SB 478 — AN ACT CONCERNING PROPERTY ASSESSMENT APPEALS AND HOMEOWNERSHIP INCENTIVE TRACTS, ESTABLISHING TAX CREDIT VOUCHER PROGRAMS TO INCENTIVIZE COMMERCIAL LEASES AND RESIDENTIAL CONVERSIONS AND AUTHORIZING THE CAPITAL REGION DEVELOPMENT AUTHORITY TO SOLICIT INVESTMENT FUNDS.

(7)sSB478 "Qualified/ expenditure"File means any costs incurred for the physical construction of a project, excluding (A) the owner's personal labor, (B) the cost of a new addition, except as required to comply with any LCO No.

4009619 10 ofsSB478 26File RaisedNo. Bill No.478 provision of the State Building Code or the State Fire Safety Code, and (C) any nonconstruction costs such as architectural fees, legal fees or financing fees;

619 (7) "Qualified expenditure" means any costs incurred for the physical construction of a project, excluding (A) the owner's personal labor, (B) the cost of a new addition, except as required to comply with any provision of the State Building Code or the State Fire Safety Code, and (C) any nonconstruction costs such as architectural fees, legal fees or financing fees;

For a project under subparagraph (D) of this subdivision, the owner shall submitsSB478 a/ copyFile of the data required under said subparagraph to the Commissioner of Housing and said commissioner shall, upon confirming that the project complies with the definition of affordable LCO No.

4009619 11 ofsSB478 26File RaisedNo. Bill No.478 housing under section 8-39a of the general statutes, issue a certificate to the owner of such confirmation.

619 submit a copy of the data required under said subparagraph to the Commissioner of Housing and said commissioner shall, upon confirming that the project complies with the definition of affordable housing under section 8-39a of the general statutes, issue a certificate to the owner of such confirmation.

The tax credit voucher shall be in an amount equal to thethelesser lesser of thecredit(A)the credit allocated under the provisions of subdivision (3) of subsection (b) of this sectionsubsection, or (A) twenty-five per cent of the actual qualified expenditures, or (B) for(i) atwenty-five projectsSB478 that/ includesFile affordable housing units as set forth in subparagraph (C) of subdivision (3) of this subsection, thirty per cent of LCO No.

4009619 12 ofsSB478 26File RaisedNo. Bill No.478 theactualqualifiedexpenditures.To claimacredit against atax set forth in subsection (c) of this section, the holder of the tax credit voucher shall file such voucher with the holder's state tax return.

619 per cent of the actual qualified expenditures, (ii) for a project located in a federally designated opportunity zone, thirty per cent of the actual qualified expenditures, or (iii) for a project that includes affordable housing units as set forth in subparagraph (C) of subdivision (3) of this subsection, thirty per cent of the actual qualified expenditures.

To claim a credit against a tax set forth in subsection (c) of this section, the holder of the tax credit voucher shall file such voucher with the holder's state tax return.

Whenever such credit is sold, assigned or otherwise transferred, the transferor and transferee shall jointly submit written notification of such sale, assignment or transfer to the Department of Economic and Community Development not later thanthirty daysafter such sale,assignment or transfer.Suchnotification shallsSB478 include/ theFile taxNo. credit voucher number, the date of transfer, the amount ofsuchcredit transferred,thecredit balance before andafter the transfer, the tax identification numbers for the transferor and the transferee and any other information required by the department.

LCO619 13 sSB478 File No.

4009619 13shall ofinclude 26the Raisedtax Billcredit No.478voucher Failurenumber, to comply with the provisionsdate of thistransfer, subdivisionthe shallamount resultofsuchcredit intransferred,thecredit abalance disallowancebefore ofandafter the credittransfer, untilthe theretax isidentification fullnumbers compliancefor on the parttransferor ofand the transferortransferee and transfereeany and,other forinformation arequired secondby or third transfer, on the partdepartment. of all subsequent transferors and transferees.

Failure to comply with the provisions of this subdivision shall result in a disallowance of the credit until there is full compliance on the part of the transferor and transferee and, for a second or third transfer, on the part of all subsequent transferors and transferees.

(d) On or before July 1,2023, and annually thereafter,thereafter,the the Department of Economic and Community Development shall submit a report, in accordancesSB478 with/ theFile provisionsNo. of section 11-4a of the general statutes, to the joint standing committees of the General Assembly having cognizance of matters relating to commerce, planning and development and finance, revenue and bonding.

Such619 report14 shallsSB478 includeFile the total LCO No.

