Sec. 32-9t. Urban and industrial site reinvestment program. Registration of fund managers. Tax credits.
Sec. 32-9t. Urban and industrial site reinvestment program. Registration of
fund managers. Tax credits. (a) As used in this section:
(1) "Commissioner" means the Commissioner of Economic and Community Development.
(2) "Eligible industrial site investment project" means a project located within this
state for the development or redevelopment of real property: (A) (i) That has been subject
to a "spill", as defined in section 22a-452c, (ii) is an "establishment", as defined in
subdivision (3) of section 22a-134, or (iii) is a "facility", as defined in 42 USC 9601(9);
(B) that, if remediated, renovated or demolished in accordance with applicable law
and regulations and the standards of remediation of the Department of Environmental
Protection and used for business purposes, will add significant new economic activity
and employment in the municipality in which the investment is to be made, and will
generate additional tax revenues to the state; (C) for which the use of the urban and
industrial site reinvestment program will be necessary to attract private investment to
the project; (D) the business use of which would be economically viable and would
generate direct and indirect economic benefits to the state that exceed the amount of the
investment during the period for which the tax credits granted pursuant to public act
00-170* are granted; and (E) that is, in the judgment of the commissioner, consistent
with the strategic economic development priorities of the state and the municipality.
(3) "Eligible urban reinvestment project" means a project: (A) That would add significant new economic activity in the eligible municipality in which the project is located, and will generate significant additional tax revenues to the state or the municipality; (B) for which the use of the urban and industrial site reinvestment program will be
necessary to attract private investment to an eligible municipality; (C) that is economically viable; (D) for which the direct and indirect economic benefits to the state outweigh
the costs of the project; and (E) that is, in the judgment of the commissioner, consistent
with the strategic economic development priorities of the state and the municipality.
(4) "Related person" means: (A) A corporation, limited liability company, partnership, association or trust controlled by the taxpayer; (B) an individual, corporation,
limited liability company, partnership, association or trust that is in control of the taxpayer; (C) a corporation, limited liability company, partnership, association or trust
controlled by an individual, corporation, limited liability company, partnership, association or trust that is in control of the taxpayer; or (D) a member of the same controlled
group as the taxpayer. For purposes of this section, "control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more
of the total combined voting power of all classes of the stock of such corporation entitled
to vote. "Control", with respect to a trust, means ownership, directly or indirectly, of
fifty per cent or more of the beneficial interest in the principal or income of such trust.
The ownership of stock in a corporation, of a capital or profits interest in a partnership
or association or of a beneficial interest in a trust shall be determined in accordance
with the rules for constructive ownership of stock provided in Section 267(c) of the
Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code
of the United States, as from time to time amended, other than paragraph (3) of such
section.
(5) "Investment" means all amounts invested in an eligible project by or on behalf
of a taxpayer, whether directly, through a fund, or through a community development
entity including, but not limited to, (A) equity investments made by the taxpayer, and
(B) loans.
(6) "Income year" means with respect to entities subject to taxation under chapters
207 to 212a, the income year as determined under each of said chapters, as the case
may be.
(7) "Taxpayer" means any person, as defined in section 12-1, whether or not subject
to any taxes levied by this state.
(8) "Fund manager" means a fund manager registered in accordance with subsection
(d) of this section.
(9) "New job" means a job that did not exist in the business of a subject business in
this state prior to the subject business' application to the commissioner for an eligibility
certificate under this section for a new facility and that is filled by a new employee, but
does not mean a job created when an employee is shifted from an existing location of
the subject business in this state to a new facility.
(10) "New employee" means a person hired by a subject business to fill a position
for a new job or a person shifted from an existing location of the subject business outside
this state to a new facility in this state, provided (A) in no case shall the total number
of new employees allowed for purposes of this credit exceed the total increase in the
taxpayer's employment in this state, which increase shall be the difference between (i)
the number of employees employed by the subject business in this state at the time of
application for an eligibility certificate to the commissioner plus the number of new
employees who would be eligible for inclusion under the credit allowed under this
section without regard to this calculation, and (ii) the highest number of employees
employed by the subject business in this state in the year preceding the subject business'
application for an eligibility certificate to the commissioner, and (B) a person shall be
deemed to be a "new employee" only if such person's duties in connection with the
operation of the facility are on a regular, full-time, or equivalent thereof, and permanent basis.
