SMALL TOWN ECONOMIC DEVELOPMENT PROGRAMS

OLR Research Report


July 29, 2002		2002-R-0563 (Revised)
SMALL TOWN ECONOMIC DEVELOPMENT PROGRAMS

By: John G. Rappa, Principal Analyst

You asked us to describe the Small Town Economic Assistance Program (STEAP) and how towns qualify for funds under this program. You also wanted to know if the state offered similar programs to towns that do not qualify for STEAP funding.

SUMMARY

STEAP funds the same wide range of physical development and social service projects as the older Urban Action Program. STEAP's eligibility criteria are largely the opposite of that program. STEAP targets relatively small (under 30,000 people), prosperous towns with no major urban center while the Urban Action Program targets large, fiscally distressed towns with urban centers.

In fact, a town qualifies for STEAP only if it is not a "distressed municipality" or a "public investment community," two designations used to qualify towns for funding under the Urban Action and other state programs. The designations are largely based on annual economic and social statistics, which account for why the list of eligible towns changes each year.

Most of the towns that do not qualify for STEAP funding may qualify for funds under other state programs. All qualify for Manufacturing Assistance Act (MAA) funding. Some towns with more than 30,000 people do not meet the Urban Act's eligibility criteria, but they still qualify for up to $ 500,000 grants in FY 2002 and FY 2003.

All towns qualify for federal community development block grant funds. Those with more than 50,000 people directly receive formula grants, which they can use to fund housing, infrastructure, and economic development and social service projects that address national goals. The state also receives an annual formula grant, which it must appropriate to towns with fewer than 50,000 on a competitive basis.

Attachment 1 lists the towns and the state and federal programs for which they qualify.

DESCRIPTION

STEAP provides grants of up to $ 500,000 a year to small towns that generally do not qualify for Urban Action grants (PA 01-07, JSS). Towns can use the grants to fund economic development, transportation, environmental protection, social services, and housing projects-basically, the same types of projects larger towns can fund with Urban Action grants. The legislature authorized up to $ 20 million in bonds for STEAP in both FY 2001-02 and FY 2002-03. The Office of Policy and Management (OPM) administers the grants (www. opm. state. ct. us/secr/services/steap. htm).

ELIGIBILITY

General

STEAP targets relatively small, undeveloped, prosperous towns. A town qualifies for STEAP grants if it has:

1. fewer than 30,000 people,

2. no land classified as an "urban center" on the State Plan of Conservation and Development's (Plan of C&D) locational guide, and

3. not been designated a "distressed municipality" or "public investment community. "

Urban Centers

The five-year Plan of C&D contains a map dividing the state into urban areas and seven other land use classifications. The map helps state agencies and local planning and zoning commissions redirect proposed new development away from open space areas toward those where roads, sewers, and other supporting infrastructure already exists.

OPM updates the plan and the locational guide every five years. The guide shows 141 towns without urban centers. Towns, state agencies, and individuals can ask the OPM secretary to amend the guide before the next scheduled revision (CGS § 16a-32).

Distressed Municipalities

The economic and community development commissioner annually designates distressed municipalities based on demographic and economic distress criteria. He scores and ranks all of the towns and designates the top 25 as distressed (CGS § 32-9 (b)). He does this based on the following criteria:

1. per capita income,

2. changes in per capita income,

3. the percent of people living below the poverty level,

4. population changes between 1980 and 1990,

5. employment changes between 1991 and 1999,

6. unemployment rate,

7. the percentage of housing units that were built before 1939,

8. the percentage of people 25 and older who have at least a high school diploma, and

9. the adjusted equalized net grand list per capita.

The commissioner must notify a town when it no longer scores among the top 25 towns, but it still retains its distressed designation for another five years. The town can end the designation sooner if its legislative body votes to do so within three months after receiving the commissioner's notice. It must notify the commissioner and the OPM secretary within 30 days after the vote.

The commissioner can also designate a town that did not score among the top 25 towns as distressed if it suffered a major plant closing or an employer laid off many workers.

The designation serves to qualify projects for open space, brownfield remediation, and Urban Action program funding. It once served to qualify towns and businesses in them for economic development incentives, but in 1990 the legislature substituted a different designation based on whether a town had an enterprise zone.

Public Investment Communities (PICs)

This designation qualifies towns for Urban Act grants and designating enterprise corridor zones, which, like enterprise zones, entitle businesses to state-reimbursed property tax abatements for developing or improving their facilities. Individuals and businesses in PIC towns also qualify for funds under the Community Economic Development, Residential Mortgage Guarantee, and Malpractice Insurance programs. The designation initially served to target economic development grants at fiscally distressed towns.