4009619 14accordance ofwith 26the Raisedprovisions Billof No.478section amount11-4a of creditsthe reservedgeneral pursuantstatutes, to subdivisionthe (3)joint ofstanding subsectioncommittees (b) of thisthe sectionGeneral forAssembly thehaving previouscognizance fiscalof yearmatters andrelating theto followingcommerce, informationplanning forand eachprojectdevelopment forand whichacreditfinance, hasrevenue beenreserved:(1)Theand totalprojectbonding. costs;

Such report shall include the total amount of credits reserved pursuant to subdivision (3) of subsection (b) of this section for the previous fiscal year and the following information for eachproject for whichacredit has beenreserved:(1)The totalproject costs;

(6)sSB478 [to]/ ToFile manageNo. facilities through contractual agreement or other legal instrument;

619 15 sSB478 File No.

619 (6) [to] To manage facilities through contractual agreement or other legal instrument;

LCO(8) No.[upon] Upon request from the legislative body of a city or town within the capital region, to work with such city or town to assist in the developmentandredevelopmenteffortstostimulatetheeconomyofthe region and increase tourism;

4009 15 of 26 Raised Bill No.478 (8) [upon] Upon request from the legislative body of a city or town within the capital region, to work with such city or town to assist in the developmentandredevelopmenteffortstostimulatetheeconomyofthe region and increase tourism;

(3)[to]Toemploysuchassistants,agentsandotheremployeesasmay be necessary or desirable to carry out its purposes, which employees shall be exempt from the classified service and shall not be employees, as defined in subsection (b) of section 5-270, to fix their compensation, to establish and modify personnel procedures as may be necessary from timesSB478 to/ timeFile andNo. to negotiate and enter into collective bargaining agreements with labor unions;

619 16 sSB478 File No.

619 time to time and to negotiate and enter into collective bargaining agreements with labor unions;

LCO(5)[to]To No.procure insurance against anyliabilityorlossinconnection with its property and other assets, in such amounts and from such insurers as it deems desirable and to procure insurance for employees;

4009 16 of 26 Raised Bill No.478 (5)[to]To procure insurance against anyliabilityorlossinconnection with its property and other assets, in such amounts and from such insurers as it deems desirable and to procure insurance for employees;

(1) To acquire, by gift, purchase, condemnation, lease or transfer, lands or rights-in-land in connection with the convention center facilities,sSB478 the/ conventionFile center hotel, the other on-site related private development or related infrastructure improvements and to sell and lease or sublease, as lessor or lessee or sublessor or sublessee, any portion of its real property rights, including air space above or areas belowtheconventioncenterfacilitiesortheconventioncenterhotel,and LCO No.

4009619 17 ofsSB478 26File Raised Bill No.

478619 facilities, the convention center hotel, the other on-site related private development or related infrastructure improvements and to sell and lease or sublease, as lessor or lessee or sublessor or sublessee, any portion of its real property rights, including air space above or areas belowtheconventioncenterfacilitiesortheconventioncenterhotel,and enter into related common area maintenance, easement, access, support and similar agreements, and own and operate the convention center facilities, provided that such activity is consistent with all applicable federal tax covenants of the authority, transfer or dispose of any property or interest therein acquired by it, at any time and to receive and accept aid or contributions, from any source, of money, labor, property or other things of value, to be held, used and applied to carry out the purposes of this section, subject to the conditions upon which such grants and contributions are made, including, but not limited to, gifts or grants from any department, agency or instrumentality of the United States or this state for any purpose consistent with this section;

(4) [to] To contract and be contracted with provided, if management, operating or promotional contracts or agreements or other contracts or agreementssSB478 are/ enteredFile into with nongovernmental parties with respect to property financed with the proceeds of obligations the interest on which is excluded from gross income for federal income taxation, the board of directors shall ensure that such contracts or agreements are in compliance with the covenants of the authority upon which such tax LCO No.

4009619 18 ofsSB478 26File RaisedNo. Bill No.478 exclusion is conditioned;

619 agreements are entered into with nongovernmental parties with respect to property financed with the proceeds of obligations the interest on which is excluded from gross income for federal income taxation, the board of directors shall ensure that such contracts or agreements are in compliance with the covenants of the authority upon which such tax exclusion is conditioned;

to contract for construction, development, concessions and the procurement of goods andsSB478 services/ andFile toNo. establish and modify procurement procedures from time to time to implement the foregoing in accordance with the provisions of section 32-603;

(8)619 [to]19 TosSB478 adoptFile procedures (A) which shall require that contractors LCO No.

