25.

There would be 1The fringe benefit costs for most state employees are budgeted centrally in accounts administered by the Comptroller.

The estimated active employee fringe benefit cost associated with most personnel changes is 41.3% of payroll in FY 22 and FY 23.

sSB1104 / File No.

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663 corresponding costs to administer the programs under the bill.

The bill results in a one-time cost to the Treasurer to establish the Community Development Corporation Trust Fund.

To the extent that revenues are available to support the various programs established by thebill,there isanannual cost to theTreasurer to hire staffto administer such programs.

Potential administrative costs to the Department of Revenue Services are estimated at $383,735 in the first fiscal year following legalization and $693,143 in the subsequent fiscal year.

This includes salary and fringe benefit costs for two Revenue Agents and five Revenue Examiners, as well as a one-time set-up and information technology programming cost estimated at $50,000 in the first year only.

The Out Years The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

sSB1104 / File No.

663 35 sSB1104 File No.

663 OLR Bill Analysis sSB 1104 AN ACT CONCERNING COMMUNITY RESTORATION FUNDS.

SUMMARY This bill imposes a 20% state sales tax and a 3% local sales tax on cannabis and cannabis products (excluding cannabis for palliative use), beginning on and after the date the Department of Consumer Protection (DCP) first issues a license to a cannabis retailer.

The bill directs the (1) state sales tax revenue from cannabis sales to a new Community Development Corporation (CDC) Trust Fund and (2) local sales tax revenue to a new municipal cannabis revenue account.

It requires the Department of Revenue Services (DRS) commissioner to distribute the funds in the municipal cannabis revenue account each quarter to municipalities on a point-of-sale basis.

Any funds for which thecommissionercannotdeterminethepointofsalemustbetransferred to the CDC Trust Fund.

The bill also creates a framework for establishing nonprofit CDCs to partner with qualifying community development credit unions (CDCUs) in undertaking specified community restoration and revitalization programs and activities.

It establishes a seven-member legislative council (the CDC oversight council) to designate the CDCs and CDCUs and oversee the distribution of cannabis tax revenue in the CDC Trust Fund for the programs and activities.

It also establishes a process by which the Office of Policy and Management (OPM) secretary and CDC oversight council identify and designate community impact zones in which CDCs and CDCUs focus their programs and activities.

Lastly, the bill authorizes the state, municipalities, and nonprofit organizations that are exempt from property tax to make deposits with CDCUs that must in turn be invested by the CDCU to further the bill’s sSB1104 / File No.

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663 community restoration and revitalization purposes.

EFFECTIVE DATE:

Upon passage § 1 — COMMUNITY DEVELOPMENT CORPORATIONS Eligible Entities The bill establishes the criteria organizations must meet in order to be designated as a CDC.

Under the bill, an entity may apply to the council to be designated as a CDC if it (1) is exempt from federal tax under section 501(c) of the federal tax code, (2) is located in a distressed municipality (see BACKGROUND) at the time of its application, and (3) meets the following requirements:

1.

has demonstrated effectiveness in, or has been formed for the purposes of, building, attracting, and retaining neighborhood wealth;

2.

provides financial, educational, or related services to support initiatives that concentrate investments in human capital and infrastructure in a specific neighborhood or neighborhoods, with measurable community revitalization achievements;

3.

agrees to focus all of its efforts in the distressed municipality in which it is located;

4.

agrees to establish or relocate its primary office in a community impact zone (described below) within the municipality after the zones are designated;

and 5.

agrees to establish or relocate any auxiliary locations to the municipality in which it is located.

Programs, Services, and Assistance The bill requires each CDC to provide specific programs, services, and assistance or grants to support community reinvestment strategies in the community impact zone in which it is located.

Its initiatives must sSB1104 / File No.

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663 include the programs and services described below, in the order of priority listed.

If the CDC has insufficient funds to execute these strategies to a high level of quality, it must pursue each strategy in the order listed, with an emphasis on achieving high quality before undertaking the next strategy.

Early Childhood.

The CDC must encourage early childhood initiatives by providing, directly or in collaboration with other entities, free or low-cost early childhood education services to families living within the community impact zone, regardless of their income.

The services must include kindergarten preparedness and readiness assessments.

The CDC may expand its services to areas within the municipality that are outside the community impact zone that have poverty levels exceeding the municipal average.