OPM designates PICs by scoring and ranking towns based on residents' income, tax base and tax rates, the share of residents who are unemployed, and the share who receive temporary family assistance (CGS § 7-545 (a) (8)). It designates the 42 towns in the top quartile as PICs (CGS § 7-545 (a) (9)). A town that was designated during a fiscal year remains eligible for PIC grants during the next four years (CGS § 7-546 (b)). Apparently, the town remains eligible even if it no longer scores among the top 42 towns for that subsequent fiscal year. OPM continues to designate the town as a PIC for that and the subsequent fiscal years.

ASSISTANCE FOR TOWNS THAT DO NOT QUALIFY FOR STEAP GRANTS

As noted above, STEAP is geared toward towns that do not qualify for funding under other programs, many of which are geared toward relatively large, economically distressed towns. As Attachment 1 shows, most of the towns that do not qualify for STEAP do qualify for other funds under other programs. Some qualify because they have been designated a distressed municipality or PIC or have land designated as urban centers; others qualify because they have state-approved enterprise zones or enterprise corridor zones.

All towns qualify for MAA funds, which they can use to develop industrial parks, supporting infrastructure, or other economic development related projects. Businesses and nonprofit developers also qualify for MAA funds. As Table 1 shows, the funding level depends on the project's location and whether two or more towns are sponsoring the project (CGS § 32-223 (c)).

Table 1: Project Funding Levels Under the Manufacturing Assistance Act

*Project Location*	*Percent of Project Cost*
Enterprise and Enterprise Corridor Zones	90%
Towns with enterprise zones (i. e. , Targeted Investment Communities)	90%
Towns without enterprise zones	50%
Project in a nonenterprise zone town that is also being sponsored by at least one other nonenterprise zone town	75%
Project in an enterprise zone town that is also being sponsored by at least one nonenterprise zone town	90% of costs attributed to enterprise zone town 75% of costs attributed to nonenterprise zone town

All towns qualify for funds to acquire and preserve open space. But "distressed municipalities" can qualify for funds to restore and protect open spaces they already own.

Fairfield, Glastonbury, Greenwich, Shelton, Southington, Trumbull, and Wallingford each have more than 30,000 people and thus do not qualify for STEAP funding. Nor do they meet the other programs' eligibility criteria. But the law allows them to qualify for up to $ 500,000 in Urban Act grants only in FY 2001-02 and FY 2002-03.

They also qualify for federal Community Development Block Grant (CDBG) funds. Fairfield and Greenwich automatically receive an annual entitlement under the large cities CDBG program (i. e. , towns over 50,000 population) while Glastonbury, Shelton, Southington, Trumbull, and Wallingford must compete for funds against other towns under the small cities program (i. e. , under 50,000 population), which is administered on behalf of the federal government by the Department of Economic and Community Development.

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Attachment 1: Towns' Eligibility for State and Federal Community Development Programs and Relevant Distressed Municipalities (DM, for 2002 list), Public Investment Communities (PIC, for FY 2003 list), Urban Center (UC), and Targeted Investment Community (TIC) Designations

