OLR Research Report

March 26, 2008




By: Rute Pinhel, Research Analyst

John Rappa, Principal Analyst

You asked for a brief summary of bills the Commerce Committee favorably reported to the Finance Committee.

SB 392 — An Act Extending Economic Development Programs

● Makes permanent CDA's authorization under two programs to finance projects with incremental tax revenues the projects generate

● One uses the project revenue or incremental property taxes to repay the bonds issued to finance projects cleaning up and redeveloping contaminated property or making extensive use of information technology

● The other uses incremental sales, admission, and dues tax revenue a project generates to repay bonds issued to finance larger-scale projects

EFFECTIVE DATE: Upon passage

SB 393 — An Act Concerning the Bioscience Facilities Fund 

● Authorizes $8 million in bonds for Connecticut Innovations for the BioScience Facilities Fund. CI must use $3 million to fund laboratory space and facilities that adopt good manufacturing process principles.

EFFECTIVE DATE: July 1, 2008

SB 400 — An Act Eliminating the Business Entity Tax

● Eliminates the $250 business entity tax, which applies to limited liability companies, limited liability partnerships, limited partnerships, and S corporations.

EFFECTIVE DATE: Upon passage and applicable to taxable years starting on or after January 1, 2008

SB 549 — An Act Concerning an Entrepreneurship Tax Credit Program

● Establishes transferable state insurance, corporate, and income tax credits for eligible people who invest in qualified Connecticut start-up businesses (“angels”).

● Credit is 35% of the cash investment up to a maximum credit of $150,000.

● Credits are transferable from the angel to another taxpayer and from that transferee to another taxpayer. Unused credits may be carried forward for up to five years.

● To receive a credit-eligible angel investment, a business must:

have annual gross revenues under $ 5 million,

have fewer than 25 employees, more than half of whom must reside in Connecticut,

have been operating in Connecticut for less than 10 years,

be primarily owned by its management and their families,

have received less than $1 million in angel credits, and

be approved by the DECD as qualified to receive such investments.

● Total credits are limited to $20 million per year for all investments

If credit allocation for a year exceeds this threshold, the DEDC commissioner can apply the difference to the allocation for the succeeding year

EFFECTIVE DATE: July 1, 2008, and applicable to income years starting on or after January 1, 2008

sSB 556 — An Act Concerning Energy and Manufacturing

Authorizes new tax incentives for energy efficiency:

Business tax credit for acquiring and installing fuel cells or other energy-saving products

n 20% credit for products reducing energy consumption by 20% or more

n 10% credit for products reducing energy consumption between 10% and 19%

Sales tax exemption for products reducing energy consumption by at least 10%

The law already authorizes sales tax exemption for materials, tools, and other specified items used in a fuel cell manufacturing facility

EFFECTIVE DATE: July 1, 2008, and applicable to income years or sales starting on or after January 1, 2008

SB 566 — An Act Concerning Fuel Cells

● Authorizes $50 million in bonds for DOT to implement the fuel cell program

● Requires DOT to establish a fuel cell program, to include:

Contracting with a state business to produce transit buses powered by fuel cells;

Transitioning to the use of fuel cells at ports, airports, and other transportation hubs, including Bradley International Airport;

Establishing up to three hydrogen refueling hubs in the state; and

Using fuel cells to provide power for railroad applications.

● Authorizes $500,000 in bonds for the Office of Legislative Management to perform an engineering study and develop plans to install fuel cells at the Capitol complex.

EFFECTIVE DATE: July 1, 2008

sSB 650 — An Act Extending the Historic Preservation Tax Credit to Include Barns and Agricultural Buildings

Expands the types of property qualified for historic preservation tax credits to include barns or agricultural buildings used for residential or nonresidential uses consistent with the district's historic character. The barns or agricultural buildings must be (1) individually listed on the national or state Register of Historic Places or (2) be located in an historic district listed on the national or state Register of Historic Places.

Defines agricultural buildings as the outbuildings typically used on a farm, including chicken coops, chicken houses, smoke houses, ice houses, or outhouses.

Related Law

● PA 07-250 authorizes business tax credits for rehabilitating certified historic commercial and industrial property for both residential and commercial purposes. By law, the Connecticut Commission on Culture and Tourism (CCCT) may reserve 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 for all such tax credits for each three-year period.

