April 7, 2008
MUNICIPALITY QUALIFICATION FOR THE URBAN AND INDUSTRIAL SITES TAX PROGRAM
By: Meghan Reilly, Legislative Fellow
You asked if municipalities qualify for tax credit allocations under Connecticut's Urban and Industrial Sites Investment Program.
The Urban and Industrial Sites Reinvestment Tax Credit Program is an economic development tool under which taxpayers may receive business tax credits for investing in eligible urban reinvestment projects. Under the program, the state may provide up to $100 million in tax credits over a ten-year period to support projects in urban or economically distressed areas (CGS § 32-9t(b)). The statute specifically allows “any taxpayer or fund manager, or community development entity” to apply (CGS § 32-9t(e)). Because a municipality is not a taxpayer or a fund manager, it does not qualify for the credits. But a community development entity acting on its behalf could, according to Department of Economic and Community Development (DECD) staff.
Under Connecticut law, a community development entity is any corporation, limited partnership or limited liability company qualified to do business in this state. It must be (1) organized for the purpose of providing investment capital or financing for eligible community development projects, (2) accountable to residents of more than one eligible municipality through representation on the governing board of the entity, (3) organized for the purpose of seeking certification and an allocation of new markets tax credits as provided in the current U.S. Internal Revenue Code, and (4) registered in the state (CGS § 32-9t).
According to DECD staff, a municipal development entity meeting these criteria could qualify for credits.