(11) "New facility" means a facility which (A) is acquired by, leased to, or constructed by, a subject business on or after the date of the subject business' application
to the commissioner for an eligibility certificate under this section, unless, upon application of the subject business and upon good and sufficient cause shown, the commissioner
waives the requirement that such activity take place after the application, and (B) was
not in service or use during the one-year period immediately prior to the date of the
subject business' application to the commissioner for an eligibility certificate under this
section, unless upon application of the subject business and upon good and sufficient
cause shown, the commissioner consents to waiving the one-year period.
(12) "Eligible municipality" means (A) a municipality with an area designated as
an enterprise zone pursuant to section 32-70, (B) a distressed municipality, as defined
in subsection (b) of section 32-9p, (C) a municipality that has a population in excess of
one hundred thousand, or (D) any municipality that the commissioner determines is
connected with the relocation of an out-of-state operation or the expansion of an existing
facility that will result in a capital investment by a company of not less than fifty million
dollars.
(13) "Eligible project" means an eligible urban reinvestment project or an eligible
industrial site investment project or both.
(14) "Approved investment" means an investment approved by the commissioner
under subsection (g) of this section.
(15) "Recapture amount" means the amount by which the total of tax credits claimed
with respect to any approved investment as of the date of calculation exceeds the sum
of all state revenue actually generated through such date by the eligible project in which
such approved investment was made.
(16) "Pro rata share" means the percentage the amount of the approved investment
by an individual investor in an eligible project bears to the total amount of the approved
investment in such project, or in the case of a taxpayer to whom credits are transferred
under this section, the percentage the amount of credits with respect to an approved
investment transferred bears to the total credits with respect to such approved investment.
(17) "Community development entity" means any corporation, limited partnership
or limited liability company qualified to do business in this state and which (A) is organized for the purpose of providing investment capital or financing for eligible projects
under this section, (B) maintains accountability to residents of more than one eligible
municipality through representation on the governing board of the entity, (C) is organized for the purpose of seeking certification and an allocation of new markets tax credits
as provided in Section 45D of the Internal Revenue Code of 1986, or any subsequent
corresponding internal revenue code of the United States, as from time to time amended,
and (D) is registered in accordance with subsection (d) of this section. No community
development entity shall be eligible for any tax credits under this section unless it is
certified under said Section 45D on the date any approved investment is made. A community development entity shall not be deemed a "fund" for purposes of this section.
(18) "Project" means the acquisition, leasing, demolition, remediation, construction, renovation, expansion or other development or redevelopment of real property
and improvements within this state, including furniture, fixtures, equipment and other
personal property which is reasonably necessary in connection therewith, and associated
interest and other financing costs and charges, relocation and start-up costs, and architectural, engineering, legal and other professional services, plans, specifications, surveys,
permits, studies and evaluations necessary or incident to the development, financing,
completion and placing in operation of such a project.
(b) There is established an urban and industrial site reinvestment program under
which taxpayers who make investments in eligible urban reinvestment projects or eligible industrial site investment projects may be allowed a credit against the tax imposed
under chapters 207 to 212a, inclusive, or section 38a-743, or a combination of said
taxes, in an amount equal to the percentage of their approved investment determined in
accordance with subsection (i) of this section.
(c) No project shall be deemed an eligible project unless such project shall, in the
judgment of the commissioner, be of sufficient size, by itself or in conjunction with
related new investments, to generate a substantial return to the state economy.
(d) (1) The commissioner may register managers of funds and community development entities created for the purpose of investing in eligible urban reinvestment projects
and eligible industrial site investment projects. Any manager or community development entity registered under this subsection shall have its primary place of business in
this state. Each applicant shall submit an application under oath to the commissioner to
be registered and shall furnish evidence satisfactory to the commissioner of its financial
responsibility, integrity, professional competence and experience in managing investment funds. Failure to maintain adequate fiduciary standards with respect to investments
made under this section shall constitute cause for the commissioner to revoke, after
hearing, any registration granted under this section or section 38a-88a. The fund manager
or community development entity shall make a report on or before the first day of March
in each year, under oath, to the Commissioner of Economic and Community Development and the Commissioner of Revenue Services specifying the name, address and
Social Security number or employer identification number of each investor, the year
during which each investment was made by each investor, the amount of each investment, a description of the fund's investment objectives and relative performance, or the
entity's projects, as the case may be, and a description, including amounts, of all fees
received by such manager or entity in relation to each such fund.
