Topic:
FEDERAL ASSISTANCE PROGRAMS; MUNICIPALITIES; STATE AID; ECONOMIC DEVELOPMENT; GRANTS;
Location:
ECONOMIC DEVELOPMENT; MUNICIPALITIES;

OLR Research Report


January 30, 2004

 

2004-R-0109

GRANT PROGRAMS FOR SMALL TOWNS

By: Kevin E. McCarthy, Principal Analyst

You asked a description of eligibility requirements for the Urban Action grant program. You also wanted to learn of other economic development assistance programs open to small towns, e.g., those with populations under 5,000.

SUMMARY

The Urban Action grant program is open to state-designated (1) distressed municipalities, (2) public investment communities, or (3) urban centers under the state's Plan of Conservation and Development (C&D). Of the 42 towns with fewer than 5,000 residents, five (Canterbury, Hampton, Sprague, Sterling, and Voluntown) currently meet these criteria. The Office of Policy and Management (OPM) annually revises the list of towns that meet the first two criteria based on statutory definitions; it revises the list of towns that meet the third criterion every five years when it amends the state Plan of C&D. Towns can use the grants for a wide range of physical development and social service projects. In addition, the State Bond Commission may declare a town that otherwise would not be eligible for assistance to be eligible if the commission determines the proposed project meets the Urban Action program's statutory goals.

All towns can apply for economic assistance under the Manufacturing Assistance Act and small towns can compete for grants under the federal Community Development Block Grant (CDBG) program. In addition, the Small Town Economic Assistance Program (STEAP) is specifically targeted at small and medium size towns. However, this program is currently closed.

In addition to these general purpose programs, all towns can apply for assistance under the Urban Sites Remedial Action Program, under which the Department of Environmental Protection (DEP) expeditiously reviews, inspects, and approves contaminated property in any town for cleanup and redevelopment if the Department of Economic and Community Development (DECD) determines that doing so would benefit the state's economy. To be eligible, the owner or developer of the contaminated property must be willing and able to conduct the investigations and remediate the site. For properties located in distressed municipalities or targeted investment communities (those with enterprise zones) DEP will investigate and if necessary perform the remediation on the properties. Further information about the Urban Sites Remedial Action Program is available at http://www.ct.gov/ecd/cwp/view.asp?a=1101&q=249844.

URBAN ACTION GRANTS

The Urban Action grant program is open to towns designated as (1) economically distressed as defined by CGS Sec. 32-9p(b), (2) public investment communities, or (3) urban centers under the state's Plan of Conservation and Development (C&D). These criteria primarily apply to larger, urbanized towns. STEAP, on the other hand, is primarily aimed at towns with fewer than 30,000 residents. Table 1 lists the towns that are currently eligible under this program and under STEAP, which is currently closed.

Table 1: Towns Eligible for Urban Action Grants and STEAP

Urban Action

Small Town Economic Assistance

Ansonia

New Britain

Andover

East Haddam

Middlefield

Sherman

Bloomfield

New Haven

Avon

East Lyme

Monroe

Simsbury

Bridgeport

New London

Barkhamsted

Eastford

Morris

Somers

Bristol

Norwalk

Berlin

Easton

New Canaan

South Windsor 

Brooklyn

Norwich

Bethany

Ellington

New Fairfield

Southbury

Canterbury

Plainfield

Bethel

Essex

New Hartford

Southington*

Colchester

Plainville

Bethlehem

Fairfield*

New Milford

Stonington

Danbury

Plymouth

Bolton

Farmington

Newington

Suffield

Derby

Putnam

Bozrah

Franklin

Newtown

Tolland

East Hartford

Seymour

Branford

Glastonbury*

Norfolk

Trumbull*

East Haven

Sprague

Bridgewater

Goshen

North Branford

Union

East Windsor

Stafford

Brookfield

Granby

North Canaan

Wallingford*

Enfield

Stamford

Brooklyn

Greenwich*

North Haven

Warren

Griswold

Sterling

Burlington

Guilford

North Stonington  

Washington

Groton

Stratford

Canaan

Haddam

Old Lyme

Waterford

Hamden

Thomaston

Canton

Hartland

Old Saybrook  

Watertown

Hampton

Thompson

Chaplin

Harwinton

Orange

Westbrook

Hartford

Torrington

Cheshire

Hebron

Oxford

Weston

Killingly

Vernon

Chester

Kent

Pomfret

Westport

Manchester

Voluntown

Clinton

Killingworth

Preston

Wethersfield

Meriden

Waterbury

Colebrook

Lebanon

Prospect

Willington

Middletown

West Hartford

Columbia

Ledyard

Redding

Wilton

Milford

West Haven

Cornwall

Lisbon

Ridgefield

Windsor

Naugatuck

Winchester

Coventry

Litchfield

Rocky Hill

Windsor Locks

 