*Town*	*STEAP*	*Urban Act*	*Enterprise Zone*	*Enterprise Corridor Zone*	*Manufacturing Assistance Act*	*Open Space*	*Urban Site Remediation*	*Federal Large Cities CDBG*	*Federal Small Cities CDBG*
Andover	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Ansonia	No	Yes (DM, PIC, and UC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Ashford	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Avon	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Barkhamsted	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Beacon Falls	Yes	No	No	Yes	90% in zone, 50% outside zone	Acquisition only	No	No	Yes
Berlin	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bethany	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bethel	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bethelem	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bloomfield	No	Yes (PIC)	No	No	90% for specific property, 50% for all others	Acquisition only	No	No	Yes
Bolton	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bozrah	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Branford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bridgeport	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
Bridgewater	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Bristol	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
Brookfield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Brooklyn	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Burlington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Canaan	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Canterbury	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Canton	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Chaplin	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Cheshire	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Chester	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Clinton	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Colchester	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Colebrook	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Columbia	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Cornwall	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Coventry	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Cromwell	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Danbury	No	Yes (UC)	No	No	50%	Acquisition only	No	Yes	No
Darien	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Deep River	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Derby	No	Yes (DM, PIC, UC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Durham	Yes	No	No	No	50%	Acquisition only	No	No	Yes
East Granby	Yes	No	No	No	50%	Acquisition only	No	No	Yes
East Haddam	Yes	No	No	No	50%	Acquisition only	No	No	Yes
East Hampton	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
East Hartford	No	Yes (DM, PIC, UC)	Yes	No	90%	Acquisition and restoration (DM)	Yes (DM)	No	Yes
East Haven	No	Yes (PIC and UC)	No	No	50%	Acquisition only	No	No	Yes
East Lyme	Yes	No	No	No	50%	Acquisition only	No	No	Yes
East Windsor	No	Yes (DM and PIC)	No	No	50%	Acquisition only	No	No	Yes
Eastford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Easton	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Ellington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Enfield	No	Yes (DM, PIC, and UC)	No	No	50%	Acquisition only	No	No	Yes
Essex	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Fairfield	No	Yes for FY 02 and FY 03	No	No	50%	Acquisition only	No	Yes	No
Farmington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Franklin	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Glastonbury	No	Yes for FY 02 and FY 03	No	No	50%	Acquisition only	No	No	Yes
Goshen	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Granby	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Greenwich	No	Yes for FY 02 and FY 03	No	No	50%	Acquisition only	No	Yes	No
Griswold	No	Yes (DM, PIC and UC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Groton	No	Yes (PIC and UC)	Yes	No	90% (TIC)	Acquisition only	No	No	Yes
Guilford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Haddam	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Hamden	No	Yes (PIC)	Yes	No	90% (TIC)	Acquisition only	No	Yes	No
Hampton	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Hartford	No	Yes (DM, PIC, UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
Hartland	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Harwinton	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Hebron	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Kent	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Killingly	No	Yes (DM, PIC, and UC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Killingworth	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Lebanon	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Ledyard	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Lisbon	Yes	No	No	Yes	90% in zone, 50% outside zone	Acquisition only	No	No	Yes
Litchfield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Lyme	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Madison	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Manchester	No	Yes (PIC and UC)	No	No	50%	Acquisition only	No	Yes	No
Mansfield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Marlborough	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Meriden	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
Middlebury	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Middlefield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Middletown	No	Yes (PIC and UC)	Yes	No	90%	Acquisition only	No	No	Yes
Milford	No	Yes (PIC)	No	No	50%	Acquisition only	No	Yes	No
Monroe	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Montville	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Morris	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Naugatuck	No	Yes (DM and PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
New Britain	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
New Canaan	Yes	No	No	No	50%	Acquisition only	No	No	Yes
New Fairfield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
New Hartford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
New Haven	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	Yes	No
New London	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	No	Yes
New Milford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Newington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Newtown	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Norfolk	Yes	No	No	No	50%	Acquisition only	No	No	Yes
North Branford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
North Canaan	Yes	No	No	No	50%	Acquisition only	No	No	Yes
North Haven	Yes	No	No	No	50%	Acquisition only	No	No	Yes
North Stonington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Norwalk	No	Yes (UC)	Yes	No	90% (TIC)	Acquisition only	No	Yes	No
Norwich	No	Yes (DM, PIC, and UC)	Yes	No	90% (TIC)	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Old Lyme	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Old Saybrook	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Orange	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Oxford	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Plainfield	No	Yes (DM and PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Plainville	No	Yes (DM and PIC)	No	No	90% for specific property, 50% for all others	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Plymouth	No	Yes (DM and PIC)	No	No	50%	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Pomfret	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Portland	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Preston	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Prospect	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Putnam	No	Yes (DM and PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Redding	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Ridgefield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Rocky Hill	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Roxbury	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Salem	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Salisbury	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Scotland	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Seymour	No	Yes (PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition only	No	No	Yes
Sharon	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Shelton	No	Yes for FY 02 and FY 03	No	No	50%	Acquisition only	No	No	Yes
Sherman	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Simsbury	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Somers	Yes	No	No	No	50%	Acquisition only	No	No	Yes
South Windsor	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Southbury	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Southington	No	No	Yes	No	90%	Acquisition only	No	No	Yes
Sprague	No	Yes (DM and PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No	Yes
Stafford	No	Yes (PIC)	No	No	50%	Acquisition only	No	No	Yes
Stamford	No	Yes (UC)	Yes	No	90% (TIC)	Acquisition only	No	Yes	No
Sterling	No	Yes (PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition only	No	No	Yes
Stonington	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Stratford	No	Yes (DM and PIC)	No	No	90% for specific property, 50% for all others	Acquisition only	No	No	Yes
Suffield	Yes	No	No	No	50%	Acquisition only	No	No	Yes
Thomaston	No	Yes (PIC)	NO	No	50%	Acquisition only	No	No	Yes
Thompson	No	Yes (DM and PIC)	No	Yes	90% in zone, 50% outside zone	Acquisition and restoration (DM)	Yes (DM)	No