(2) Any manager of funds registered on or before July 1, 2000, pursuant to section
38a-88a shall be deemed registered as a fund manager for all purposes under the provisions of this section upon submission, in writing, to the commissioner of such manager's
intention to act as a manager of funds under this section. The commissioner may request
from any such manager such information as the commissioner may require relating to
such manager's financial responsibility, integrity, professional competence and experience in managing investment funds.
(e) Any taxpayer or fund manager, or community development entity wishing to
make an investment under the provisions of this section shall apply to the commissioner
in accordance with the provisions of this section. The application shall contain sufficient
information to establish that the project in which the proposed investment will be made
is an eligible industrial site investment project or an urban reinvestment project, as
appropriate, and information concerning the type of investment proposed to be made,
the location of the project, the number of jobs to be created or retained, physical infrastructure that might be created or preserved, feasibility studies or business plans for the
project, projected state and local revenue that might derive as a result of the project and
other information necessary to demonstrate the financial viability of the project and
to demonstrate that the investment will provide net benefits to the economy of, and
employment for citizens of, the municipality and the state, and in the case of an eligible
industrial site investment project, how such project will meet the standards of remediation of the Department of Environmental Protection. The commissioner shall impose a
fee for such application as the commissioner deems appropriate.
(f) (1) The commissioner shall determine whether the project in which the proposed
investment is to be made is an eligible urban reinvestment project or an eligible industrial
site investment project, whether the project is economically viable only with use of
the urban and industrial site reinvestment program, the effects of the project on the
municipality where the investment will be made, and whether the project would provide
a net benefit to economic development and employment opportunities in the state and
whether the project will conform to the state plan of conservation and development.
The commissioner may require the applicant to submit such additional information as
may be necessary to evaluate the application.
(2) The commissioner shall prepare a revenue impact assessment that estimates the
state and local revenue that would be generated as a result of the project. The commissioner shall prepare an economic feasibility study relative to such project. The commissioner may retain any such persons as the commissioner deems appropriate to conduct
such revenue impact assessment or economic feasibility study.
(g) (1) The commissioner, upon consideration of the application, the revenue impact assessment and any additional information that the commissioner requires concerning a proposed investment, may approve an investment if the commissioner concludes
that the project in which such investment is to be made is an eligible urban reinvestment
project or an eligible industrial site investment project. If the commissioner rejects an
application, the commissioner shall specifically identify the defects in the application
and specifically explain the reasons for the rejection. The commissioner shall render a
decision on an application not later than ninety days from its receipt. The amount of the
investment so approved shall not exceed the greater of: (A) The amount of state revenue
that will be generated according to the revenue impact assessment prepared under this
subsection; or (B) the total of state revenue and local revenue generated according to such
assessment in the case of a manufacturing business with standard industrial classification
codes of 3999, 2099, 2992 and 2834 which is relocating to a site in Connecticut from
out-of-state, provided the relocation will result in new development of at least seven
hundred twenty-five thousand square feet in a state-sponsored industrial park.
(2) The approval of an investment by the commissioner may be combined with the
exercise of any of the commissioner's other powers, including, but not limited to, the
provision of other forms of financial assistance.
(3) The commissioner shall require the applicant to reimburse the commissioner
for all or any part of the cost of any revenue impact assessment, economic feasibility
study or other activities performed in the exercise of due diligence pursuant to subsection
(f) of this section.
(4) There is established an account to be known as the "Connecticut economic impact and analysis account" which shall be a separate, nonlapsing account within the
General Fund. The account shall contain any moneys required by law to be deposited
in the account and shall be held separate and apart from other moneys, funds and accounts. There shall be deposited in the account any proceeds realized by the state from
activities pursuant to this section. Investment earnings credited to the account shall
become part of the assets of the account. Any balance remaining in the account at the
end of any fiscal year shall be carried forward in the account for the next fiscal year.
