Sec. 32-285. Tax incremental financing program. Application and approval procedure. Bond authorization. Reports. Independent financial analyses.
Sec. 32-285. Tax incremental financing program. Application and approval
procedure. Bond authorization. Reports. Independent financial analyses. (a)(1)
There is hereby established a tax incremental financing program, under which the incremental hotel taxes collected under subparagraph (H) of subdivision (2) of subsection
(a) of section 12-407, which are generated by a project approved by the authority under
this section may be used to pay the debt service on bonds issued by the authority to help
finance, on a self-sustaining basis, significant economic projects and encourage their
location in the state.
(2) The incremental sales taxes collected under chapter 219, other than the sales
tax referenced in subdivision (1) of this subsection, and admissions, cabaret and dues
taxes collected under chapter 225 which are generated by a project may, subject to
approval pursuant to this section by the joint standing committees of the General Assembly having cognizance of matters relating to the Department of Economic and Community Development and finance, revenue and bonding, and the authority, be used to pay
the debt service on bonds issued by the authority to help finance, on a self-sustaining
basis, significant economic projects and encourage their location in the state.
(b) As used in this section: (1) "Authority" means the Connecticut Development
Authority; and (2) "eligible project" means a large-scale economic development project
(A) that may add a substantial amount of new economic activity and employment in
the municipality in which it is to be located and surrounding areas, and may generate
significant additional tax revenues in the state; (B) for which use of the tax incremental
financing mechanism may be necessary to attract the project to locate in the state; (C)
which is economically viable and self-sustaining, taking into account the application of
the proceeds of the bonds to be issued under the tax incremental financing program;
(D) for which the direct and indirect economic benefits to the state and the municipality
in which it will be located outweigh the costs of the project; and (E) which is consistent
with the strategic development priorities of the state.
(c) Any person, firm or corporation wishing to participate in the tax incremental
financing program, or any municipality wishing to obtain tax incremental financing to
support a project within its boundaries, may apply to the authority in accordance with
the provisions of this subsection. The application shall contain such information as the
authority may require, which may include information concerning the type of business
proposed to be established and its location, the number of jobs to be created or retained
and their average wage rates, feasibility studies or business plans for the project and
other information necessary to demonstrate its financial viability, the amounts and types
of bonds proposed to be issued for the project and the proposed use of the proceeds,
information about other sources of financing available to support repayment of the bonds
proposed to be issued, including property tax increments to be made available by the
municipality, a geographic description of the area surrounding the proposed site of the
project and the existing firms doing business in that area, an economic impact assessment
of the effects of the project on the municipality, an assessment of the incremental hotel
taxes, or, if applicable, the incremental sales and admissions, cabaret and dues taxes to
be generated by the project, an analysis of necessary infrastructure development to support the project and any available sources of financing for such infrastructure and other
information which demonstrates that the bonds will be self-sustaining from the incremental taxes collected and any amounts made available by a municipality under subsection (i) of this section, and that the project will provide net benefits to the economy and
employment opportunity in the state. The authority shall impose a fee for such application as it deems appropriate. Any costs incurred by the authority which are associated
with such application and are not covered by such fee shall be paid from funds of the
authority which are not otherwise committed or pledged.
(d) Upon receiving an application for participation in the tax incremental financing
program and any supporting information, the executive director of the authority shall
make a preliminary determination as to whether a proposed project may be eligible for
participation in the program.
(e) (1) The authority shall review each application that has been preliminarily determined to be eligible under subsection (d) of this section. In reviewing an application,
the authority shall obtain such additional information as may be necessary to make a
final determination as to whether the project is eligible for participation in the program,
whether the project is economically viable with use of the tax incremental financing
mechanism, the effects of the project on the municipality and whether the project would
provide net benefits to economic development and employment opportunity in the state.
The authority may require the project sponsor to submit such additional information as
may be necessary to evaluate the application.
(2) The authority shall retain such financial advisors and other experts as it deems
appropriate to conduct an independent financial assessment of the application and supporting information, including, in particular, the amount of the incremental hotel taxes,
or, if applicable, the incremental sales and admissions, cabaret and dues taxes to be
generated by the project, whether the project will be economically viable and whether
the bonds will be self-sustaining.