EFFECTIVE DATE: July 1, 2008, and applicable to income years starting on or after January 1, 2008

SB 651 — An Act Concerning Funds for Water Treatment Facilities

Establishes a $2 million, bond-funded program providing loans to manufacturers for upgrading water treatment plants to meet federal Clean Water Act requirements

Requires program to fund at least four manufacturers

Houses it DECD, which must adopt implementing regulations

EFFECTIVE DATE: October 1, 2008

sHB 5554 — An Act Concerning Tax Credits and Incentives for Live Theater and the Performing Arts Industry

Extends the existing film production and film infrastructure business tax credits to activities related to live production in venues owned or operated by nonprofit organizations

30% film production tax credit applies to construction, technical work, staging, or performance for live theater, music, dance, opera, and other performing arts

The credit amount for the infrastructure credit ranges from 10% to 20% depending on the amount invested

n The bill extends the credit to buildings, facilities, and installations needed for live performing arts

Requires the Office of Workforce Competitiveness (OWC) to develop a program to train people for jobs in the performing arts industry

Requires OWC to design the program based on a three-phased model similar to the one proposed for training film industry workers

Related Law

Current law authorizes:

80% property tax exemption for improvements to facilities for producing entertainment products in locally designated entertainment districts (i.e., Bridgeport, New Britain, Stamford, and Windham)

Maximum 50% corporate business tax credit if business creates specified number of new jobs in these facilities as a result of the expansion

EFFECTIVE DATE: July 1, 2008 (the provisions concerning the film production and infrastructure tax credits are applicable to income years starting on or after January 1, 2008)

sHB 5585 — An Act Concerning Digital and Film Media

1-2 — CCCT Reporting Requirement and Employment Growth Programs

● Requires the CCCT to:

submit monthly reports, beginning by June 1, 2008, to the Commerce and Finance committees on the status of the film production, digital animation, and infrastructure projects tax credits,

collaborate with OWC to stimulate the growth of film and digital media employment in the state, and

report annually beginning by January 1, 2009 to the Commerce, Finance, and Higher Education committees on the steps it takes to stimulate employment growth.

3 & 5 — Film Industry Training Program

● Requires OWC to establish a film industry training program to support film production and digital media.

● OWC must report by August 15, 2008 and March 15, 2009 to the Commerce and Higher Education committees on (1) the program syllabi, (2) an evaluation of available resources for the programs, and (3) any recommended program changes.

● Establishes a nonlapsing film industry equipment reserve account in the General Fund. DECD must use the money to buy equipment for OWC's film industry training program

4 — Job Development Program

● Requires DECD, in consultation with the Education, Labor, and Higher Education departments, to establish a program to support job development for the state's film industry.

DECD must report by October 1, 2008 to the Commerce and Higher Education Committees on the program's development.

6 — DECD Reporting Requirements

● Requires DECD's to include in its annual report:

an analysis of its activities to support the growth of the state's film industry,

a description of its marketing efforts to publicize the film production and digital animation tax credits, and

recommendations for further developing the state's film and entertainment industries.


● Appropriates

$1 million to UConn in FY 09 to plan and develop a digital media program and $500,000 to purchase equipment and software for it,

an unspecified amount in FY 09 to DECD to establish the job development program for the state's film industry,

an unspecified amount in FY 09 to the film industry equipment reserve account, and

an unspecified amount to CCCT in FY 09 to organize and manage the 2009 Connecticut Film Festival.

EFFECTIVE DATE: July 1, 2008, expect for the provision concerning the CCCT's monthly reporting requirement, which is effective upon passage

sHB 5586 — An Act Concerning Funding for the Naugatuck Economic Development Corporation

Allows the three economic development agencies collectively to provide up to $30 million in funding for economic development projects in downtown Naugatuck

The funds must go to the Naugatuck Economic Development Corporation's existing programs

Assistance over $10 million must be reviewed and approved by the Finance Committee

In providing any assistance, the bill requires the agencies to comply with the law limiting the amount of economic development assistance they can provide without the legislature's approval (CGS 32-462)

EFFECTIVE DATE: July 1, 2008

sHB 5587 — An Act Concerning Local Economic Development

Authorizes $10 million in bonds for DECD for the Waterbury Development Corporation Revolving Loan Fund.

EFFECTIVE DATE: Upon passage

sHB 5589 — An Act Concerning Brownfields

Authorizes 30% business and personal income tax credit for investigating and cleaning up brownfields

Allows five-year carry forward and credit transfers

Allows municipalities to acquire and transfer credits

Establishes two brownfield remediation programs and authorizes up to $10 million in bonds per year for 10 years for these and an existing program

Eliminates the sunset on tax increment financing (TIF) bonds CDA may issue to fund brownfield and information technology projects

Extends Brownfield Task Force to January 1, 2009

Related Law

Businesses redeveloping contaminated sites in may qualify for Urban and Industrial Sites Remediation Program tax credits

EFFECTIVE DATE: July 1, 2008, except that (1) the provisions concerning TIF and municipal liability are effective upon passage and (2) the provision concerning bond authorizations is effective July 1, 2009.

HB 5777 — An Act Concerning Funding for Local Growth and Development

Creates a dedicated revenue source for local economic development programs, including cultural and arts programs

Requires the revenue services commissioner to segregate and allocate one-third of the hotel tax revenue generated from each town for the program

EFFECTIVE DATE: Upon passage

HB 5779 — An Act Concerning Financial Assistance for the Reservoir Avenue Development Project in Bridgeport 

Requires $3.5 million of an existing Urban Act bond authorization to be used for Bridgeport's Reservoir Avenue Corridor Development Project

The existing authorization is for grants for urban development projects DECD administers on OPM's behalf.

