PA 08-185—sSB 26

Finance, Revenue and Bonding Committee

AN ACT CONCERNING CERTAIN PROGRAMS ADMINISTERED BY THE OFFICE OF POLICY AND MANAGEMENT, THE DEFINITION OF “BIOMASS,” THE ESTABLISHMENT OF PRIVATE DEVELOPMENT DISTRICTS WITHIN ADRIAEN'S LANDING, AND MUNICIPAL OPTIONS TO PROVIDE CERTAIN PROPERTY TAX EXEMPTIONS AND TO MAKE ANNUAL ADJUSTMENTS IN REAL PROPERTY VALUATIONS

SUMMARY:

This act:

1. extends the Capital City Economic Development Authority's (CCEDA) powers and duties relating to certain Hartford economic development projects for an additional five years;

2. establishes a process for designating a “private development district” on the Adriaen's Landing site in Hartford;

3. allows municipalities to make property tax exemptions for additional types of tax-exempt organization property effective on the date the organization acquires the property, rather than only at the start of the next assessment year;

4. allows municipalities to adjust real property values in the assessment years between revaluations, if their legislative bodies approve;

5. modifies what counts as “sustainable biomass” for purposes of the state's renewable portfolio standard (RPS), which requires electric companies and competitive electric suppliers to get part of their power from renewable resources; and

6. requires the Auditors of Public Accounts to perform and pay for the required annual comprehensive audit of accounts associated with Rentschler Field that contain state funds.

The act also eliminates a requirement that the Board of Accountancy be within the Office of Policy and Management (OPM) for administrative purposes and makes a minor change in the approval procedure for temporary leases of the New London State Pier or other state-owned or- controlled navigation property.

EFFECTIVE DATE: Upon passage, except for the provision concerning the Board of Accountancy, which takes effect July 1, 2008, and the provision allowing municipalities to adjust property values between revaluations, which takes effect October 1, 2008. The provision concerning the effective dates of property tax exemptions for property acquired by tax-exempt organizations applies to assessment years starting on or after October 1, 2007.

HARTFORD ECONOMIC DEVELOPMENT PROJECTS

3 — CCEDA's Authority

This act extends CCEDA's powers and duties relating to certain Hartford economic development projects for an additional five years, until July 1, 2013. They were scheduled to expire on July 1, 2008. The projects are (1) a convention center, (2) a downtown higher education center, (3) up to 1,000 newly constructed or rehabilitated housing units, (4) the Civic Center (XL Center) and coliseum renovations, (5) expanded downtown parking, and (6) riverfront infrastructure and improvements.

Under the act, CCEDA exercises the following authority for an additional five years with regard to the Hartford projects:

An applicant requesting state funds for a project must submit a copy of its application, along with supporting documents, to OPM and CCEDA. CCEDA has 90 days to give the funding agency its written recommendations, which may include contractual performance standards and project timelines. The agency cannot spend funds until it receives these recommendations or until the 90 days expire, whichever is sooner. It does not have to implement CCEDA's recommendations, but must give CCEDA a written explanation about any spending decision that is inconsistent with them.

CCEDA cannot issue any funding recommendations until Hartford has created a municipal parking authority and transferred or scheduled the transfer (in a legally binding way) of its authority over all municipally owned or operated parking facilities to the new authority. CCEDA must coordinate all state and municipal planning and financial resources for projects, and all state and municipal agencies must cooperate with the authority in its efforts.

5 — On-Site Related Private Development at Adriaen's Landing

The act expands the scope of the convention center component of the Adriaen's Landing project to include any on-site related private development that CCEDA owns, develops, or operates according to a determination by the authority and the OPM secretary that it is necessary and in the public interest. By law, “on-site related private development” means housing, entertainment, recreation, retail, and office development contemplated in the Adriaen's Landing master development plan. (It is unclear if the expansion includes the convention center hotel. The act incorporates a statutory definition of “on-site related private development” that includes the hotel but also retains an existing exclusion for the hotel from the scope of the convention center facilities project. ) By extending the scope of the convention center facilities, the act gives the private development projects expedited permitting and exempts them from several environmental and public works laws.

The act also makes the inclusion of a central heating and cooling plant a mandatory rather than an optional part of the convention center facilities.

6 & 7 — Adriaen's Landing Private Development District

The act allows CCEDA and the OPM secretary to jointly designate land on the Adriaen's Landing site in Hartford as a “private development district,” meaning that it is available for certain types of private development but needs an inducement to encourage it. Although the types of private development allowed in a district are the convention center hotel and other housing, entertainment, recreation, retail, and office development contemplated in the master development plan for Adriaen's Landing, the secretary and the authority may only designate land for the district on which construction of a building or improvement is to start on or after July 1, 2008.