(3) The authority shall prepare a revenue impact assessment that estimates the incremental hotel taxes or, if applicable, the incremental sales and admissions, cabaret and
dues taxes that would be generated by the project, the state and local revenues that would
be foregone as a result of the project, all state and local revenues that would be generated
by the project and the economic benefits that would likely result from construction of
the project, including revenue effects of such economic benefits.
(4) (A) Not later than seventy-two hours before presenting a proposed project to
the board of directors of the authority for final approval, if such project uses incremental
hotel taxes, the executive director of the authority shall give notice of the proposed
project and meeting to the president pro tempore and minority leader of the Senate, the
speaker and minority leader of the House of Representatives and the chairpersons and
ranking members of the joint standing committees of the General Assembly having
cognizance of matters relating to finance, revenue and bonding and the Department of
Economic and Community Development. Such notice shall include such information
about the project, the estimated tax increments and the revenue impact assessment, as
may be appropriate, consistent with the protection of any confidential financial information provided by the project sponsor. Any such member of the General Assembly may,
by notifying the executive director, request that the board of directors of the authority
defer final consideration of the project for thirty days.
(B) If such project uses incremental sales and admissions, cabaret and dues taxes,
the notice required pursuant to subparagraph (A) of this subdivision shall not be required,
but the procedure in subdivision (6) of subsection (f) of this section shall be followed
after the board of directors of the authority has given approval to such project.
(f) (1) Upon consideration of the application, the results of the independent financial assessment, the revenue impact assessment and any additional information that the
board of directors of the authority requires concerning a proposed project, such board
of directors shall determine whether to approve the project for participation in the tax
incremental financing program and, if so, the amount and type of bonds the authority
shall issue to support the approved project, the purposes for which the funds generated by
sale of the bonds may be applied and the amount of the incremental sales and admissions,
cabaret and dues taxes that shall be annually allocated to pay principal and interest on
the bonds to be issued for the project. The amounts so allocated shall not exceed the
estimated amount of incremental taxes to be collected, except that in the case of retail
shopping center projects, the amount of incremental sales allocated to calculating incremental sales taxes shall not exceed thirty per cent of gross sales directly associated with
the project. From the amount of incremental taxes so allocated by the authority, the
amount required for payment of principal and interest on the bonds issued in accordance
with subsection (g) of this section shall be deemed appropriated from the state General
Fund, provided, for projects using incremental sales and admissions, cabaret and dues
taxes, an amount shall be deemed appropriated only upon final approval of such projects
pursuant to subdivision (6) of this subsection.
(2) The authority may approve a project only if it concludes that: (A) The project
is an eligible project; (B) the incremental hotel taxes or, if applicable, the incremental
sales taxes collected under chapter 219 and the incremental admissions, cabaret and
dues taxes collected under chapter 225 that are generated by the project, together with
other dedicated sources of financing available to pay debt service on the bonds, will be
sufficient to pay interest and principal on the bonds as they come due; (C) the project
will be economically viable and will contribute significantly to economic development
and employment opportunity in the state; and (D) the direct and indirect economic
benefits of the project to the state and the municipality in which it shall be located will
be greater than the costs to the state and such municipality.
(3) The authority shall seek to obtain diversification among the types of projects
supported under this program and among the geographic regions in the state in which
projects are located.
(4) The approval of a project by the authority may be combined with the exercise
of any of its other powers, including but not limited to, the provision of other forms of
financial assistance. The proceeds of the bonds may be combined with any other funds
available from state or federal programs, or from investments by the private sector, to
support the project.
(5) Upon approving a project, the authority may require the project sponsor to reimburse the authority for all or any part of the costs of the independent financial assessment
conducted in reviewing the application and any other related costs incurred.