EFFECTIVE DATE: July 1, 2008

sHB 5780 — An Act Concerning the Job Creation Tax Credit

● Makes several changes to the job creation tax credit program:

Lowers the job creation requirement, from 10 to five jobs,

Allows the credit to be applied to personal income taxes (in addition to corporation, utility company, and insurance premium taxes allowed under current law), and

Allows the taxpayer to claim the credits in either the income or taxable year in which they were earned.

● Allows businesses to access the credit directly without applying to the DECD commissioner for approval. It eliminates the requirement that the:

commissioner give both the taxpayer and DRS notice of the amount of any credit recapture,

commissioner issue a credit allocation notice certifying the credits,

taxpayer provide the commissioner information about the number of new jobs created and the income taxes withheld, and

commissioner issue an eligibility certificate for the tax credits.

● Eliminates the DECD commissioner's authority to combine the credits with other forms of financial assistance.

Related Law

● Under current law, companies that create at least 10 new jobs in the state may be allowed a tax credit of up to 60% of the state income tax withheld from the new employees' wages for up to five successive years. The credit applies against corporation, utility company, and insurance premium taxes. Total credits for all eligible companies are limited to $10 million per year.

EFFECTIVE DATE: July 1, 2008 and applicable to income or taxable years starting on or after January 1, 2008

HB 5782 — An Act Creating a Technology Business Tax Benefit Transfer Program

Establishes a program through which technology and biotechnology companies can cash in unused R&D tax credits and unused net operating loss carry-over

The program allows these companies to exchange the unused tax benefits with companies that can use them for at least 75% of the credits' value

The program is open to technology and biotechnology companies that:

Employ 225 or fewer full-time employees, 75% of whom reside in Connecticut, and

Have allowable, unused R&D tax credits and unused net operating loss carry-over.

Companies purchasing the credits:

Must be unaffiliated with the technology or biotechnology company that earned the credits and

must use the credits in the income year in which they acquired them.

Technology and biotechnology firms receiving cash for the benefits may use them only for specified costs, including constructing and developing facilities, and R&D

EFFECTIVE DATE: July 1, 2008, and applicable to income years starting on or after January 1, 2008

HB 5880 — An Act Concerning a Sales Tax-Free Weekend for Each of the State's Tourism Districts, and Establishing the Greenway Commons Improvement District in the Town of Southington

Authorizes a once-a-year sales tax-free weekend in each of the state's five regional tourism districts

Exemption applies to sales or services costing $1,000 or less

Each tax-free weekend must occur at a different time during the year

Authorizes the formation of the Greenway Commons Improvement District in a designated area of Southington to finance infrastructure improvements

Specifies process for forming, organizing, and terminating the district

Voters in the proposed district and people and entities that own property there can vote on its formation

District may:

Individually assess land and buildings benefiting from a specific improvement

Levy district-wide taxes, fees, rents, and benefit assessments

Issue up to $10 million in bonds, notes, and other obligations

n District may issue the bonds after it enters into an interlocal agreement

n Southington and state not liable for district's bond or other debt

Must submit quarterly project status report on bond-financed work

EFFECTIVE DATE: July 1, 2008

sHB 5882 — An Act Authorizing Bonds of the State for Various Projects







Hartford's Colin Bennett Bldg




Norwich Arts Council

Facility repairs and renovations




Lebanon green preservation



Hartford Stage Co.

Facility expansion




South Montui St. sidewalk installation



Bridgeport and International Performing Arts, Inc.

Black Rock Arts Center renovation




Wallingford Welcome Center



Wallingford Historic Preservation Trust

Nehemiah Royce House restoration




Sidewalk improvements




Blue Hills Ave. underground power line installation




Washington Park Community House renovations




Palace and Majestic Theaters renovations



Seymour Housing Authority

Norman Ray House elevator installation




Thomaston Opera House renovation



Railroad Museum of New England

Thomaston railroad station restoration



Norwich Spirit of Broadway Theater

Building rehabilitation



Norwich Arts Council

Debt repayment and infrastructure maintenance and improvements




Branford Sports Complex repairs and updating



East Hampton

Governor William A. O'Neill walking trail

EFFECTIVE DATE: July 1, 2008

HB 5883 — An Act Concerning Funding for the Silas Bronson Library, for Waterbury Industrial Commons, and Amending the Urban and Industrial Site Reinvestment Program

Makes energy generation projects eligible for tax credits under the urban and industrial site reinvestment program and requires the DECD commissioner to give these projects priority.

Authorizes $15 million in bonds for DECD for Waterbury to form a public-private partnership to remediate and develop the Waterbury Industrial Commons. The partnership must include (1) remediating the site, (2) expanding job growth, (3) centralizing the Waterbury Public Works location, and (4) establishing a greenway biking and walking trail that connects to Naugatuck.

Authorizes $15 million in bonds for the State Library to provide a grant-in-aid to the city of Waterbury for improvements to the Silas Bronson Library.

EFFECTIVE DATE: July 1, 2008, except or provisions concerning energy generation projects, which are effective October 1, 2008