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July 2, 2008 |
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2008-R-0374 |
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Economic Development Corporations |
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By: John Rappa, Principal Analyst |
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You asked what economic development corporations (EDCs) are, how they are established, the legal authority for establishing and operating these entities, and whether that authority includes issuing bonds. You also wanted to know how many EDCs operate in Connecticut.
As the title suggests, EDCs are private organizations formed to promote economic development. Consequently, they cannot issue bonds or other government debt.
As Attachment 1 shows, at least 19 EDCs are operating in Connecticut. All but one are nonprofit, federal tax-exempt organizations. Consequently, they must comply with the appropriate provisions of the federal tax code to maintain their tax-exempt status. Most were organized as charitable organizations under section 501(c) (3) of the code. Others were organized as civic organizations (i.e., 501(c) (4)) or professional and trade associations (i.e., 501 (c) (6)).
The exceptions are the Community Economic Development Fund and the Housatonic Industrial Development Corporation. The former operates as a 501(c) (3), but the legislature also created it to increase the flow of credit to small businesses in inner city neighborhoods. Attachment 2 is a 2006 OLR report describing the fund’s organizational structure and statutory authority (2006-R-0610). The Housatonic Industrial Development Corporation was organized as a nonstock corporation and consequently operates under the state rules governing this type of business organization.
EDCs serve similar purposes, but different types of geographic areas. Seven operate regionally, four serve a specific municipality, three operate statewide, and three serve specific neighborhoods. All may do so with their own funds, but the law recognizes them as tools for addressing public economic development needs. It allows municipalities to designate an EDC to plan and implement physical development project on their behalf (CGS § 8-188). It also makes EDCs eligible for state economic development dollars, which Table 1 summarizes.
Table 1: Economic Development Programs Open to EDCs
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Program |
Administering Agency |
CGS § |
Description |
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Financial and Technical Assistance to Municipal and Regional Economic Development Agencies |
Department of Economic and Community Development (DECD) |
32-7 |
Funds for developing technical capacity to plan and implement economic development projects |
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Loans to Nonprofit State and Local Development Corporations |
DECD |
32-9q |
Working capital, start-up, and fixed asset loans |
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Connecticut Growth Fund |
Connecticut Development Authority (CDA) |
32-23v |
Capital for business loan funds |
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Comprehensive Business Assistance Fund |
CDA |
32-23x |
Capital for making loans to businesses that cannot obtain from banks and other conventional sources |
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Manufacturing Assistance Act |
DECD |
32-222 |
Matching funds for developing land and capitalizing business loan funds |
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Grants to Regional Corporations for Regional Revolving Loan Funds |
CDA |
32-267 |
Grants for capitalizing regional revolving business loan funds |
Attachment 1: Connecticut Economic Development Corporations
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Name |
IRS Code Designation |
Purpose |
Geographic Area Served |
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Regional |
Municipal Only |
Neighborhood Only |
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Bradley Development League Inc. |
501(c)(4) |
Market airport and region for economic growth |
East Granby, Suffield, Windsor, and Windsor Locks |
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Bridgeport Economic Resource Center |
501(c)(3) |
Accelerate economic development |
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Bridgeport |
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Broad-Park Development Corporation |
501(c)(3) |
Upgrade physical housing and economic development in specific Hartford neighborhoods |
57 Hartford-area municipalities |
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Frog Hollow and South Green |
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Community Economic Development Fund Foundation |
501(c)(3) |
Revitalize distressed neighborhoods by providing access to capital, technical assistance to small businesses, and supporting economic development |
Low- and moderate-income people statewide |
All small businesses in designated municipalities |
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Connecticut Community Investment Corporation |
501(c)(4) |
Promote economic growth and community development statewide |
All regions |
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Greater Hartford Business Development Center, Inc. |
501(c)(3) |
Stimulate economic development in the Hartford metropolitan area by collaborating with public and private organizations to help start, finance, retain, and recruit small businesses within region |
Hartford region |
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Hockanum Industrial Development and Venture Capital Corporation |
501(c)(3) |
Aid in the redevelopment of distressed nonresidential property and restore them to productive economic use |
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Vernon |
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Housatonic Industrial Development Corporation |
Nonstock Corporation |
Help Connecticut businesses grow, create, or retain jobs and achieve economic development goals |
Statewide |
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Orange Economic Development Corporation |
501(c)(3) |
Encourage economic growth in Orange’s retail, commercial, industrial zones |
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Orange |
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Mansfield Downtown Partnership, Inc. |
501(c)(3) |
Direct the rehabilitation and enhancement of specific areas |
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Storrs Center, King Hill Road, and Four Corners Areas |
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MetorHartford Alliance |
501(c)(6) |
Provide visible leadership enabling region to fulfill opportunities related to sustainable economic growth |
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Naugatuck Economic Development Corporation |
501(c)(3) |
Promote and facilitate professional, systematic approach to economic development in Naugatuck |
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Naugatuck |
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New London Main Street |
501(c)(3) |
Preserve, develop, and enhance economic, social, and cultural quality of life in downtown New London |
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Downtown New London |
Attachment 1: -Continued-
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Name |
IRS Code Designation |
Purpose |
Geographic Area Served |
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Regional |
Municipal Only |
Neighborhood Only |
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Northeast Connecticut Economic Alliance |
501(c)(3) |
Promote, stimulate, and expand Northeast CT economic base by providing resources, consulting, and business networking |
Ashford, Brooklyn, Canterbury, Chaplin, Columbia, Coventry, Eastford, Hampton, Killingly, Lebanon, Mansfield, Plainfield, Pomfret, Scotland, Sterling, Thompson, Union, Willington, Windham, and Woodstock |
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Northwest Connecticut Economic Development Corporation |
501(c)(4) |
Public and private collaboration for creating jobs, strengthening tax base and improving the economic well being in region |
Barkhamsted, Canaan, Colebrook, Cornwall, Goshen, Hartland, Harwinton, Kent, Litchfield, Morris, North Canaan, New Hartford, Norfolk, Roxbury, Salisbury, Sharon, Thomaston, Torrington, Warren, Washington, and Winsted/Winchester |
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Stamford Partnership, Inc. |
501(c)(3) |
Plan, promote, and implement orderly economic development |
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Stamford |
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South Central Connecticut Regional Economic Development Corporation |
501(c)(4) |
Promote regional economic development |
Bethany, Branford, East Haven, Guilford, Hamden, Madison, Meriden, Milford, New Haven, North Branford, North Haven, Orange, Wallingford, West Haven, and Woodbridge |
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Southeastern Connecticut Enterprise Region Corporation |
501(c)(3) |
Stimulate and support economic development and diversification of southeast region by fostering climate favorable for development, supporting business retention and expansion, recruiting new businesses, coordinating municipal economic development efforts, and defining and updating region’s goals |
Bozrah, Colchester, East Lyme, Franklin, Griswold, Groton, Groton City, Ledyard, Lisbon, Lyme, Montville, New London, North Stonington, Norwich, Preston, Salem, Sprague, Stonington, Stonington Borough, Waterford |
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Soutthside Institutions Neighborhood Alliance, Inc. |
501(c)(3) |
Work cooperatively with community to develop leadership and improve economic, physical, and social characteristics in specific Hartford neighborhoods |
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Frog Hollow, Barry Square, and South Green |
Source: Guidestar and organization websites
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