(6) For final approval of any proposed project using incremental sales and admissions, cabaret and dues taxes, the authority shall submit, in a manner consistent with
the protection of any confidential financial information provided by the project sponsor,
copies of the application, the independent financial assessment, the revenue impact
assessment, and the proposed financial assistance to be offered by the authority to the
proposed project, to the joint standing committees of the General Assembly having
cognizance of matters relating to the Department of Economic and Community Development and finance, revenue and bonding for final approval. Within forty-five days of
said committees' receipt of such proposed project information, said committees shall
advise the authority of their approval or modifications, if any, to such proposed financial
assistance. If said committees do not agree, the committee chairpersons shall appoint a
committee on conference which shall be comprised of three members from each joint
standing committee. At least one member appointed from each committee shall be a
member of the minority party. The report of the committee on conference shall be made
to each committee, which shall vote to accept or reject the report. The report of the
committee on conference may not be amended. If a joint standing committee rejects the
report of the committee on conference, the proposed financial assistance shall be deemed
approved. If the joint standing committees accept the report, the committee having cognizance of finance, revenue and bonding shall advise the authority of their approval or
modifications, if any, of such proposed financial assistance, provided, if the committees
do not act within forty-five days, the proposed financial assistance shall be deemed
approved. Financial assistance by the authority for the proposed project shall be in
accordance with the proposed financial assistance as approved or modified by the committees.
(g) (1) The authority may issue one or more series of bonds in accordance with the
provisions of chapter 579, to the extent not inconsistent with the provisions of this
subsection, payable in whole or in part from the incremental taxes allocated and deemed
appropriated from the state General Fund under subsection (f) of this section and any
amounts contributed by a municipality under subsection (i) of this section, to finance a
project approved under this section or to refund bonds previously issued under this
section. The authority is authorized to make a grant of all or part of the proceeds of such
bonds to any person in connection with the acquisition, construction and equipping
of an eligible project, including the expense of the state or any municipality, or any
instrumentality or agency of the state or any municipality, in connection therewith.
Subject to applicable federal tax law, the authority may issue such bonds, the interest
on which is excludable from gross income for federal income tax purposes, or such
bonds, the interest on which is not so excludable. The authority, when authorizing the
issuance of any series of such bonds, shall, in conjunction with the State Treasurer,
determine the rate of interest of such bonds, the date or dates of their maturity, the
medium of payment, the redemption terms and privileges, whether such bonds shall
be sold by negotiated or competitive sale and any and all other terms, covenants and
conditions not inconsistent with this section, in connection with the issuance thereof,
including but not limited to, the pledging of special capital reserve funds authorized
under subsection (b) of section 32-23j.
(2) The issuance of any bonds by the authority under this section shall be subject
to the approval of the State Bond Commission. Upon approving a project, the authority
shall submit the matter to the State Bond Commission for final approval. The State Bond
Commission shall not approve any project unless it has received the submission from
the authority at least ten days prior to the meeting at which such project is to be considered. Such submission shall include the information considered by the authority in approving the project, the independent financial assessment and such other information as
the commission deems appropriate. In reaching its decision, the State Bond Commission
may consider such information as submitted. After such approval by the Bond Commission, no other approval shall be required for the project.
(h) For such period of time as bonds issued to support an approved project are
outstanding, the Treasurer shall make payment of interest and principal on the bonds
to the trustee when due, but not exceeding in any fiscal year the amount deemed appropriated pursuant to subsection (f) of this section.
(i) A portion of the proceeds of bonds issued pursuant to this section may be made
available to a municipality in which a project is located for the purpose of carrying out
or administering a redevelopment plan or other functions authorized under chapter 130
or chapter 132. Such municipality may contribute all or any part of the money specified
in subdivision (2) of section 8-134a or subdivision (b) of section 8-192a to the authority
for the payment of principal and interest on the bonds issued by the authority under this
section to support such approved project. In exercising such power, such municipalities
shall proceed as provided in said chapter 130 or 132, as the case may be, except that
the references therein to bonds and bond anticipation notes shall be deemed to refer to
the bonds issued by the authority under this section.
(j) (1) Not later than July first in each year that bonds issued to support an approved
project are outstanding, the authority shall submit a report to the joint standing committees of the General Assembly having cognizance of matters relating to the Department
of Economic and Community Development and finance, revenue and bonding with
respect to the operations, finances and achievement of the economic development objectives of the projects approved under this section. The authority shall review and evaluate
the progress of each project and shall devise and employ techniques for forecasting and
measuring relevant indices of accomplishment of its goals of economic development,
including, but not limited to, (A) the actual expenditures compared to original estimated
costs, (B) whether there have been significant cost increases over original estimates,
(C) the number of jobs created, or to be created, by or as a result of the project, (D) the
cost or estimated cost, to the authority, involved in the creation of those jobs, (E) the
amount of private capital investment in, or stimulated by, the project, in proportion to
the public funds invested in such project, (F) the number of additional businesses created
and associated jobs, and (G) any impact on tourism.