Amounts in the account may be used by the Department of Economic and Community
Development to fund the cost of any activities of the department pursuant to this section,
including administrative costs related to such activities.
(h) Upon approving an investment, the commissioner shall issue a certificate of
eligibility certifying that the applicant has complied with the provisions of this section.
(i) (1) There shall be allowed as a credit against the tax imposed under chapters
207 to 212a, inclusive, or section 38a-743, or a combination of said taxes, an amount
equal to the following percentage of approved investments made by or on behalf of a
taxpayer with respect to the following income years of the taxpayer: (A) With respect
to the income year in which the investment in the eligible project was made and the two
next succeeding income years, zero per cent; (B) with respect to the third full income
year succeeding the year in which the investment in the eligible project was made and
the three next succeeding income years, ten per cent; (C) with respect to the seventh
full income year succeeding the year in which the investment in the eligible project was
made and the next two succeeding years, twenty per cent. The sum of all tax credits
granted pursuant to the provisions of this section shall not exceed one hundred million
dollars with respect to a single eligible urban reinvestment project or a single eligible
industrial site investment project approved by the commissioner. The sum of all tax
credits granted pursuant to the provisions of this section shall not exceed five hundred
million dollars.
(2) Notwithstanding the provisions of subdivision (1) of this subsection, any applicant may, at the time of application, apply to the commissioner for a credit that exceeds
the limitations established by this subsection. The commissioner shall evaluate the benefits of such application and make recommendations to the General Assembly relating
to changes in the general statutes which would be necessary to effect such application if
the commissioner determines that the proposal would be of economic benefit to the state.
(j) The credits allowed by this section may be claimed by a taxpayer who has made
an investment (1) directly only if such investment has a total asset value, either alone
or in conjunction with other taxpayer investments in an eligible project, of not less
than five million dollars or, in the case of an investment in an eligible project for the
preservation of an historic facility and redevelopment of the facility for mixed uses that
includes at least four housing units, a total asset value of not less than two million dollars;
(2) through a fund managed by a fund manager registered under this section only if such
fund: (A) Has a total asset value of not less than sixty million dollars for the income
year for which the initial credit is taken; and (B) has not less than three investors who are
not related persons with respect to each other or to any person in which any investment is
made other than through the fund at the date the investment is made; or (3) through a
community development entity.
(k) The commissioner shall, upon request, provide a copy of the eligibility certificate issued under subsection (h) of this section to the Commissioner of Revenue Services.
(l) The tax credit allowed by this section, when made through a fund, shall only be
available for investments in funds that are not open to additional investments or investors
beyond the amount subscribed at the formation of the fund.
(m) (1) The Commissioner of Revenue Services may treat one or more corporations
that are properly included in a combined corporation business tax return under section
12-223a as one taxpayer in determining whether the appropriate requirements under
this section are met. Where corporations are treated as one taxpayer for purposes of this
subsection, then the credit shall be allowed only against the amount of the combined
tax for all corporations properly included in a combined return that, under the provisions
of subdivision (2) of this subsection, is attributable to the corporations treated as one
taxpayer.
(2) The amount of the combined tax for all corporations properly included in a
combined corporation business tax return that is attributable to the corporations that are
treated as one taxpayer under the provisions of this subsection shall be in the same ratio
to such combined tax that the net income apportioned to this state of each corporation
treated as one taxpayer bears to the net income apportioned to this state, in the aggregate,
of all corporations included in such combined return. Solely for the purposes of computing such ratio, any net loss apportioned to this state by a corporation treated as one
taxpayer or by a corporation included in such combined return shall be disregarded.
(n) Any taxpayer allowed a credit under this section may assign such credit to another taxpayer or taxpayers, provided such other taxpayer or taxpayers may claim such
credit only with respect to a taxable year for which the assigning taxpayer would have
been eligible to claim such credit and such other taxpayer or taxpayers may not further
assign such credit. The taxpayer or taxpayers allowed such credit, the fund manager or
the community development entity shall file with the Commissioner of Revenue Services information requested by the commissioner regarding such assignments, including, but not limited to, the current holders of credits as of the end of the preceding
calendar year.
(o) No taxpayer shall be eligible for a credit under (1) this section, and (2) section
12-217e or 38a-88a, for the same investment. No two taxpayers shall be eligible for any
tax credit with respect to the same investment or the same project costs.