4009619 19 of 26 Raised Bill No.478 or subcontractors engaged in the convention center project and theservices construction of the convention center hotel take affirmative action to provide equal opportunity for employment without discrimination as to race, creed, color, national origin or ancestry or gender, (B) to ensure that the wages paid on an hourly basis to any mechanic, laborer or workman employed by such contractor or subcontractor with respect to the convention center project or the construction of the convention center hotel shall be at a rate customary or prevailing for the same work in the same trade or occupation in the town and city of Hartford, unless otherwise established pursuant to aestablish project labor agreement, and (C)modify whichprocurement shallprocedures requirefrom thetime prime construction contractors for the convention center project and for the convention center hotel, and the principal facility managers of the convention center facilities and the convention center hotel to maketime reasonable efforts to hireimplement or cause to be hired available and qualified residents of the cityforegoing of Hartford and available and qualified members of minorities, as defined in sectionaccordance 32-with 9n, for construction and operation jobs at the conventionprovisions center facilities and the convention center hotel at all levels of constructionsection and32-603; operation;

(8) [to] To adopt procedures (A) which shall require that contractors or subcontractors engaged in the convention center project and the construction of the convention center hotel take affirmative action to provide equal opportunity for employment without discrimination as to race, creed, color, national origin or ancestry or gender, (B) to ensure that the wages paid on an hourly basis to any mechanic, laborer or workman employed by such contractor or subcontractor with respect to the convention center project or the construction of the convention center hotel shall be at a rate customary or prevailing for the same work in the same trade or occupation in the town and city of Hartford, unless otherwise established pursuant to a project labor agreement, and (C) which shall require the prime construction contractors for the convention center project and for the convention center hotel, and the principal facility managers of the convention center facilities and the convention center hotel to make reasonable efforts to hire or cause to be hired available and qualified residents of the city of Hartford and available and qualified members of minorities, as defined in section 32- 9n, for construction and operation jobs at the convention center facilities and the convention center hotel at all levels of construction and operation;

(10)sSB478 [to]/ ToFile borrow money and to issue bonds, notes and other obligationsoftheauthority totheextent permittedunder section32-607, to fund and refund the same and to provide for the rights of the holders thereof and to secure the same by pledge of assets, revenues, notes and LCO No.

4009619 20 ofsSB478 26File RaisedNo. Bill No.478 state contract assistance as provided in section 32-608;

619 (10) [to] To borrow money and to issue bonds, notes and other obligationsoftheauthority totheextent permittedunder section32-607, to fund and refund the same and to provide for the rights of the holders thereof and to secure the same by pledge of assets, revenues, notes and state contract assistance as provided in section 32-608;

(2)sSB478 [in]/ InFile consultationNo. with the chief elected official of the town and city of Hartford, to condemn properties which may be necessary or desirable to effectuate the purposes of the authority to be exercised in accordance with the provisions of part I of chapter 835;

LCO619 21 sSB478 File No.

4009619 21(2) of[in] 26In Raisedconsultation Billwith No.478the (3)chief [to]elected Toofficial formulateof plansthe for,town acquire,and financecity andof develop,Hartford, lease,to purchase,condemn construct,properties reconstruct,which repair,may improve,be expand,necessary extend,or operate,desirable maintainto andeffectuate marketthe facilities,purposes providedof suchthe activitiesauthority areto consistentbe exercised in accordance with allthe applicableprovisions federalof taxpart covenantsI of thechapter authority;835;

(3) [to] To formulate plans for, acquire, finance and develop, lease, purchase, construct, reconstruct, repair, improve, expand, extend, operate, maintain and market facilities, provided such activities are consistent with all applicable federal tax covenants of the authority;

(7)sSB478 [to]/ ToFile contractNo. for construction, development, concessions and the procurement of goods and services and to establish and modify procurement procedures, from time to time, to implement the foregoing in accordance with the provisions of section 32-603;

LCO619 22 sSB478 File No.

4009619 22(7) of 26 Raised Bill No.478 (8) [to] To borrowcontract moneyfor andconstruction, todevelopment, issueconcessions bonds, notes and otherthe obligationsoftheauthorityprocurement totheextentof permittedundergoods section32-607, to fund and refundservices the same and to provideestablish forand themodify rightsprocurement ofprocedures, thefrom holderstime thereofto andtime, to secureimplement the sameforegoing byin pledgeaccordance ofwith assets,the revenues,provisions notesof and state contract assistance, as provided in section 32-608;32-603;

(8) [to] To borrow money and to issue bonds, notes and other obligationsoftheauthority totheextent permittedunder section32-607, to fund and refund the same and to provide for the rights of the holders thereof and to secure the same by pledge of assets, revenues, notes and state contract assistance, as provided in section 32-608;

(2) No corporation or other business entity shall be prohibited from investing funds pursuant to this subdivision for any such project by virtue of the fact that a member of the board of directors of the authority issSB478 an/ officer,File director,No. shareholder or employee of such corporation or business entity, provided such member of the board shall abstain from deliberation, action or vote by the authority in specific request to such corporation or business entity.

LCO619 23 sSB478 File No.