Educational Achievement.

The CDC must increase achievement at public elementary and middle schools in the zone.

It must coordinate with officials at these schools to submit grant applications to the CDC oversight council to supplement per-student funding so that it matches or approaches the highest levels of per-student funding at any elementary or middle school in the state.

Schools receiving grants must (1) set goals to achieve statewide mastery test scores in the top percentiles, based on specific target goals set for each school by the council,and(2) guarantee that astudent residing inthezonewill beable to attend that specific school.

Community Assets.

The CDC must rebuild community assets by constructing, renovating, or repairing neighborhoodstructuresor assets that are significant to the economy or community.

These include playgrounds, sidewalks, parks, community centers, senior centers, public libraries, urban gardens, and green spaces.

(Presumably, a CDC would undertake these efforts in conjunction with the municipality or property owner that owns or controls the asset or structure.) To be eligible for funding, the structures or assets must be owned by (1) the federal government, state, or municipality;

(2) the CDC;

(3) the partnered CDCU;

or (4) a resident of the municipality in which it is sSB1104 / File No.

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663 located.

The CDC must seek to train zone residents to do some of the work the projects require, either directly or indirectly with other entities or through partnerships with existing technical education and apprenticeship programs.

The CDC must also retain, sell, or rent these structures or assets after their completion, but it may sell them only to zone residents.

The partnered CDCU may develop a cooperative model for owning and renting the structures and assets.

Homeownership.

The CDC must increase homeownership rates by doing the following:

1.

It must track and make efforts to increase the percentage of owner-occupiedresidentialbuildingsinthezone.Itmustsetfive- year target percentages and periodically evaluate and revise its target amounts.

2.

It must restore and repair multifamily rental buildings located in the zone to convert them into owner-occupied residential buildings or multifamily cooperative buildings with at least one rental unit.

To be eligible for funding, the property must generally be owned by the CDC, the partnered CDCU, or a resident of the municipality.

However, properties that are not owned by such entities or individuals may still be considered for funding if the building’s owner agrees, in writing, to the corporation’s terms furthering the bill’s homeownership purposes.

The CDC may also promote participation in existing state and housing programs to encourage owner occupancy.

3.

As with the community structures and assets described above, the CDC must retain, sell, or rent the buildings after their completion, but it may sell them only to zone residents.

The CDC or partnered CDCU may develop a cooperative ownership or rental model for the buildings.

Homebuyer Education and Financial Literacy.

The CDC must sSB1104 / File No.

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663 support pathways to homeownership by partnering with existing programs to offer education and financial literacy programs.

The partnerships must be joint efforts between the CDC and its partnered CDCU and each CDCU may develop and offer subsidized or incentivized financial products for individuals who participate in the programs.

Job Pipelines for Zone Residents.

The CDC must consult or coordinate with other organizations, including the Workforce Investment Boards, to implement or participate in community work- based training programs.

The programs must provide pre- apprenticeship or apprenticeship opportunities through instruction or trainingto(1)increaseliteracy,math,andothertechnical,prevocational, or vocational skills and (2) connect workforce, economic development, and education systems with businesses and other zone stakeholders.

The CDC’s efforts must focus on (1) zone residents and (2) businesses offering or carrying out training programs in the following order of priority:

in the zone, in the municipality, and outside the municipality.

The CDC must also place zone residents with businesses that offer employment or on-the-job training.

It must select businesses in the following order of priority:

within the zone, within the municipality, and outside the municipality if the opportunities in the zone and municipality have been exhausted.

Community and Senior Centers.

The CDC must (1) expand access to programs at existing community or senior centers that serve zone residents, regardless of age, or (2) convert the centers to ones to serve all zone residents, regardless of age.

(Presumably, a CDC would undertake these efforts in conjunction with the municipality or organization that runs the existing community or senior center.) Transportation.

The CDC must provide municipal residents with low-cost transportation options by developing or supporting transportation alternatives within and between municipalities for travel toandfromwork,home,school,retailstores,andentertainmentvenues.

sSB1104 / File No.