The act gives CCEDA the authority to negotiate, and with the OPM secretary's approval conclude, an agreement with a private developer or an owner or lessee of any building or improvement in the district for payments in lieu of real property taxes (PILOT) to CCEDA. The act makes any private development rights within the district conditional on such a PILOT agreement. It also requires the agreement to include a requirement that the developer, owner, or lessee make a good-faith effort to achieve the goal of using available and qualified minority businesses to provide construction services and materials equal to 10% of the total services and materials costs of improvements to be built in the district.

PILOT payments to CCEDA have the same lien and payment priority and can be enforced in the same way as municipal real property taxes. CCEDA must use the payments to carry out its statutory purposes relating to encouraging economic development in Hartford.

8 — Exemption From Municipal Laws, Ordinances, And Regulations

The act extends the exemption from municipal ordinances, laws, and regulations that already applied to the overall Adriaen's Landing project to the operation of any improvements in the private development district. The exemption applies to the improvements to the extent they are covered by the laws governing the Adriaen's Landing project, CCEDA's authority, or any other state law.

The act further limits Hartford's authority over the Adriaen's Landing project and the private development district by barring any municipality from imposing indirectly, as a condition of the project receiving state or local funding that the municipality administers, any requirement that it cannot impose directly. The prohibition does not apply if federal law requires the municipality to impose the condition.

9 — State PILOT Payments to Hartford

The act requires the state to make PILOT payments to Hartford for land and improvements within the designated Adriaen's Landing private development district as long the designation continues. Under the act, Hartford's authority to negotiate and fix property tax assessments for retail, commercial, and residential uses for certain capital city projects and projects located within the Adriaen's Landing site for up to 15 years does not apply to land and improvements within the designated private development district while the designation continues.

11 — PROPERTY TAX ON PROPERTY ACQUIRED BY TAX-EXEMPT ORGANIZATION

In general, the property tax exemption for any property acquired by a tax-exempt organization after the first day of October may not take effect until the following October 1 (CGS 12-89). But the law allows a municipality to establish, by ordinance, that a property tax exemption for certain types of tax-exempt organizations becomes effective on the date the organization acquires the property.   This act extends this municipal authority to cover property acquired by, or held in trust for, three additional types of organizations: (1) a bona fide war veterans' organization, (2) a Connecticut Grand Army post, and (3) the American National Red Cross.

The municipal option authority already covered:   

1. property used for scientific, educational, literary, historical, or educational purposes;

2. college property;

3. personal property loaned to tax-exempt educational institutions;

4. property owned by agricultural or horticultural societies;

5. property held for cemetery use;

6. personal property of religious organizations devoted to religious or charitable use;

7. houses of religious worship;

8. property of religious organizations used for certain purposes;

9. houses used as dwellings by officiating clergy; and

10. hospitals and sanitoriums.

By law, the municipal ordinance must establish a procedure for reimbursing the tax-exempt organization for any tax it paid for any period after the acquisition date, as well as for any tax for which the exempt organization reimbursed the prior owner on the transfer of the title.   

12 — ADJUSTING PROPERTY VALUES BETWEEN PROPERTY TAX REVALUATIONS

Authorization

The act allows municipalities to adjust real property values in the assessment years between revaluations, if their legislative bodies approve. It allows them to do so by calculating an average annual adjustment based on sales data instead of performing an annual revaluation based on the methods the law authorizes. Municipalities that choose to adjust the values in this manner must continue doing so until the next revaluation. The act specifies that this practice does not exempt municipalities from revaluing property every five years as the law requires.

Timing

It appears that municipalities may begin doing annual property value adjustments with respect to grand lists following revaluations implemented on or after October 1, 2007, even though one of the act's provisions explicitly allows them to begin doing so with respect to the first grand list following any revaluation implemented after October 1, 2005. To comply with the act's other provisions, a municipality that implemented a revaluation in 2005 year would have to begin adjusting the values on the October 1, 2006 grand list and continue doing so in each subsequent assessment year until the next revaluation. But the act does not explicitly allow municipalities to retroactively adjust the values for the October 1, 2006 grand list.

The act's other provisions specify that municipalities may begin adjusting values in the assessment year following the assessment year in which they implemented the revaluation. Consequently, this provision appears to limit this option to assessment years following revaluations implemented on or after October 1, 2007. For example, a municipality that implemented a revaluation on that date could begin adjusting the values for the assessment year beginning October 1, 2008. One that implemented revaluation after that date could begin adjusting values for the assessment year commencing the subsequent October 1.

Adjustment

The act allows municipalities to annually adjust the values resulting from the revaluation and specifies the data they must use to make the adjustments, but does not state how they must calculate them. Municipalities that choose to adjust the values must:

1. divide property into categories OPM created to comply with the law's grand list reporting requirement and

2. adjust the values in each category to reflect the “average annual adjustment in value” for each category. (The act does not specify the data municipalities must use to calculate the average. )

They may further adjust the values by geographic areas. In other words, a municipality may designate zones and adjust the values for each category in that zone.

