You asked four questions about the entertainment district property tax exemptions, which we answer below.

The answer depends on whether the town chooses to abate the taxes attributed to the value of improvements made to real property in the district. By law, the town may abate 100% of these taxes for seven years. If it chooses to do so, it must abate the taxes on improvements made to all property in the district, not just those used for entertainment purposes. The state does not reimburse the town for the revenue loss (CGS § 32-76a).

This abatement is one of two types of entertainment-related property tax benefits available in towns with state-approved entertainment districts. The second type is available to entertainment businesses located anywhere in the town, not just in the district. It also differs from the first type in that it exempts 80% of a property's value for five years, and the state reimburses the town for the revenue loss. The exemption applies to new or renovated facilities and newly acquired machinery and equipment used in these facilities (CGS § 32-76 (e)).

Eligible entertainment businesses include those that produce, or support the production of, live, broadcast, or manufactured entertainment products, including multimedia products. They include set and scenery makers; sound and video equipment manufacturers or providers; makers of support infrastructure, such as fiber optics; stage and screen writers; and entertainment financiers and agents. Businesses engaged in gambling or gaming and that do not sell or serve alcoholic beverages do not qualify for the exemption ((CGS § 32-76 (e)).

Property improvements and machinery purchases in towns with entertainment districts may qualify for property tax exemptions under other programs. By law, only towns with enterprise zones may designate entertainment districts. Consequently, manufacturers and financial service firms in towns with entertainment districts qualify for enterprise zone benefits. They automatically qualify for the benefit if they improve property in the zone; they qualify at the economic and community development commissioner's discretion when they improve property outside the zones.

The owners of other types of properties in a zone qualify for a seven-year property tax exemption, which towns must provide (CGS § 32-71). The state does not reimburse towns for this revenue loss.

DRS has not interpreted this law because it does not oversee property taxation. The Department of Economic and Community Development (DECD), which processes the reimbursements for the tax exemptions, interprets the law as permissive, meaning that it lets towns decide if they want to abate the taxes on property improvements in the district.

Data is readily available only for the state-reimbursed property tax exemptions. As Table 1 shows, of the eight companies that received an exemption, six are located in Bridgeport.

Table 1: Businesses Receiving State-Reimbursed Entertainment District Property Tax Exemptions, 1999-2006

Source: Department of Economic and Community Development

The process for claiming the entertainment district property tax exemption is the same as the one for claiming the enterprise zone exemption. A business must first apply to the DECD commissioner for a certificate certifying that the facility and its machinery and equipment meet statutory criteria (CGS § 32-9r). If she issues the certificate, the business must then file a claim form with the town's tax assessor by November 1 annually. Attachment 1 is an OLR Report detailing the process (2000-R-0851).

The statutes do not specify the process towns must follow if they choose to abate property taxes in an entertainment district. Presumably, a town that chooses to do so would specify that process in an ordinance authorizing the abatement.

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