4009619 23is of 26 Raised Bill No.478 [(e)] (f) The authority shall have the power to negotiate, and, with the approval of the Secretary of the Office of Policy and Management, to enter into an agreementofficer, withdirector, anyshareholder private developer, owner or lesseeemployee of anysuch buildingcorporation or improvementbusiness locatedentity, onprovided landsuch inmember aof privatethe developmentboard district,shall asabstain definedfrom indeliberation, sectionaction 32-600,or asvote amended by thisthe act,authority providingin forspecific paymentsrequest to thesuch authoritycorporation inor lieubusiness ofentity. real property taxes.

Such[(e)] an(f) agreementThe authority shall behave madethe apower conditionto ofnegotiate, anyand, privatewith rightthe approval of developmentthe withinSecretary of the privateOffice developmentof district,Policy and shallManagement, includeto aenter requirementinto thatan suchagreement with any private developer, owner or lessee makeof good-any faitheffortstohire,orbuilding causeor toimprovement behired,availableandqualifiedlocated minorityon businessland enterprises,in a private development district, as defined in section 4a-60g,32-600, toas provideamended constructionby servicesthis andact, materialsproviding for improvementspayments to bethe constructedauthority withintheprivatein developmentlieu district inaneffortto achieveaminority business enterprise utilization goal of tenreal perproperty centtaxes. of the total costs of construction services and materials for such improvements.

Such an agreement shall be made a condition of any private right of development within the private development district, and shall include a requirement that such private developer, owner or lessee make good- faitheffortstohire,or cause to behired,availableandqualifiedminority business enterprises, as defined in section 4a-60g, to provide construction services and materials for improvements to be constructed withintheprivate development district inaneffortto achieveaminority business enterprise utilization goal of ten per cent of the total costs of construction services and materials for such improvements.

(1) Administrative support and services, including all staff support, necessary for the operations of the authority may be provided by the Department of Economic and Community Development, (2) the Department of Economic and Community Development is authorized to administer contracts and accounts of the authority, and (3) provision is made for the coordination of management and operational activities at the convention center, sport, exhibition or coliseum facilities and the stadium facility, that may include:sSB478 / File No.

(A)619 Provision24 forsSB478 jointFile procurement and contracting, (B) the sharing of services and resources, (C) the coordination of promotional and booking activities, and (D) other arrangements designed to enhance facility utilization and revenues, reduce operating costs or achieve LCO No.

4009619 24include: of 26 Raised Bill No.478 operating efficiencies.

(A) Provision for joint procurement and contracting, (B) the sharing of services and resources, (C) the coordination of promotional and booking activities, and (D) other arrangements designed to enhance facility utilization and revenues, reduce operating costs or achieve operating efficiencies.

Subdivision (9) of section 32-600 of the 2022 supplement to the general statutes is repealed and the following is substituted in lieu thereofsSB478 (Effective/ OctoberFile 1,No. 2022):

(9)619 "Private25 developmentsSB478 district"File means any land on the Adriaen's Landing site that is designated jointly by the Secretary of the Office of LCO No.

4009619 25thereof of(Effective 26October Raised1, Bill2022): No.

478(9) "Private development district" means any land on the Adriaen's Landing site that is designated jointly by the Secretary of the Office of Policy and Management and the authority as available for the purpose of on-site related private development and in need of inducement for private development andoperation.Only landonwhich constructionof a building or improvement is to commence on or after July 1, 2008, shall be so designated.

7 October 1, 2022 32-600(9) Statement of Purpose:Legislative Commissioners:

ToIn (1)Section require5(b)(4), the filingpenultimate ofsentence anwas appraisalrewritten for certainclarity property assessment appeals and prohibitinternal contingencyconsistency. fee agreements for assessment appeals, (2) enlarge the eligible area for a homeownership incentive program and revise the provisions of such program, (3) establish a tax credit voucher program to incentivize new or expanded leases of commercial office space, (4) establish a tax credit voucher program for the conversion of certain commercial office buildings to mixed-use or residentialbuildings, and(5)authorizetheCapital RegionDevelopment Authority to solicit investment funds.

[ProposedFIN deletionsJoint areFavorable enclosedSubst. in brackets.

ProposedsSB478 additions/ areFile indicated by underline, except that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not underlined.] LCO No.

4009619 26 ofsSB478 26File No.

619 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 23 $ FY 24 $ Department of Revenue Services GF - Revenue See Below See Below Loss Note:

GF=General Fund Municipal Impact:

Municipalities Effect FY 23 $ FY 24 $ Hartford Precludes Potential Potential Revenue Loss Explanation The bill, which makes changes to certain property tax assessment appeals and establishes new tax credit programs, results in the following:

Sections 1 and 2 have no fiscal impact.