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663 Powers Under the bill, a CDC may:

1.

acquiretherealpropertydescribedabove(e.g.,communityassets and structures and multifamily residential buildings) in coordination with its partnered CDCU;

2.

operate as a contractor or subcontractor, or establish a subsidiary to do so, as long as the CDC or subsidiary complies with all applicable state licensing and registration requirements;

and 3.

partner or contract with contractors or subcontractors to carry out projects and related work for the purposes described above, provided the CDC gives first priority to a contractor or subcontractor located in the zone and second priority to one located in the municipality.

Partnerships with CDCUs No later than six months after being designated a CDC, the corporation must (1) identify a Connecticut credit union located within the municipality in which the CDC is located that will apply to the CDC oversight council to be designated as a CDCU or (2) issue a request for proposal for the organization of a new Connecticut credit union, or an existing Connecticut credit union, to partner with the CDC.

Foreclosed or Auctioned Property A CDC must be offered the right of first refusal in the sale of any real property in the zone that has been foreclosed or is being sold at public auction, provided it has notified the mortgagee or municipal tax collector, as applicable, of its interest in acquiring the property.

Under the bill, this provision applies regardless of the state laws on mortgage foreclosures and tax sales.

Financial Report The bill requires each CDC to submit a financial report to the CDC oversight council, including any information the council requires.

It must submit the report as often as the council requires, but at least sSB1104 / File No.

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663 annually.

Removing a CDC Designation The bill allows a CDC to request that its designation be removed.

The CDC oversight council may grant the request as long as it designates another entity to replace the CDC, based on prior applications or through a new request for applications.

The bill also authorizes the council to remove a CDC’s designation if (1) it determines that the CDC is unable to carry out or deficient in carrying out the purposes described above and (2) the corporation was given the opportunity to address and improve the deficiencies noted by the council.

§§ 2 & 9 — COMMUNITY DEVELOPMENT CREDIT UNIONS Authorization The bill authorizes Connecticut credit unions to (1) partner with CDCs;

(2) be designated as CDCUs, and if designated, engage in the activities authorized under the bill;

and (3) issue social impact bonds, as described below.

Under the bill, Connecticut credit union service organizations may also bedesignatedasCDCUs.By law,a Connecticut credit unionservice organization is an organization that is incorporated under the state’s laws and established by at least one Connecticut credit union or wholly owned by a federal or out-of-state credit union that converted to a Connecticut credit union.

Eligible Credit Unions ThebillauthorizesConnecticutcreditunionsandcreditunionservice organizations to apply to the CDC oversight council to be designated as a CDCU.

To be designated, the credit union or credit union service organization must:

1.

serve low- and moderate-income people and communities with limited access to affordable financial services and products, with priority, and sSB1104 / File No.

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663 2.

agree to partner with at least one CDC and focus its activities and efforts to support the corporation’s purposes.

The CDC oversight council must give priority to credit unions and credit union service organizations that specialize in:

1.

providing home mortgages or small business loans to members with imperfect, limited, or no credit history;

2.

providing financial education and counseling to members;

and 3.

offering products, services, and support at a low or reasonable cost to members.

Duties and Powers Under the bill, each CDCU must do the following:

1.

submit its governance structure to the CDC oversight council for review;

2.

approve the addition of the CDC’s representatives to its governing board, executive committee, supervisory committee, or similar entity, in such numbers and as the credit union and CDC agree;

3.

if applicable and necessary, expand its field of membership to allow residents of all community impact zones within the municipality in which its partnered CDC is located to be members of the credit union;

4.

offer or agree to offer free or low-cost basic checking and savings account servicesto allresidentsofthezoneinwhichits partnered CDC is located;

5.

agree to establish in or move a location to the zone after it is designated (as described below) (but the bill specifies that the credit union is not precluded from establishing or having locations elsewhere in the state or municipality in which the zone sSB1104 / File No.

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663 is located);

and 6.

develop and issue social impact bonds, in consultation with its partnered CDC, to support or supplement the CDC’s efforts.

The bill specifies that the social impact bonds must be designed to maximize tax benefitsto investorsincaseswhere thecommunity impact zone aligns with federally designated opportunity zones.

Financing CDC Activities The bill authorizes each CDCU to develop low-cost or subsidized financial products and services to support its CDC’s goals and apply to the CDC oversight council for funding to do so.

It also authorizes each CDCU to collaborate with its CDC to help finance or facilitate investments in real property or community structures and assets, as described above.

Financial Report Each CDCU must submit a financial report to the CDC oversight council, including any information the council requires.

