OLR Bill Analysis

sHB 6499 (Files 173 and 778, as amended by House “A” and Senate “A”)*

AN ACT CONCERNING CERTAIN PUBLIC INVESTMENT COMMUNITIES

SUMMARY:

This bill provides a way for towns to continue qualifying for Small Town Economic Assistance Program (STEAP) grants when they no longer meet certain eligibility criteria. A town qualifies for STEAP if it has fewer than 30,000 people and the state has not designated the entire town as a distressed municipality or public investment community (PIC) or part of the town as an urban center. The bill applies to towns that become ineligible for STEAP grants because the state designated them a distressed municipality or a PIC.

The bill tightens the criteria for designating enterprise corridor zones, which are state-designated areas where manufacturers and other specified businesses qualify for property tax abatements and business tax credits for developing facilities and creating jobs.

The bill also changes the point in time when the economic and community development commissioner can remove an enterprise corridor zone designation. Current law allows him to do so 10 years after he approved the designation if any of the participating towns no longer meet the designation criteria. The bill instead lets him remove the designation 10 years after the date any of the towns no longer meet the criteria.

*House Amendment “A” changes the criteria for designating enterprise corridor zones and the point in time when the commissioner can remove a zone designation.

*Senate Amendment “A” extends the option for continued STEAP grant eligibility to distressed municipalities.

EFFECTIVE DATE: July 1, 2005

STEAP

The bill allows towns to continue qualifying for STEAP grants after the state designates them a distressed municipality or a PIC. By law, a town becomes ineligible for these grants when its population exceeds 30,000 people, the state designates part of the town as an urban center or the state designates the entire town as a distressed municipality or PIC. (But these designations also qualify towns for Urban Act grants. ) The state designates urban centers every five years when it updates the State Plan of Conservation and Development. It designates distressed municipalities and PICs annually.

The bill applies to towns that become ineligible for STEAP because the state designated them a distressed municipality or a PIC. It lets these towns decide if they want to qualify for Urban Act or STEAP grants. A town may chooses to continue qualifying for STEAP grants only if its legislative body or the board of selectmen (if that body is a town meeting) approves and the town notifies the Office of Policy and Management (OPM) secretary about the decision. The town qualifies for STEAP grants for four years and may qualify for additional four-year periods in the same manner.

Urban Act and STEAP grants fund housing, transportation, economic development, environmental protection, and social service projects. But the Urban Act’s criteria are weighted more toward developed, economically distressed towns. The criteria include the PIC designation, which OPM determines annually based on social and economic statistics.

ENTERPRISE CORRIDOR ZONES

The bill changes the criteria for designating enterprise corridor zones. Under current law, the legislative bodies of three or more contiguous towns can, with the economic and community development commissioner’s approval, designate industrial areas within each town as corridor zones if the towns meet the following criteria:

1. each town is a PIC and has fewer than 60,001 people; and

2. at least half of the towns are located along the same interstate highway, limited access state highway, or intersecting intrastate or limited access state highways.

Under the bill, the legislative bodies of two or more contiguous towns can, with the commissioner’s approval, designate the entire towns as corridor zones if each town meets the following criteria:

1. PIC and a distressed municipality;

2. fewer than 40,001 people;

3. has an average unemployment rate that exceeds the state’s average rate, as reported by the labor commissioner on the preceding July 1 for the most recent 12-month period; and

4. has an average per capita income that that is less than the state’s average per capita income according to the last census or the U. S. Census Bureau’s population report for the preceding January 1, whichever is most recent.

In addition, at least one of the towns must be located along an interstate highway, limited access state highway, or intersecting interstate or limited access state highways. And, at least one has been designated a regional center on the State Plan of Conservation and Development’s locational guide map. (Torrington and Winstead qualify for enterprise corridor zone designation under the bill’s criteria. )

BACKGROUND

Public Investment Communities

PIC is a designation that identifies fiscally distressed towns. OPM scores and ranks all 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. It then designates the 42 towns in the top quartile as PICs. The designation serves as an eligibility criterion for Urban Act grants, community economic development loans, residential mortgage guarantees, malpractice insurance assistance, and enterprise corridor zone designations. Table 1 below lists the 2005 PIC towns.

Table 1: 2005 PIC Towns

Ansonia

Bloomfield

Bridgeport

Bristol

Chaplin

Derby

East Hampton

East Hartford

East Haven

Enfield

Griswold

Hamden

Hampton

Hartford

Killingly

Manchester

Meriden

Middletown

Naugatuck

New Britain

New Haven

New London

Newington

Norwich

Plainfield

Plainville

Plymouth

Putnam

Seymour

Sprague

Stafford

Sterling

Stratford

Thomaston

Thompson

Torrington

Vernon

Waterbury

West Haven

Winchester

Windham

Windsor

Distressed Municipalities

The economic and community development commissioner annually designates distressed municipalities based on demographic and economic indicators. The designation serves as a criterion for qualifying projects for open space, brownfield remediation, and Urban Act funding. The commissioner has not designated the 2005 distressed municipalities but the ones for 2004 are listed in the Table 2 below.

Table 2: Distressed Municipalities

Ansonia

Bridgeport

Bristol

Derby

East Hartford

East Windsor

Enfield

Hartford

Killingly

Meriden

Naugatuck

New Britain

New Haven

New London

Norwich

Plainville

Plymouth

Putnam

Sprague

Torrington

Vernon

Waterbury

West Haven

Winchester

Windham

Enterprise Corridor Zones

The economic and community development commissioner designated the two current enterprise corridor zones in 1995. They are:

1. the Route 8 zone, consisting of Ansonia, Beacon Fall, Derby, Naugatuck, and Seymour; and

2. the Interestate 395 zone, consisting of Griswold, Killingly, Lisbon, Plainfield, Putnam, Sprague, Sterling, and Thompson.

Legislative History

On April 8, the House referred the bill to the Planning and Development Committee, which reported it favorably on April 13. On May 26, the House referred the bill to the Finance, Revenue and Bonding Committee, which reported it favorably on May 3.

COMMITTEE ACTION

Commerce Committee

Joint Favorable Report

Yea

21

Nay

0

Planning and Development Committee

Joint Favorable Report

Yea

15

Nay

0

Finance, Revenue and Bonding Committee

Joint Favorable Report

Yea

41

Nay

4