OLR Bill Analysis

SB 973

AN ACT CONCERNING THE DEFINITION OF MEDIAN INCOME IN ENTERPRISE ZONES FOR ASSESSMENT PURPOSES.

SUMMARY:

This bill changes the criterion under which taxpayers qualify for a property tax exemption when they improved homes, apartments, condominiums, and other types of residential property in the state's 17 enterprise zones. By law, municipalities must exempt a portion of the property's assessed value attributed to the improvements according to a seven-year schedule.

Improved rental units and those converted into condominiums must be rented or sold, respectively, only to people meeting an income criterion. Under current law, these people can earn no more than 200% of the municipality's median family income. Under the bill, they can earn no more than 200% of the median income for the area in which the municipality is located, as determined by the U. S. Department of Housing and Urban Development (HUD).

EFFECTIVE DATE: Upon passage

BACKGROUND

Enterprise Zone Property Tax Exemptions

The law requires municipalities to grant two types of property tax exemptions to taxpayers in enterprise zones who improve their properties. They must exempt 80% of the assessed value of newly constructed or improved factories, warehouses, banks, and other specified property for five years. The state reimburses municipalities for this revenue loss.

Municipalities must also exempt a portion of the assessed value of other types of property, but under a different schedule. Homes, apartments, stores, offices, and other types of property ineligible for the five-year, 80% exemption, qualify for a seven-year exemption. The exemption is 100% of the improvement's assessed value in the first two years, drops to 50% in the third, and declines by 10% per year in each of the remaining four years. The state does not reimburse municipalities for this revenue loss.

HUD Area Median Income

HUD annually determines median family income for metropolitan and nonmetropolitan areas based on census data. It uses this data to determine whether someone is eligible for housing or housing assistance under many different programs.

COMMITTEE ACTION

Commerce Committee

Joint Favorable