It must submit the report as often as the council requires, but at least annually.

Removing a CDCU Designation The bill allows a CDCU to request that its designation be removed and to cease its partnership with the CDC.

The CDC oversight council may grant therequest as long as the CDC identifies another credit union or credit union service organization to replace it or issues a request for proposal for one.

The bill also authorizes the council to remove a CDCU’s designation if (1) it determines that the CDCU is unable to carry out or is deficient in carrying out the purposes described above and (2) the CDCU was given the opportunity to address and improve the deficiencies noted by the council.

§ 3 — CDC OVERSIGHT COUNCIL Membership and Governance sSB1104 / File No.

663 44 sSB1104 File No.

663 The bill establishes a seven-member legislative council comprised of the treasurer, Department of Economic and Community Development (DECD) commissioner, Commission on Women, Children, Seniors, Equity and Opportunity executive director, and four members appointed by the governor.

The governor must seek to appoint individuals (1) with broad community knowledge and experience with communities within the eligible census tracts described below and (2) who reflect the ethnic, gender, and economic diversity of these communities.

He must make his appointments between August 1, 2021 and August 31, 2021.

The treasurer andDECDcommissioner must co-chair thecounciland jointly schedule and hold its first meeting by September 1, 2021.

Beginning on and after January 1, 2022, the council must meet at least six times each year.

A majority of the council constitutes a quorum for transacting business.

Vacancies must be filled for the unexpired term by the appointing authority (i.e., governor).

(However, the bill does not specify the term length for appointees.) Council members are not paid, but must be reimbursed for expenses within available funds.

The Commerce Committee’s administrative staff serve as the council’s staff.

Duties The bill requires the council to perform the following duties:

1.

establish eligibility criteria for designating CDCs, CDCUs, and community impact zones and designate them in accordance with the bill;

2.

establish an annual budget as described below;

3.

oversee the investments, deposits, and disbursements for the Community Development Corporation Trust Fund;

4.

approve CDC and CDCU programs, services, and activities to further their purposes;

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663 5.

oversee, support, and coordinate these programs, services, and activities within and across municipalities and with other relevant state agencies, entities, and initiatives;

6.

advise CDCs, CDCUs, state agencies, and other entities on the core purposes of CDCs and CDCUs;

7.

review the disbursement of funds to CDCs and CDCUs, and contracts entered into by these entities, to evaluate their impact and effectiveness and ensure that decisions they make regarding services, grants, or financial instruments are based solely on the purposes described under the bill;

8.

review the reports CDCs and CDCUs submit to it;

and 9.

do all things necessary to carry out its duties and responsibilities under the bill.

Designating CDCUs The bill requires the council to designate CDCUs from among applicants that fulfill the bill’s requirements.

It may designate only one CDCU for each municipality (i.e., town, city, borough, consolidated town and city, or consolidated town and borough).

Designating CDCs Criteria.

By October 1, 2021, the council must release its criteria for prospective applicants seeking to be designated as a CDC.

In addition to the eligibility requirements for CDCs described above, the council’s criteria must consider (1) whether the applicant’s leadership and governance has broad community representation, with an emphasis on ethnic and economic diversity reflective of the municipality in which it is located, and (2) the professional competence and relevant experience of its management and staff.

Required Submissions.

Each applicant must include a letter of support from the municipality’s chief elected official and a statement that the applicant agrees to locate its office in a community impact zone sSB1104 / File No.

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663 once these zones are designated.

Deadlines.

The council must accept applications from October 1, through January 31, 2022, and announce its selections by March 1, 2022.

The council may designate only one CDC for each municipality.

Annual Budget The council must establish an annual budget that sets forth the amount in the CDC Trust Fund to be (1) invested;

(2) disbursed for CDC andCDCU programs, services,activities,and expenses;and (3) set aside for the intensive reading instruction program and mental health or substance abuse disorder treatment services described below.

Intensive Reading Instruction Program.

The council’s budget must set aside an amount equal to the amount appropriated in the state budget act, up to $3 million, for the State Department of Education’s (SDE) intensive reading program for grades kindergarten through three and select low-achieving elementary schools.

The council may reduce the amount set aside for the program if there are insufficient funds in the CDC Trust Fund to provide for the CDC and CDCU purposes established under the bill.