(p) Any credit not used in the income year for which it was allowed may be carried
forward for the five immediately succeeding income years until the full credit has been
allowed.
(q) (1) Any tax credits approved under this section that would constitute in excess
of twenty million dollars in total for a single investment shall be submitted by the Commissioner of Economic and Community Development to the joint standing committee
of the General Assembly having cognizance of matters relating to finance, revenue and
bonding prior to the issuance of a certificate of eligibility for such investment. Said
committee shall have thirty days from the date such project is submitted to convene a
meeting to recommend approval or disapproval of such investment. If such submittal
is withdrawn, altered, amended or otherwise changed, and resubmitted, said committee
shall have thirty days from the date of such resubmittal to convene a meeting to recommend approval or disapproval of such investment. If said committee does not act on a
submittal or resubmittal, as the case may be, within that time, the investment shall be
deemed to be approved by said committee.
(2) While the General Assembly is in session, the House of Representatives or the
Senate, or both, may meet not later than thirty days following the date said committee
makes a recommendation pursuant to subdivision (1) of this subsection. If such submission is not disapproved by the House of Representatives or the Senate, or both, within
such time, the commissioner may issue such certificate.
(3) While the General Assembly is not in regular session, the House of Representatives or the Senate, or both, may meet not later than thirty days following the date said
committee makes a recommendation pursuant to subdivision (1) of this subsection. If
such submission is not disapproved by the House of Representatives, the Senate, or
both, within such time, the commissioner may issue such certificate.
(r) Not later than July first in each year that credits allowed by this section are
claimed by a taxpayer with respect to an approved investment, the commissioner may
retain such persons as said commissioner may deem appropriate to conduct a study to
estimate the state revenue that is being and will be generated by the eligible project in
which such investment is made. Such economic impact study shall determine whether
the state revenue actually generated by such eligible project is equal to the estimate of
state revenue made at the time the investment in such eligible project was approved. If
the sum of all state revenue actually generated by such eligible project is less than the
amount of the total sum of tax credits claimed with respect to the approved investment
in such project on the date of such analysis, the commissioner may determine from the
person retained pursuant to this subsection the applicable recapture amount and may
revoke the certificate of eligibility issued under subsection (h) of this section. The commissioner may require the taxpayer, the fund manager or community development entity
that made such approved investment to reimburse the commissioner for all or any part
of the cost of any economic impact study performed under this subsection.
(s) (1) Any taxpayer which has claimed credits allowed by this section related to an
investment concerning which the commissioner has revoked the certificate of eligibility
issued under subsection (h) of this section, shall be required to recapture such taxpayer's
pro rata share of the recapture amount as determined under the provisions of subdivision
(2) of this subsection and no subsequent credit shall be allowed unless such certificate
of eligibility is reinstated under the provisions of subdivision (3) of this subsection.
(2) If the taxpayer is required under the provisions of subdivision (1) of this subsection to recapture its pro rata share of the recapture amount during (A) the first year such
credit was claimed, then ninety per cent of such share shall be recaptured on the tax
return required to be filed for such year, (B) the second of such years, then sixty-five
per cent of such share shall be recaptured on the tax return required to be filed for such
year, (C) the third of such years, then fifty per cent of such share shall be recaptured on
the tax return required to be filed for such year, (D) the fourth of such years, then thirty
per cent of such share shall be recaptured on the tax return required to be filed for such
year, (E) the fifth of such years, then twenty per cent of such share shall be recaptured
on the tax return required to be filed for such year, and (F) the sixth or subsequent of
such years, then ten per cent of such share shall be recaptured on the tax return required
to be filed for such year. The Commissioner of Revenue Services may recapture such
share from the taxpayer who has claimed such credits. If the commissioner is unable to
recapture all or part of such share from such taxpayer, the commissioner may seek to
recapture such share from any taxpayer who has assigned credits in an amount at least
equal to such share to another taxpayer. If the commissioner is unable to recapture all
or part of such share from any such taxpayer, the commissioner may recapture such
share from any fund through which the investment was made.