Windham

Cromwell

Lyme

Roxbury

Wolcott

   

Darien

Madison

Salem

Woodbridge

 

 

Deep River

Mansfield

Salisbury

Woodbury

   

Durham

Marlborough

Scotland

Woodstock

   

East Granby

Middlebury

Sharon

 

*Population more than 30,000, however, eligible for up to $500,000 per year in Urban Action grant funds.

Towns can use urban action grants for:

1. economic development projects such as (a) building or rehabilitating commercial, industrial, or mixed-use structures and (b) constructing, reconstructing, or repairing roads access ways, and other site improvements; 

2. urban transit;

3. recreation and solid waste disposal projects;

4. social service-related projects, including day care centers, elderly centers, domestic violence and emergency homeless shelters, multi purpose human resource centers, and food distribution facilities; 

5. housing projects; 

6. pilot historic preservation and redevelopment programs that leverage private funds; and 

7. other projects involving economic and community development, transportation, environmental protection, public safety, and social service programs.

SMALL CITIES PROGRAMS

Towns with fewer than 50,000 residents can qualify for small cities under the federal CDBG program. DECD awards these grants annually on a competitive basis. (Larger towns are entitled to grants under other provisions of CDBG.) Towns can use the grants to revitalize neighborhoods, expand affordable housing and economic opportunities, and improve community facilities and services. They can also lend a small portion of their grants to community based development organizations.

 

Section 108, the loan guarantee provision of the CDBG program, allows towns to transform a small portion of their CDBG funds into federally guaranteed loans. Towns borrowing funds guaranteed by Section 108 must pledge their current and future CDBG allocations to cover the loan amount as security for the loan. They may provide grants or loans to any sub-recipient that is a Community Based Development Organization.  These organizations may carry out neighborhood revitalization, community economic development, or energy conservation activities.  In some instances, they may carry out otherwise ineligible activities such as constructing new housing.

Further information about the Small Cities Program is available on the DECD's Website, http://www.ct.gov/ecd/cwp/view.asp?a=1098&q=249736.

MANUFACTURING ASSISTANCE ACT (MAA)

All towns, as well as businesses and nonprofit developers, can apply for MAA funds, which they can use to develop industrial parks, supporting infrastructure, or other economic development related projects. The funds can be used to provide loans for a wide range of economic development projects, including

1. acquisition of real property, machinery or equipment, so long as the assistance does not exceed the fair market value;

2. construction of site and infrastructure improvements relating to a municipal or business development project;

3. building construction, renovation, or demolition;

4. relocation expenses to help manufacturing or other economic-based businesses to locate, construct, renovate or acquire a facility; and

5. business support services such as labor training, day care, energy conservation, pollution control, in conjunction with other state agencies.

As Table 2 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 2: Project Funding Levels Under MAA

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 non-enterprise zone town that is also being sponsored by at least one other non-enterprise zone town

75%

Project in an enterprise zone town that is also being sponsored by at least one non-enterprise zone town

90% of costs attributed to enterprise zone town

75% of costs attributed to other town(s).

SMALL TOWN ECONOMIC ASSISTANCE PROGRAM

To be eligible for STEAP, a town must (1) have a population under 30,000 and (2) be ineligible for Urban Action grants because it is a (a) distressed community, (b) public investment community or (c) an urban center under the state's Plan of C&D. (The State Bond Commission may declare a town that otherwise would not be eligible for Urban Action assistance to be eligible if the commission determines the project in question meets the goals set in the Urban Action statute. Receiving Urban Action aid this way does not disqualify a town from STEAP eligibility.)

Each eligible municipality may receive no more than $500,000 per fiscal year under the program toward all projects. STEAP grants can be used for the same purposes as Urban Action grants. An OPM Website http://www.opm.state.ct.us/secr/services/steap.htm and OLR Report 2002-R-0563 provide additional information about STEAP.

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