Municipalities that choose to adjust the values must do so based on the average percent of change in the values, up to 5%. But it is not clear if they must adjust each property's value based on (1) the average change in value for all property, (2) the average change in value for each property class, or (3) the average change in value for each property class in each specified geographic area.

Municipalities must adjust the values based on a compilation of all fair market sales within their respective jurisdictions during the year before the October 1 assessment date. If there were not enough sales during that period to accurately adjust the values, assessors may use sales data from a prior period or base the adjustment on other types of data they use to determine property values.

Administration

By law, tax assessors must notify property owners when they increase the value of their property. The act exempts them from this requirement when a property's value increases solely from the annual adjustment method the act allows.

The law requires assessors to assess property that was constructed after the October 1 assessment date as of the date the property received its certificate of occupancy or the date it is actually used for its intended purpose. The act explicitly subjects assessors to this requirement.

4 — SUSTAINABLE BIOMASS

Under the RPS, electric companies and competitive electric suppliers must get part of their power from renewable resources, with specific mandates for obtaining power from class I and II resources. By law, sustainable biomass used in facilities that meet specified emission or size limits is considered a type of class I resource. Sustainable biomass used in facilities that meet less stringent emission limits is considered a class II resource. The power from class I and II resources qualifies for renewable energy certificates that are bought and sold on the regional wholesale electric market.

By law, four types of biomass generally do not count as sustainable biomass. These are: (1) construction and demolition (C&D) waste; (2) finished biomass products from sawmills, paper mills, or stud mills; (3) organic refuse fuel derived separately from municipal solid waste; and (4) biomass from old growth timber stands.

Prior law provided three exceptions to this exclusion. It permitted the four types of biomass to count as a class I or II resource if:

1. the biomass was used in a gasification plant funded by the Clean Energy Fund before May 1, 2006;

2. the energy from the biomass was the subject of a long-term contract entered into before May 1, 2006 between an electric company and a renewable resources generator under a program commonly known as Project 100; or

3. the biomass was used in a renewable energy facility certified as a class I renewable energy resource by the Department of Public Utility Control (DPUC).

By law, the third exception runs until DPUC certifies that the gasification plant described in the first exception has become operational and is accepting the biomass.

The act modifies the third exception by (1) limiting the amount of the four types of biomass that can be used at the facility to 140,000 tons per year; (2) requiring DPUC to have certified the facility as a class I renewable energy resource before December 31, 2007; and (3) requiring that the facility use biomass, including C&D waste, from a Connecticut transfer station and volume-reduction facility that generated biomass during calendar year 2007 that was used during that year to generate class I renewable energy certificates.

The act adds a new exception under which the four types of biomass can count as sustainable biomass. Under the act, if no facility described in the first or third exceptions is accepting such biomass, up to 140,000 tons of the biomass can be used each year in one or more other renewable energy facilities certified as a class I or II renewable energy resource by DPUC. These facilities must use the biomass (including C&D waste) from a Connecticut transfer station and volume-reduction facility that generated biomass during calendar year 2007 that was used during that year to generate class I renewable energy certificates.

The act's 140,000-ton annual limit does not apply to gasification plants funded by the Clean Energy Fund before May 1, 2006.

2 — AUDITS OF RENTSCHLER FIELD ACCOUNTS

The act requires the Auditors of Public Accounts to perform and pay for the required annual comprehensive audits of accounts associated with Rentschler Field that contain state funds. Under prior law, audits had to be conducted by an independent accounting firm chosen by the OPM secretary from a list of at least four such firms provided by the state comptroller. The cost of the independent audit was treated as a stadium operating expense. The audit requirement applies to the Stadium Facility Enterprise Fund, the revenue account, the operating expense fund, and any other account containing state money associated with the stadium.

The act also eliminates an obsolete requirement that the Auditors of Public Accounts conduct an audit of the stadium facility operation's internal controls between August 8 and November 30, 2003.

10 — TEMPORARY AGREEMENTS FOR LEASING STATE PIER

PA 08-101 authorizes the transportation commissioner to lease or grant any interest at the State Pier in New London or any navigation property the state owns or controls with the approval of the State Properties Review Board (SPRB), OPM, and the attorney general. It also allows the commissioner, after requesting SPRB and attorney general approval, to execute a temporary lease that would be effective only until the full agreement has received final approval. This act requires the OPM secretary to approve any such temporary lease. It also specifies that OPM, as well as the attorney general and the SPRB, make the final decision on the final lease or grant of interest.

OLR Tracking: JSL/KM/JR: GC: PF: ts