They 1) require property owners who appeal board of assessment appeal decisions to the Superior Court to submit property appraisals;

and 2) restrict contingency fee agreements in certain property assessment appeals cases.

This does not result in any fiscal impact to the Judicial Department as the court system disposes of over 400,000 cases annually and the number of cases is not anticipated to be great enough to have a material impact on court operations.

Section 3 modifies and expands an existing homeownership incentive program in Hartford, which may result in a minimal General sSB478 / File No.

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619 Fund revenue loss to the extent the geographical expansion results in additional program participants.

It also precludes potential municipal revenue losses (given constant mill rates) by eliminating property tax abatements under the program.

Section4 establishesa newbusinesstax creditprogram to incentivize new or expanded commercial office space leases in designated municipal downtown areas.

This results in a potential General Fund revenue loss to the extent that eligible program participants apply and are granted credits by the Department of Economic and Community Development, the magnitude of which is dependent on the specifics of qualifying projects.

Section 5 establishes a new business tax credit program for property owners, including municipalities and businesses, rehabilitating, or renovating commercial office buildings in distressed municipalities to convert them to residential or mixed uses.

This results in a General Fund revenue loss of up to $60 million annually to the extent that qualifying projects are undertaken.

Sections 6 – 7, which do not result in any fiscal impact to the state, clarify that the Capital Region Development Authority (CRDA) may solicit private investment funds from businesses to finance projects in conjunction with CRDA with certain terms and requirements.

Under current practice, CRDA seeks out opportunities to leverage private investment for appliable projects.

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

sSB478 / File No.

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619 OLR Bill Analysis sSB 478 AN ACT CONCERNING PROPERTY ASSESSMENT APPEALS AND HOMEOWNERSHIP INCENTIVE TRACTS, ESTABLISHING TAX CREDIT VOUCHER PROGRAMS TO INCENTIVIZE COMMERCIAL LEASES AND RESIDENTIAL CONVERSIONS AND AUTHORIZING THE CAPITAL REGION DEVELOPMENT AUTHORITY TO SOLICIT INVESTMENT FUNDS.

SUMMARY This bill requires property owners who are aggrieved by a board of assessment appeals’ decision and appeal their real property’s valuation to the Superior Court to file a property appraisal with the court within days after filing their appeal.

In certain assessment appeals brought to the Superior Court, it also prohibits (1) anyone compensated on a contingency fee basis from representing an applicant and (2) expert witnesses compensated on a contingency fee basis from testifying.

Current law requires Hartford to implement a homeownership incentive program providing 100% municipal property tax abatements and state income tax exemptions for residents of designated areas who meet specified criteria.The bill (1) limits the tax benefits provided under the program to a 100% income tax exemption and (2) expands the areas Hartford must designate for the program from two census blocks to at least two census tracts.

The bill also establishes two new business tax credit programs.

The first isdesignedto incentivizenewor expandedcommercialoffice space leases in certain distressed municipalities.

The credit equals up to 10% of the amount of (1) lease payments made by qualifying participants for up to 10 years and (2) capital improvements made to newly leased or additionally leased commercial office space.

It establishes eligibility criteria for the program, including requirements that the (1) property or project be located in the downtown area of a distressed municipality sSB478 / File No.

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619 with a population of 80,000 or more (i.e., Bridgeport, Hartford, or Waterbury) and (2) business meet specified minimum investment and employment thresholds.

The second tax credit program is for property owners, including municipalities, rehabilitating or renovating commercial office buildings indistressedmunicipalitiestoconvertthemtoresidentialor mixeduses.

The credit equals 25% of the project’s qualified expenditures or 30% if the project is in an opportunity zone or meets specified affordable housing criteria.

The bill caps the total amount of credits that may be awarded at $60 million per year and $9 million per project.

Lastly, the bill authorizes the Capital Regional Development Authority (CRDA) to solicit private investment funds from companies for projects it undertakes and establishes conditions under which businessesmay make these investmentsifoneoftheirofficers,directors, shareholders, or employees is a CRDA board member.

EFFECTIVE DATE:

October 1, 2022, except that the tax credit provisions are effective July 1, 2022.

§§ 1 & 2 — REAL PROPERTY TAX ASSESSMENT APPEALS Property Appraisal Requirement for Appeals Under CGS § 12- 117a Existing law allows property owners to appeal their assessments to a municipality’s board of assessment appeals.

The appeals board must hold a hearing on each appeal, except for those on commercial, industrial, utility, or apartment properties assessed at over $1 million.

A taxpayer aggrieved by an appeals board’s decision can appeal to Superior Court (CGS § 12-117a).

In property tax assessment appeals concerning the valuation of real property brought to the Superior Court under this law, the bill requires applicantsto file a property appraisalwiththe court within90daysafter filing the appeal.

