AN ACT CONCERNING THE FILING DEADLINE FOR CERTAIN TAX CREDITS OR PROPERTY TAX EXEMPTIONS, AN EXEMPTION FROM THE ADMISSIONS TAX, VALIDATION OF A TOWN REFERENDUM AND AN EXECUTIVE OR LEGISLATIVE NOMINATION, THE PROCEDURE FOR EXECUTIVE OR LEGISLATIVE NOMINATIONS, ELIGIBILITY FOR A REFUND OF THE MOTOR VEHICLE FUELS TAX, THE JOB CREATION TAX CREDIT PROGRAM, AND CREATION OF A MIXED-USE HISTORIC STRUCTURE REHABILITATION TAX CREDIT

1. starting in FY 09, authorizes up to $50 million over three years in business tax credits for rehabilitating historic property for mixed residential and commercial use;

2. extends an existing job creation tax credit to any company, not just out-of-state companies relocating here, that creates new full-time jobs in the state;

3. reduces the number of new jobs that qualify for a credit from 50 to 10 and increases the credit amount from 25% to 60% of the state income tax withheld from new employees' wages;

4. eliminates the deadline for the House or Senate to vote on nominations for state agency department heads after they are reported by the Executive and Legislative Nominations Committee and validates any nominations approved in 2007 after the deadline;

5. makes waste haulers for the Connecticut Resources Recovery Authority's Mid-Connecticut Project eligible for motor fuels tax refunds on fuel used exclusively for that job;

6. extends deadlines for certain taxpayers to file for property tax exemptions and a corporation tax refund based on a tax credit;

7. exempts admission charges to the Hartford Convention Center on specified dates from the admission tax; and

8. validates the results of a particular referendum that was held in Clinton after the statutory time limit for doing so.

The law already authorizes business tax credits for rehabilitating certified historic commercial and industrial property for residential uses only. This act authorizes business tax credits for rehabilitating historic property to be used for both residential and commercial purposes. It authorizes up to $50 million in credits per three-year cycle, beginning with FYs 09-11. Total tax credits for any single project are limited to 10% of the aggregate limit for all such tax credits for each three-year period.

The credit equals 25% of the qualified rehabilitation expenditures or 30%, if a portion of the units are affordable to low- and moderate-income people. A project is considered affordable if (1) at least 20% of the units are affordable rental units or (2) 10% are affordable homeownership units. A unit is affordable if it costs a moderate-income household no more than 30% of its income. A household falls into this category if it earns no more than the median income of the town where the unit is located.

Individuals, limited liability companies, nonprofit and for-profit corporations, and other business entities are eligible for the credit if they have title to the property and rehabilitate it. They qualify for credits based on the property's historic status and how the property will be used after rehabilitation.

The property must be an historic commercial or industrial property (1) individually listed on the national or state Register of Historic Places or (2) located in an historic district listed on the national or state Register of Historic Places. In addition, the Connecticut Commission on Culture and Tourism (CCCT) must certify that the property contributes to the district's historic character.

The rehabilitated property must be used for both residential and commercial purposes and the residential portion must comprise at least 33% of its total floor area.

The act establishes a two-step process for accessing the credits. The first step occurs when an owner asks CCCT to reserve credits on his behalf. The owner must do this before he starts rehabilitating the property. In requesting a credit reservation, the owner must submit the construction plans and specifications.

The owner must also provide an estimate of the project's qualified rehabilitation expenditures. These include all costs other than the owner's personal labor; new additions not needed to comply with building and fire safety codes; and architectural, legal, and financing fees and other nonconstruction costs. The qualified expenditures must exceed 25% of the property's assessed value. CCCT must reserve the credits if the rehabilitation plan meets its standards.

For projects that include affordable housing, the owner must specify the number of affordable units, their proposed rents or sale prices, and the median income of the town where the property is located. He must submit this data to the Department of Economic and Community Development (DECD). The DECD commissioner must review the affordable housing applications and issue a certificate to those she approves. CCCT cannot reserve the affordable housing credits unless the owner submits the DECD certificate.