The council must make the set-aside funds available to implement or support the intensive reading instruction program or any statewide early literacy initiative SDE develops and implements, regardless of whether the program relates to a community impact zone or qualifies for other CDC or CDCU programs or funding.

The set-aside funds must supplement any existing or available funding.

The council must (1) establish application forms and criteria for the funds and (2) give first priority to applications from schools located in a community impact zone, as long as all such schools apply.

Any funds awarded to these schools must be distributed on a zone-wide basis and be used solely to make the program available to all students reading below proficiency level who live, or attend a school, in the zone.

The council must give second priority to applications from schools sSB1104 / File No.

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663 located in a distressed municipality on the basis of their student reading achievement level, as determined by the SDE commissioner.

Mental Health and Substance Abuse Disorder Treatment Services.

The council must set aside an amount in its annual budget to provide financial assistance to health care providers and facilities providing mental health or substance abuse disorder treatment services in any municipality.

The council must (1) determine the amount to be set aside, (2) establish eligibility requirements for the assistance, and (3) publicize its availability to the relevant community.

Investment Plan The council must, in consultation with the treasurer and Connecticut Green Bank’s chief executive officer, adopt an investment plan with the goals of (1) yielding long-term investment returns to support CDC and CDCU programs, services, and activities and (2) supporting a substantial portion of the fund’s annual expenditures from the investment returns.

The initial investment plan must establish an investment strategy for at least 20 years;

the council may periodically revise the plan by affirmative vote.

The council must annually review the plan and investment returns generated and adjust the amounts invested and disbursed each year accordingly.

Social Impact Bonds The council must develop a proposal to allow social impact bonds to be issued by the state to support public schools located in community impact zones.

By February 1, 2022, theOPM secretary must report to the General Assembly on the proposal, including recommendations on ways to leverage the opportunity zone program to support these schools.

Audits The council may require an external, independent audit of any CDC or CDCU.

It may also request the Auditors of Public Accounts to perform audits and other related evaluations to facilitate the council’s sSB1104 / File No.

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663 responsibilities under the bill.

The auditors must perform any requested audits and evaluations.

Legislative Report Annually, beginning by February 1, 2024, the council must report to the governor and General Assembly and provide:

1.

a list of CDCs, CDCUs, and community impact zones designated to date and 2.

a summary ofCDC andCDCU programs,services, activities,and efforts and the CDC Trust Fund disbursements to support them.

§ 3 — COMMUNITY IMPACT ZONES The bill establishes a process by which the OPM secretary and CDC oversight council identify and designate community impact zones (i.e., the targeted areas in which CDCs and CDCUs focus their activities).

Metrics for Selecting Census Tracts The process begins with the OPM secretary selecting eligible census tracts within distressed municipalities that will be eligible to have a designated community impact zone.

In selecting the tracts, the secretary must consider the:

1.

educational level attained by the tract’s population, specifically thepercentagethathasattainedanassociateorbachelor’sdegree;

2.

most recent thirdgradereading andmathscoresonthestatewide mastery test;

3.

unemployment rate;

4.

state of the local economy, employment availability, and job access and diversity;

5.

percentage of the population receiving public assistance;

6.

percentage of the population below the federal poverty level;

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663 7.

homeownership rate;

8.

percentage of vacant housing;

and 9.

crime rates.

By August 1, 2021, the OPM secretary must release a list of census tractseligibleforconsideration,basedonademonstrationofthegreatest socioeconomic need using the metrics listed above.

Zone Criteria In addition to releasing a list of eligible census tracts, the secretary must also, by August 1, 2021, release the criteria for determining areas within the tracts to be designated as community impact zones.

The criteria must take into consideration the goals, purposes, and requirements the bill establishes for CDCs and may give weight to one or more of the following:

1.

the existence of a public elementary school;

early childhood center;

or community center serving children, seniors, or both in the area;

2.

the existence of a local community organization comprised of residents and leaders in the area whose role complements the goals, purposes, and requirements for CDCs;

3.

the area’s proximity to existing or planned public transportation;

and 4.

existing access to an asset-based housing organization focusing on homeownership and financial literacy.

Designated Zones By June 1, 2022, each CDC must submit a proposal to the council for up to two geographically distinct areas within an eligible census tract in which it is located to be designated as a community impact zone.

The council must, by August 1, 2022, announce its selections.