The appraisal must be completed by an individual or company licensed to perform real estate appraisals in Connecticut.

The bill authorizes the court to (1) extend the 90-day period for good cause sSB478 / File No.

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619 and (2) dismiss the appeal if the appraisal is not timely filed.

Contingency Fee Agreements In certain property tax assessment appeals brought to the Superior Court where the assessed value of the property is $700,000 or less, the bill prohibits (1) anyone compensated on a contingency fee basis from representing an applicant and (2) expert witnesses compensated on a contingency fee basis from testifying.

The bill’s provisions apply to appeals made by a taxpayer (1) aggrieved by a decision of the board of assessment appeals (CGS § 12- 117a);

(2) following a board’s decision not to hear an appeal concerning commercial, industrial, utility, or apartment property assessed at over $1 million (CGS § 12-111);

or (3) alleging an illegal property tax (CGS § 12-119).

§ 3 — HOMEOWNERSHIP INCENTIVE PROGRAM Current law requires 100% municipal property abatements and state income tax exemptions for residents meeting specified criteria in a municipalitythatannuallyadjuststhepropertytaxassessmentratiosfor residential property.

Because Hartford is the only municipality that adjusts these ratios, it istheonly municipality where these benefitsmust be granted.

To date, it has not yet implemented the program.

The bill (1) limits the tax benefits provided under the program to a 100% income tax exemption and (2) expands the areas Hartford must designate for the program from two census blocks to at least two census tracts.

As under current law, the designated areas must have a homeownership rate of 15% or less to qualify.

The bill makes various conforming changes to the program.

As is required under current law, the state must provide the income tax exemptions to the following people who reside in the designated areas:

1.

owners of owner-occupied homes (generally residential structures with three or fewer units) and sSB478 / File No.

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619 2.

people renting dwellings in the designated areas as their primary residence who graduated from a four-year college within two years before signing the lease agreement.

As under current law, the exemption lasts until the homeownership rate for one- to three-unit dwellings in the designated area reaches or exceeds 49%.

At that point, the municipality must notify the ownersand eligible renters that the exemption will be phased out over five years.

The phase-out must reduce the exemption’s value by 20% per year until the residents are liable for 100% of the income taxes owed.

§ 4 — TAX CREDIT FOR NEW OR EXPANDED COMMERCIAL OFFICE SPACE LEASES Credit The bill establishes a new business tax credit program, administered by theDepartmentofEconomicandCommunity Development (DECD), to incentivize new or expanded commercial office space leases in designated municipal downtown areas.

Program Participant Eligibility Requirements To participate in the tax credit program, an applicant must meet the following requirements:

1.

the property or project (presumably the commercial office building where the applicant’s business is, or will be, located) is located within the “downtown” of a distressed municipality (see BACKGROUND) with a population of 80,000 or more (currently, only Bridgeport, Hartford, and Waterbury meet this criteria);

2.

the lease must be (a) a new lease for commercial office space previously unoccupied by the applicant or a lease that expands the applicant’s existing office space;

(b) for new or additional commercial office space of at least 10,000 square feet;

and (c) for a minimum of three years, but cannot be a sublease;

and 3.

the applicant must be (a) already located in the same municipality as the office space it will be leasing, (b) relocating sSB478 / File No.

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619 from another state, or (c) relocating from another municipality in the state and present a letter from that municipality’s chief executive officer or chief economic development official supporting the applicant’s move or expansion.

Under the bill, a distressed municipality’s “downtown” is its central business district or other commercial neighborhood area that serves as a center of socioeconomic interaction, characterized by a cohesive core of commercial and mixed-use buildings, often interspersed with civic, religious, and residential buildings and public spaces, typically served by public infrastructure, and arranged along a main street and intersecting side streets.

Program Administration Application Form.

DECD must develop the program’s application form and publicize the program.

It must post the form and program information on the department’s webpage, including the eligibility requirements and application materials required to substantiate eligibility.

Eligible applicants may apply to DECD to participate in the program and DECD must notify each participant that it accepts.

Annual Application Process.

Participants must apply for credit vouchers, on an annual basis, within 90 days after the annual period.

In doing so, they must provide the information the DECD commissioner requires concerning the lease payment amounts, capital improvement expenditures, and employment levels for the annual period, as described below.

If the commissioner determines that the participant is eligible for a voucher, DECD must enter on the voucher the (1) amount of payments and expenditures established to the commissioner’s satisfaction and (2) credit amount allowed.

Regulations.

The DECD commissioner may adopt regulations to implement the program.

Credit Amounts Under the bill, DECD must award eligible program participants with sSB478 / File No.