(3) If the commissioner has revoked the certificate of eligibility issued under subsection (h) of this section, such certificate of eligibility shall be reinstated by the commissioner if, upon a request made by the taxpayer, fund manager or community development
entity who made such approved investment, an economic impact study conducted pursuant to subsection (r) of this section shall determine that the sum of all state revenue
actually generated by the project in which such investment was made is greater than the
amount of the total sum of tax credits claimed on the date of such analysis, provided no
such request shall be made pursuant to this subsection during the calendar year in which
such certificate was revoked. For the purpose of determining whether such certificate
shall be reinstated, the commissioner shall, upon receipt of a request made under this
subsection, obtain one such economic impact study per calendar year and may obtain
additional such economic impact studies as the commissioner deems appropriate.
(P.A. 00-170, S. 38, 42; June Sp. Sess. P.A. 01-9, S. 122, 131; June 30 Sp. Sess. P.A. 03-6, S. 77; P.A. 04-20, S. 6;
P.A. 05-276, S. 2, 3; P.A. 06-159, S. 20; 06-184, S. 10; 06-187, S. 12; 06-189, S. 18.)
*Public act 00-170 is entitled "An Act Concerning Reduction of Various Taxes and Fees, Sunset of Certain Insurance
Reinvestment Funds, Crediting of Interest on the Attorneys' Client Security Fund, a Tax on Snuff Tobacco Products, Funds
for the Fisheries Account, Incentives for Urban Site Reinvestment and Use of the Tobacco Settlement Fund". (See Reference
Table captioned "Public Acts of 2000" in Volume 16 which lists the sections amended, created or repealed by the act).
History: P.A. 00-170 effective July 1, 2000 (Revisor's note: In Subsec. (e), a period was inserted editorially by the
Revisors before "The commissioner shall"); June Sp. Sess. P.A. 01-9 amended Subsec. (a) to redefine "eligible industrial
site investment project" in Subdiv. (2), "eligible urban reinvestment project" in Subdiv. (3), "investment" in Subdiv. (5),
"recapture amount" in Subdiv. (15), and "pro rata share" in Subdiv. (16), define "community development entity" and
"project" in new Subdivs. (17) and (18) and make a technical change in Subdiv. (14), amended Subsec. (b) to change
"invest" to "make investments" and add reference to "approved" investment, and added provisions re community development entity, changed "investment" to "project" and made conforming and technical changes in Subsec. (d) to (g), (i), (j),
(n), (o), (r) and (s), effective July 1, 2001; June 30 Sp. Sess. P.A. 03-6 amended Subsec. (g) by, in Subdiv. (1), adding
"greater of:", designating existing maximum investment amount as Subpara. (A) and adding Subpara. (B) re total revenue
generated in case of manufacturing business with standard industrial classification codes of 3999, 2099, 2992 and 3834,
by adding provision in Subdiv. (3) re other activities performed in the exercise of due diligence and deleting "used in
reviewing the application", and by adding new Subdiv. (4) re Connecticut economic impact and analysis account, effective
August 20, 2003; P.A. 04-20 made a technical change in Subsec. (g)(3), effective April 16, 2004; P.A. 05-276 amended
Subsec. (j)(1) by inserting ", either alone or in conjunction with other taxpayer investments in an eligible project,", reducing
the investment threshold for credits from $20,000,000 to $5,000,000 and further reducing such threshold to $2,000,000
for an eligible project for preservation of an historic facility and redevelopment of the facility for certain mixed uses, and
amended Subsec. (n) by adding "or taxpayers", effective July 13, 2005; P.A. 06-159 amended Subsec. (k) by providing
that a copy of the eligibility certificate be submitted upon request of commissioner, rather than requiring such copy to be
filed with the tax return, effective June 6, 2006; P.A. 06-184, effective June 9, 2006, and P.A. 06-187, effective May 26,
2006, both redefined "eligible municipality" in Subsec. (a)(12) to add Subpara. (D); P.A. 06-189 amended Subsec. (q) by
designating existing provisions as Subdiv. (1) and amending same by replacing procedure for approval by House, Senate
or both not later than 60 days after submission of tax credit with provisions re recommendation by Finance, Revenue and
Bonding Committee not later than 30 days after submission, and adding Subdivs. (2) and (3) providing procedure for
approval by House, Senate or both while General Assembly is in regular session and not in regular session.