It must sSB1104 / File No.

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663 designate one zone for a municipality with a population of 100,000 or fewer and two zones for a municipality with a population greater than 100,000.

If the council rejects a proposal or does not designate an area that a CDC proposed, it may allow the CDC to resubmit a proposal if a zone has not otherwise been designated.

CDC Offices By February 1, 2023, or as soon as practicable following the zone designations, each CDC must establish an office or relocate its office in the zone.

§ 4 — CDC TRUST FUND Establishment The bill establishes the CDC Trust Fund as a separate, nonlapsing fund and requires it to contain any money the law requires.

The fund’s investment earnings must be credited to its assets.

The CDC oversight council must use the fund for the CDC and CDCU purposes established under the bill.

(The bill does not appear to authorize the fund to be used for the reading instruction and mental health and substance abuse treatment programs described above.) Investments The treasurer must (1) invest the fund’s deposits in a reasonable and appropriate way to achieve the fund’s objectives;

(2) exercise a prudent person’s discretion and care;

and (3) consider such things as rate of return, risk, term or maturity, portfolio diversification, liquidity, projected disbursements and expenditures, and expected gifts.

The bill prohibits the treasurer from requiring the trust to invest directly in (1) obligations of the state or any of its political subdivisions or (2) investments or other funds he administers.

The treasurer must continuously invest and reinvest the fund’s assets, consistent with the fund’s objectives, until they are disbursed.

Report sSB1104 / File No.

663 51 sSB1104 File No.

663 The treasurer must report, annually by December 31, to the CDC oversight council and Finance, Revenue and Bonding Committee on the fund’s receipts, disbursements, assets, investments, liabilities, and administrative costs for the prior fiscal year.

§ 5 — STATE, MUNICIPAL, AND NONPROFIT ORGANIZATION DEPOSITS IN A CDCU The bill authorizes the state, municipalities, and federally tax-exempt 501(c) organizations that are exempt from property tax to make deposits with a CDCU to be invested by the CDCU to further the bill’s community restoration and revitalization purposes.

Each CDCU receiving such a deposit must provide a rate of return that is at least the London Interbank Offered Rate (LIBOR).

§ 6 — LOCAL SALES TAX ON CANNABIS AND CANNABIS PRODUCTS Rate and Base The bill imposes a 3% local sales tax on the sale of all cannabis and cannabis products, beginning on and after the date DCP first issues a cannabis retailer license.

The local tax applies in addition to the 6.35% state sales tax on these products and must be administered in the same mannerasthestatetax(statesalestaxonthese productsgoestotheCDC Trust Fund (§ 7)).

Underthebill,“cannabis”isanypartofaplantorspeciesofthegenus cannabis, whether or not it is growing, including its seeds and resin;

its compounds, manufactures, salts, derivatives, mixtures, and preparations;

and cannabinon, cannabinol, and cannabidiol.

It excludes a plant’s mature stalks;

fiber made from the stalks;

a compound, manufacture, salt, derivative, mixture, or preparation made from the stalks;

fiber, oil, or cake;

sterilized seeds;

industrial hemp;

and marijuana authorized to be cultivated or sold for palliative use.

A “cannabis product” is a cannabis concentrate (e.g., oils and tinctures) or product containing cannabis, which may be combined with other ingredients, that is intended for use or consumption.

It excludes raw cannabis plants.

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663 Tax Remittance Each licensed cannabis retailer making such sales to consumers (i.e., individuals age 21 or older) must (1) file a tax return with the DRS commissioner, on or before the last day of each calendar quarter, for the immediatelyprecedingquarterand(2)remitthetaxduewiththereturn.

The returns must (1) be in the form and contain the information the commissioner prescribes and (2) indicate the municipality (i.e., town, city, borough, consolidated town and city, or consolidated town and borough) in which the sale occurred.

The bill prohibits any tax credits from being applied against the tax.

Municipal Cannabis Revenue Account The DRS commissioner must deposit any local sales tax collected into a new municipal cannabis revenue account.

The bill establishes the account as a separate General Fund account and requires it to contain any money the law requires.

The DRS commissioner must use the account’s funds to provide the disbursements described below to each municipality in which cannabis retailers are selling cannabis and cannabis products to consumers.

Accounting.

