DECD: Urban Site Investment Tax Credit Program

 
Urban and Industrial Sites Reinvestment
Tax Credit Program

Overview
The Urban and Industrial Sites Reinvestment Tax Credit Program was created under Public Act 00-170 and later modified by Public Acts: 05-276; 06-184;06-187 and 06-189. This program is a powerful economic development tool designed to drive investment to the state’s urban centers and other economically distressed communities without depleting valuable state bond dollars.  Under the program, the state may provide up to $100 million in tax credits over a ten-year period to support projects that create significant jobs and capital investment in these underserved areas. 
 
Amount of the Credit
Total expenditures for the program are capped at $500 million. The amount of credits offered is based on the department’s extensive due diligence process, which includes a comprehensive financial review and an impact analysis using the REMI econometric model.  The commissioner must submit any requests for credits over $20 million to the legislature for their review.
 
If approved for credits, a company cannot begin to take advantage of them until the fourth year of the project (see schedule below). It is also important to note that any project using these credits must be, at a minimum, revenue neutral to the state and that the law provides strict audit, compliance and penalty provisions that are strictly adhered to throughout the life of the project.  As outlined in Connecticut General Statutes 32-9t, DECD will conduct a yearly assessment of each project to ensure that the applicant is meeting all of its contractual obligations.
 
Minimum Limitations
Direct investments must be made in a minimum amount of $5 million 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 $2 million dollars. There is no minimum investment amount for indirect investments made by certified Fund Managers.
 
Investments can be made either directly by the taxpayer or indirectly through an investment fund. The investment fund must have a minimum asset value of $60 million. The fund must have been established for the specific purpose of making investments under this program and must be managed by a certified Program Fund Manager.
 
Eligibility – Urban Site
An eligible Urban Site Investment Project is defined as an investment that will add significant new economic activity, increase employment in a new facility and generate significant additional tax revenues to the municipality and the state.
 
Communities that may participate in the Urban Site Investment Tax Credit Program are those that have an enterprise zone, have been designated as a distressed municipality or have a population in excess of one hundred thousand.
 
Eligibility – Industrial Site
An eligible Industrial Site Investment Project is defined as an investment made in real property, or in improvements to real property, located within Connecticut that has been subject to environmental contamination. The investment will return the property to a viable business condition that will add significant new economic activity, increase employment and generate additional tax revenue to the state and the municipality in which the property is located.
 
Assignment of Tax Credits (Salability)                                           
Any taxpayer allowed this credit may assign the credit to another taxpayer provided that taxpayer claims the credit in a taxable year for which the assigning taxpayer would have been eligible to claim the credit.
 
The taxpayer assigned the credit cannot further assign the credit.
 
The taxpayer may not claim this tax credit and the 25% corporate tax credit allowed under the provisions of the enterprise zone program (12-217e).
 
Carry-Forward
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.
 
Property Tax Benefit
The real property of an "eligible industrial site investment project" or an "eligible urban reinvestment project" may be eligible to receive a 50% property tax abatement on that portion of the property tax due that is attributable to the increased value of such property as a result of the approved remediation, construction or other development.
 
Recapture                                                                                                  
The abatement shall cease upon the sale or transfer of the property for any other purpose unless the municipality consents to its continuation. The municipality may also establish a recapture provision in the event of sale, provided such recapture shall not exceed the original amount of taxes abated.
 
This property tax abatement will not be granted if the real property in question qualifies for abatement or exemption of property taxes under any other provision of the general statutes.
 
Schedule
The corporate tax credit is dispersed to the recipient over a ten-year period on the following schedule:
 

Year

1

2

3

4

5

6

7

8

9

10

Percentage

0

0

0

10

10

10

10

20

20

20

Statutory Updates
PA 05-276: http://www.cga.ct.gov/2005/ACT/PA/2005PA-00276-R00HB-06727-PA.htm

For more information about this program, please contact:
Robert Rigney
Department of Economic and Community Development
Office of Business and Industry Development
(860) 270-8110
robert.rigney@po.state.ct.us