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619 credit vouchers of up to 10% of the amount of (1) lease payments the participant made during the annual period, for the term of the lease, up to 10 years, and (2) capital improvements made during the annual period to newly leased or additionally leased commercial office space.

(The bill appears to give DECD discretion in establishing the actual credit amounts, as long as they do not exceed 10%.) Capital improvements include furniture, fixtures, and equipment;

telecommunications and cybersecurity upgrades and improvements;

and other improvements to commercial office space DECD allows.

(The bill does not specify whether these capital improvement costs must be incurred by the applicant or property owner in order to be credit- eligible.) Minimum Investment and Employment Requirements Program participants must demonstrate that they comply with minimum investment and employment requirements in order to claim a credit voucher.

Participants that are new businesses must demonstrate a minimum investment into the business of at least $2.5 million for the annual period.Existingbusinessesmustdemonstratetheyatleastdoubledtheir real property and capital improvement expenditures over the previous annual period.

All program participants, except for those in their first year of the program, must also demonstrate (1) that they hired at least 10 new full- time employees since signing the lease or (2) an employment increase of at least 10% over their preceding 12-month average.

If participants do not meet these employment requirements after their first year, DECD must proportionately reduce the amount of their tax credit voucher.

Credit Claims The credit applies against the following business taxes:

insurance premiums tax;

corporation business tax;

air carriers tax;

railroad companies tax;

cable, satellite, and video companies tax;

and utility companies tax.

Taxpayers (presumably the program participants that sSB478 / File No.

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619 have been issued tax credit vouchers) must file the credit voucher with the respective tax return in order to claim the credit.

Penalty for Fraudulent or False Submissions The bill imposes a financial penalty equal to the amount of the participant’s tax credit voucher on any participant that deliberately submits false or fraudulent information to DECD.

The bill’s penalty is in addition to other penalties already provided by law.

Reporting Requirement Beginning by January 1, 2024, the DECD commissioner must annually report to the Commerce, Planning and Development, and Finance, Revenue and Bonding committees and at least include:

1.

the total number of program participants, 2.

a summary of the locations for which applications were received and participants were accepted, 3.

a summary of the participants’ employment levels, and 4.

theamount ofeachtax credit voucher andtotalvouchersallowed for the previous fiscal year.

§ 5 — TAX CREDIT FOR REHABILITATING OR RENOVATING COMMERCIAL OFFICE BUILDINGS Credit The bill establishes a new business tax credit program for property owners, including municipalities and businesses, rehabilitating or renovating commercial office buildings in distressed municipalities to convert them to residential or mixed uses.

The credit equals 25% of the qualified rehabilitation expenditures.

But it may be 30% if (1) the project is in a federally designated opportunity zone or (2) a portion of the units are affordable to low- and moderate-income people.

A project is considered affordable if (1) at least 20% oftheunitsare affordablerentalunitsor (2)10%are affordable sSB478 / File No.

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619 homeownership units.

A unit is affordable if it costs a household no more than 30% of its income.

A household falls into this category if it earns no more than the median income of the town where the unit is located.

The bill caps the total amount of credits that may be awarded at $60 million per fiscal year and $9 million per project.

Eligible Property Owners and Projects Individuals, municipalities,partnerships,limitedliability companies, corporations, or other businesses are eligible for the credit if they have title to a commercial office building that is an eligible project.

The “project” must (1)belocatedinadistressedmunicipality’s“downtown” and (2) rehabilitate or renovate the building, or units or spaces in it, to convertthebuilding orunitsto residentialormixed-use.

The billapplies the same definition of “downtown” as described above for the commercial office space expanded leasing program.

Reserving the Credits The bill establishes a two-step process for accessing the credits.

First, the property’s owner must ask DECD to reserve credits on its behalf before it starts rehabilitating the property.

In requesting a credit reservation, the owner must submit the following:

1.

a certification that the commercial building has been vacant or underutilized for at least six consecutive months since March 15, 2020, along with any additional information the commissioner requires to substantiate this certification;

2.

the rehabilitation or renovation plans;

and 3.

a description and anticipated schedule for the project’s phases, if applicable.

If the project will include affordable housing units, the owner must also provide (1) the number of units to be created, (2) their proposed rents or sales prices, and (3) the median income of the municipality sSB478 / File No.

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619 where the project is located.

The owner must submit this data to the Department of Housing (DOH) commissioner who must determine whether the project qualifies as affordable housing, as described above, and issue a certificate if she approves.

DECD cannot reserve the affordable housing credits unless the owner submits the DOH certificate.

DECD may charge the owner up to a $10,000 application fee to cover the program’s administrative costs.

Claiming the Credits The second step in accessing the credits is when the owner notifies the DECD commissioner that the rehabilitation or renovation is complete.

The owner must show that the work was performed and submit certification of the qualified expenditures incurred for the project.