(2) Not later than July first in each year that bonds issued to support an approved
project are outstanding, the Office of Policy and Management shall retain independent
financial experts to conduct an analysis of the financial status of each project approved
under this section. The independent financial analysis shall include, but not be limited to,
determinations as to whether the incremental hotel taxes or, if applicable, the incremental
sales and admissions, cabaret and dues taxes actually generated by the project are equal
to the estimates made at the time the project was approved, whether the project is economically viable and whether the bonds issued are self-sustaining with the incremental
taxes actually collected and other financing sources dedicated to repayment of the bonds.
The authority shall require the project sponsor to reimburse the Office of Policy and
Management for the costs of such annual analyses. The results of such analyses shall
be made available to the president pro tempore of the Senate, the speaker of the House
of Representatives, the majority and minority leaders of both houses, and to the chairpersons and ranking members of said committees.
(k) No commitments for new projects shall be approved by the authority under this
section on or after July 1, 2010.
(P.A. 92-236, S. 26, 48; May Sp. Sess. P.A. 94-4, S. 68, 85; P.A. 95-160, S. 64, 69; 95-250, S. 1; P.A. 96-211, S. 1, 5,
6; 96-264, S. 6, 8; P.A. 98-179, S. 25, 26, 28, 30; P.A. 01-210, S. 1, 3; P.A. 05-113, S. 2; P.A. 08-162, S. 3.)
History: May Sp. Sess. P.A. 94-4 in Subsec. (k) extended program from July 1, 1994, to July 1, 1996, effective June
9, 1994; P.A. 95-160 revised effective date of May Sp. Sess. P.A. 94-4 but without affecting this section; P.A. 95-250 and
P.A. 96-211 replaced Commissioner and Department of Economic Development with Commissioner and Department of
Economic and Community Development; P.A. 96-264 amended Subsec. (k) to extend program from July 1, 1996, to July
1, 1998, effective July 1, 1996; P.A. 98-179 amended Subsec. (g)(2) to prohibit the State Bond Commission from approving
a project unless it received the submission from the authority at least ten days prior to the meeting at which the project is
considered, amended Subsec. (j) to require certain details in the report required under that subsection, and amended Subsec.
(k) to extend the sunset date for this section to July 1, 2001, effective June 5, 1998; P.A. 01-210 amended Subsec. (k) to
extend the sunset date for section to July 1, 2005, effective July 1, 2001; P.A. 05-113 amended Subsec. (k) to extend date
from which authority prohibited from approving commitments for new projects from July 1, 2005, to July 1, 2008, effective
June 24, 2005; P.A. 08-162 designated existing provisions of Subsec. (a) as Subdiv. (1) and amended same to apply to
hotel taxes collected under Sec. 12-407(a)(2)(H) rather than sales tax collected under Ch. 219 and admissions, cabaret and
dues taxes collected under Ch. 225, added Subsec. (a)(2) re sales tax and admissions, cabaret and dues taxes, amended
Subsec. (c) and Subsecs. (e)(2) to (e)(4) to include references to incremental hotel taxes, designated existing provisions
of Subsec. (e)(4) as Subsec. (e)(4)(A), added Subsec. (e)(4)(B) re notice for projects using incremental sales and admissions,
cabaret and dues taxes, amended Subsec. (f)(1) to provide, for projects using incremental sales and admissions, cabaret
and dues taxes, that an amount be deemed appropriated only upon final approval, amended Subsec. (f)(2) to include
reference to incremental hotel taxes, added Subsec. (f)(6) re final approval of proposed projects using incremental sales
and admissions, cabaret and dues taxes, amended Subsec. (j)(2) to include a reference to incremental hotel taxes, and
amended Subsec. (k) to change commitment deadline from July 1, 2008, to July 1, 2010, effective June 12, 2008.