CCCT can charge the owner up to $10,000 to process applications and monitor rehabilitation. DECD can charge up to $2,000 to cover its costs for determining eligibility and monitoring compliance after the project is completed (see below).

The second step in claiming credits begins when the owner notifies CCCT that he or she has finished rehabilitating the property. The owner must show that the work was completed and certify the costs incurred. CCCT must review the owner's documents and verify whether the work complies with the rehabilitation plan. After completing its review, the commission must issue a credit voucher granting a credit equal to the lesser of (1) the amount CCCT reserved when it certified the rehabilitation plan or (2) 25% or 30% of the qualified rehabilitation expenses, as appropriate.

Owners may claim the credit themselves or transfer them to others. Credit holders may claim the credit in the tax year when the property receives its certificate of occupancy. For multiphase projects, credit holders may claim a part of the credit in proportion to the part of the project that received a certificate of occupancy.

A credit holder claims the credit by attaching the voucher to its tax return. The credit can be used against the corporation tax or similar taxes on air carriers and insurers, or the taxes on railroad, cable and satellite TV, and utility companies. It can be used in the tax year when the substantially rehabilitated certified property is placed in service. This happens when the qualified rehabilitation expenditures exceed 25% of the property's assessed value and the building official issues a certificate of occupancy, which can be for the entire structure or individual dwelling units completed as part of a multiphase project.

Multiple owners of a certified property must pass the credits through to designated partners, members, or owners on either a pro rata basis or according to an agreement among them, regardless of their other tax or economic attributes.

The credit holder can carry forward any unused portion of the credit for the next five years or until the full credit is used, whichever happens first.

The act requires CCCT to adopt implementing regulations, which must include application procedures, criteria for rating projects, and timeframes for approving requests.

The act requires CCCT to stop reserving credits in the first year of any three-year cycle when the aggregate credits reserved reach 65% of the $50 million credit allocation for the cycle (i. e. , $32. 5 million). It can continue to reserve credits only if the Commerce and Finance, Revenue and Bonding committees each allow it. Likewise, if credit reservations reach 90% in the second year, CCCT must suspend the reservations, unless the committees vote to allow it to continue. Suspensions do not affect previously reserved credits.

The act requires DECD to monitor projects to insure that the affordable units remain affordable to low- and moderate-income people for at least 10 years. It allows the DECD commissioner to require deed restrictions or other fiscal mechanisms to ensure compliance. The act allows DECD to adopt regulations, in consultation with CCCT, that implement its application review and monitoring requirements. The regulations can allow DECD to monitor the affordable housing requirements itself or designate local housing authorities, municipalities, or public or quasi-public agencies to do so.

The act requires CCCT to report annually on the credits it reserved during the previous fiscal year to the Commerce and Finance, Revenue and Bonding committees. Reports are due annually starting by October 1, 2009. Each report must include the following information for each project for which credits are reserved:

5. for affordable housing reservations, the value of the credit reserved and the percentage of the residential units that qualify as affordable.

EFFECTIVE DATE: Upon passage and applicable to income years starting on or after January 1, 2008, except for the DECD monitoring requirement, which is effective July 1, 2007.

The act (1) extends the job creation business tax credit enacted in 2006 to any company that creates at least 10 new full-time jobs in the state and (2) increases the maximum credit from 25% to 60% of the state income tax withheld from the new employees' wages for up to five successive years. Under prior law, companies were eligible only if they (1) were not conducting business in Connecticut, (2) relocated to Connecticut, and (3) created at least 50 new full-time jobs in the state.

As under prior law, companies must apply to the DECD commissioner for the credits. The act makes it a condition of DECD's approval that the proposed job growth conform to the State Plan of Conservation and Development.

Under prior law and the act, the credit applies against the corporation, utility company, and insurance premium taxes. Total credits for all eligible companies are still limited to $10 million per year.

The act makes minor adjustments in credit eligibility, application, and approval requirements.

Under the act, a tax credit application must contain enough information to show that the job growth will provide net benefits for the economy of the host municipality and the state. As under prior law, applicants must provide a detailed description of the number of jobs to be created, feasibility studies or business plans, projections of the state and local revenue that could result, and any other information needed to evaluate the credit. Under the act, an applicant is no longer required to show that relocation is financially viable or provide details about the type of business the applicant engages in.