The commissioner must maintain (1) an accounting of all deposits into the account, aggregated by municipality;

(2) a list of amounts remitted by each cannabis retailer;

and (3) any other information he deems necessary.

He must make the respective information available to each municipality in which a cannabis retailer is located.

Distributions.

Beginning in the second calendar quarter after the initial deposit into the account, the commissioner must distribute to each municipality in which a cannabis retailer is located, and for which a point-of-sale can be determined, an amount calculated on a point-of- sale basis.

Any funds remaining at the close of the fiscal year for which the point-of-sale cannot be determined must be transferred to the CDC Trust Fund.

Delinquent Taxes sSB1104 / File No.

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663 Under the bill, delinquent taxes are subject to a penalty of 10% of the tax due and unpaid or $50, whichever is greater, plus interest at 1% of the unpaid principal for each month or fraction of a month from thedue date to the payment.

Subject to the Penalty Review Committee provisions, the commissioner may waive all or part of these penalties when it is proven to the commissioner’s satisfaction that failing to pay the tax within the timeframe was due to reasonable cause and was not intentional or due to neglect.

Liability for Willful Nonpayment of Taxes Collected The bill makes those who are responsible for collecting and paying the tax on behalf of a cannabis cultivation facility or cannabis retailer, respectively, personally liable if they willfully fail to collect, truthfully account for, or pay the tax and it cannot be collected from the business.

Under the bill, an individual or officer, partner, or employee of a business who is responsible for paying the tax on the facility’s or retailer’s behalf is personally liable for the full unpaid tax, plus interest and penalties, if (1) he or she willfully fails to collect, truthfully account for, and pay it, or willfully attempts to evade or defeat the tax and (2) the tax cannot otherwise be collected from the facility or retailer.

The dissolution of the business does not free the person from liability.

DRS must credit any amount collected from such a person against the taxes owed by the facility or retailer.

Tax Enforcement The bill applies the same collection, enforcement, and appeal process requirements established in statute for the admissions and dues taxes to the cannabis excise tax and local sales tax, unless the provision is inconsistent with the bill.

Under these provisions, the DRS commissioner can (1) require the facilities and retailers to keep certain records and examine all of their records and (2) administer oaths, subpoena witnesses, and receive testimony.

The facilities and retailers can request a hearing on the amount of taxes they are required to pay, sSB1104 / File No.

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663 and appeal the hearing decision if aggrieved.

Lastly, an additional penalty may be imposed on facilities and retailers for willful violations or filing fraudulent returns.

Regulations The bill authorizes the DRS commissioner to adopt implementing regulations for the tax.

Recording Revenue The bill authorizes the comptroller to record the revenue the taxes generate each fiscal year no later than five business days after the end of July following the end of the fiscal year.

§§ 7 & 8 — STATE SALES TAX ON CANNABIS AND CANNABIS PRODUCTS The bill imposes a 20% state tax on sales of cannabis and cannabis products (as described above) and requires the DRS commissioner to deposit the revenue into the CDC Trust Fund for each calendar quarter ending on or after thedate of the initialremittance of the tax.

It prohibits any tax credits from being allowed against the tax.

BACKGROUND Related Bills sSB 888 (File 569), favorably reported by the Judiciary Committee, establishes a state excise tax on cannabis and directs the revenue to the General Fund and two new accounts for specified purposes.

It also imposes a 3% municipal sales tax on cannabis and cannabis products that applies in addition to the state’s 6.35% sales tax and requires municipalities to use the revenue for specified purposes.

sHB 6443, favorably reported by the Finance, Revenue and Bonding Committee, directs any taxes collected and retained by the state on or after July 1, 2021 on recreational cannabis and cannabis products to a new Connecticut Equitable Investment Fund.

Distressed Municipalities By law, the DECD commissioner must annually designate distressed sSB1104 / File No.

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663 municipalities based on a combination of economic, education, demographic, and housing criteria.

In 2020, he designated the following municipalities as distressed:

Ansonia Bridgeport Bristol Chaplin Derby East Hartford East Haven Griswold Hartford Meriden Montville New Britain New Haven New London Norwich Preston Putnam Sprague Stratford Torrington Voluntown Waterbury West Haven Winchester Windham COMMITTEE ACTION Finance, Revenue and Bonding Committee Joint Favorable Yea 30 Nay 18 (04/22/2021) sSB1104 / File No.

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