“Qualified expenditures” are the costs incurred in the project’s physical construction.

They include all costs other than (1) the owner’s personal labor;

(2) new additions that are not needed to comply withthe state building and fire safety codes;

and (3) architectural, legal, and financing fees and other non-construction costs.

DECD must review the owner’s documents and verify whether the work complies with the rehabilitation or renovation plan.

After completing its review, DECD must issue a credit voucher equal to 25% or 30% of the actual qualified expenses, as appropriate, as long as they do not exceed the reserved credit amount.

DECD may issue the credit to the owner or to another taxpayer the owner names as contributing to the rehabilitation or renovation.

Taxpayers may claim the credits against the following business taxes:

insurance premiums tax;

corporation business tax;

air carriers tax;

railroad companies tax;

cable, satellite, and video companies tax;

and utility companies tax.

A taxpayer claims the credit by attaching the voucher to its tax return.

The credits can be used in the tax year when the “substantially sSB478 / File No.

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This happens when the project’s qualified expenditures exceed 25% of the commercial office building’s assessed value and the building may be occupied, which can be for the entire building or an identifiable portion of it.

For multiphase projects, credit holders may claim a part of the credit in proportion to the part of the project that is placed in service.

Taxpayersmay carry forwardanyunusedportionofthecreditforthe next five years or until the full credit is used, whichever happens first.

Credit Transfers Multiple owners of a property must pass the credits through to designated partners, members, or owners on either a pro rata basis or according to an agreement among them, regardless of their other tax or economic attributes.

Taxpayers may also sell or transfer the credits, in whole or part, to one or more people, up to three times.

The transferor and transferee must jointly notify DECD, in writing, no later than 30 days after the sale or transfer.

In doing so, they must provide their tax identification numbers, the credit voucher number, the transfer date, the amount transferred, the pre- and post-transfer credit balance, and any other information DECD requires.

The credit is disallowed until both the transferor and transferee fully comply with the notice requirement.

The DECD commissioner must annually give the revenue services commissioner a list of credits approved or transferred for the most recent fiscal year.

DECD Regulations The bill authorizes DECD to adopt implementing regulations, which may include applicationprocedures,criteriafor evaluating projects,and timeframes for approving requests.

Any criteria for evaluating projects must give priority to projects located in federally designated opportunity zones.

sSB478 / File No.

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619 Reporting Requirement Beginning by July 1, 2023, DECD must annually report on the credits it reserved for the previous fiscal year to the Commerce, Planning and Development, and Finance, Revenue and Bonding committees.

Each report must include thefollowing informationfor eachproject for which credits are reserved:

1.

total project cost and credit amounts reserved;

2.

whether the project is mixed-use, and if so, the proportion that is nonresidential;

3.

number of residential units to be created;

and 4.

if applicable, the percentage of the residential units that qualify as affordable housing.

§§ 6 & 7 — CRDA’S SOLICITATION OF PRIVATE INVESTMENTS The bill authorizes CRDA to solicit private investment funds from businesses to finance any capital city project (see BACKGROUND) or other project CRDA undertakes.

It requires that the private investments be made on equivalent or substantially similar terms and conditions as the investments CRDA makes for the project, as set by CRDA’s board of directors, but allows CRDA to give these private investments repayment priority.

The bill allows businesses to make these private investments even if an employee, officer, director, or shareholder of the business is a CRDA board member, so long as the member recuses himself or herself from any board deliberation, action, or vote on the project that is specific to the business.

BACKGROUND Distressed Municipalities By law, the DECD commissioner must annually designate distressed municipalities based on a combination of economic, education, demographic, and housing criteria.

The current (2021) distressed sSB478 / File No.

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619 municipalities are Ansonia, Bridgeport, Chaplin, Derby, East Hartford, East Haven, Griswold, Groton, Hartford, Meriden, Montville, New Britain, New London, Norwich, Plainfield, Putnam, Sprague, Sterling, Stratford,Torrington,Voluntown,Waterbury,West Haven,Winchester, and Windham.

Capital City Projects By law, “capital city projects” include, among other things, the:

1.

construction or rehabilitation of up to 3,000 downtown housing units, 2.

development and redevelopment of buildings in Hartford, 3.

development of riverfront infrastructure and improvements in Hartford and East Hartford, 4.

demolition or redevelopment of vacant buildings in Hartford and East Hartford, and 5.

addition of downtown parking.

Related Bill sHB 5496 (File 505), favorably reported by the Government Administration and Elections Committee, contains similar provisions on CRDA’s solicitation of private investment funds.

COMMITTEE ACTION Finance, Revenue and Bonding Committee Joint Favorable Substitute Yea 34 Nay 17 (04/06/2022) sSB478 / File No.

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