The commissioner may approve full or partial credits only if the proposed increase in jobs (1) is not economically viable without the credits and (2) provides a net benefit to economic development and employment in the state.

The requirement that the commissioner impose an appropriate application fee is unchanged. The act also retains the existing procedure for claiming credits and the recapture provision.

EFFECTIVE DATE: July 1, 2007 and applicable to income years starting on or after January 1, 2007.

The act makes waste haulers eligible for a refund of the motor vehicle fuels taxes they paid on fuel used exclusively for hauling waste for the Connecticut Resources Recovery Authority's Mid-Connecticut Project. The refund is already available to, among others, federal, state, and municipal vehicles used for government purposes.

EFFECTIVE DATE: July 1, 2007 and applicable to refund claims filed on or after that date.

The act eliminates a requirement that the House or Senate act on gubernatorial nominations for department heads within 10 calendar days after they are reported by the Executive and Legislative Nominations Committee. It also confirms otherwise valid legislative and executive nominations approved during the 2007 session on which the House or Senate failed to act within 10 days of the committee's report.

The act allows certain taxpayers to receive property tax exemptions for particular assessment or grand list years even though they missed the filing deadlines for the exemption or credit.

Machinery and Equipment, Manufacturing and Service Facilities, and Commercial Trucks

1. machinery and equipment used for manufacturing, biotechnology, or recycling (MME);

2. manufacturing and service facilities located in targeted investment communities or enterprise zones;

3. new and newly acquired MME and service facility equipment in distressed municipalities, targeted investment communities, or enterprise zones; and

Property owners must apply to local assessors for these exemptions by November 1 annually.

This act waives this filing deadline for property owners in the towns and for one or more of the above property categories and the grand lists shown in Table 1, if the property owners apply within 30 days of the act's passage and pay the statutory late fee. In each case, the act requires the local assessor to (1) verify eligibility for the exemption and approve the exemption, (2) refund any taxes paid on the property, and (3) submit the request for a tax loss reimbursement to the Office of Policy and Management secretary. Subject to the secretary's review and approval, the act requires the state to reimburse the town for the tax loss under the applicable statute.

The law allows a municipality, by ordinance, to give property tax exemptions to real or personal property leased to federally tax-exempt charitable, religious, or nonprofit organizations, if the property is used exclusively for the purposes of the tax-exempt entity. This act waives the exemption filing deadline for a property owner who is otherwise eligible for the exemption on Norwalk's 2005 grand list, if he or she files an exemption application within 30 days after the act's effective date. It requires Norwalk to refund any taxes paid on the property.

Despite the expiration of the three-year deadline for filing an amended corporation tax return and claiming a refund, the act allows a Trumbull company to receive a tax refund if it (1) was otherwise eligible for the research and experimentation expenses tax credit for 2002 and (2) files an amended return within 30 days of the act's effective date. The credit is 20% of a company's annual research and experimentation spending.

The act exempts a person charging admission to the Hartford Convention Center on June 9^th or 10^th, 2007 from the 10% admission tax. (PA 07-1, June Special Session, exempts all events at the convention center from the tax, effective July 1, 2007. )

The act validates a referendum held in Clinton on February 28, 2007 that approved $6,372,500 in bonding for infrastructure improvements, despite its having been held 21 days, rather than the statutorily required seven to 14 days, after it was discussed at a town meeting. It also validates all acts, proceedings, and votes town officials take in regard to, or reliance on, the referendum as of the date taken.

§	*Town*	*Grand List(s) or Assessment Year(s)*	*Type of Property*
2	East Hartford	2006	MME
3	Milford	2004, 2005	MME
4	Stafford	2005, 2006	Trucks
5	Chester	2006	MME
6	Bridgeport	2003, 2004	Manufacturing and service facilities & equipment
8	Norwalk	2006	Manufacturing and service facilities & equipment
9	South Windsor	1999	MME
12	Stafford	2003, 2004	Trucks
13	East Hartford	2005	Manufacturing and service facilities & equipment
14	Bridgeport	2005	Manufacturing and service facilities & equipment