Topic:
ECONOMIC DEVELOPMENT; GRANTS; MUNICIPALITIES; STATE AID; URBAN AFFAIRS (GENERAL);
Location:
ECONOMIC DEVELOPMENT; MUNICIPALITIES; URBAN DEVELOPMENT;

OLR Research Report


August 26, 2008

 

2008-R-0484

URBAN ACT V. STEAP

By: John Rappa, Principal Analyst

You asked if municipalities can qualify for funds under the Urban Act and Small Town Economic Assistance programs and how their benefits compare.

DUAL ELIGIBILITY

Municipalities cannot simultaneously qualify for funds under both programs. The Small Town Economic Assistance Program (STEAP) specifically serves municipalities that do not qualify for Urban Act grants, which are geared mainly for cities and large, economically distressed towns. In fact, STEAP criteria are the inverse of the Urban Act criteria; a municipality qualifies for STEAP grants if it does not meet the criteria for Urban Act grants.

In other words, it qualifies for STEAP grants if:

1. the Office of Policy and Management (OPM) secretary does not designate a portion of the municipality as an urban center when updating the five-year Plan of Conservation and Development,

2. the municipality does not rank among the top 42 fiscally distressed municipalities when the secretary prepares the annual Public Investment Community (PIC) index, or

3. it does not rank among the top 25 economically distressed municipalities when the economic and community development commissioner prepares the annual distressed municipality list (CGS 4-66g).

CHOOSING BETWEEN URBAN ACT AND STEAP

Because each municipality's rank on the PIC and distressed municipalities list can change annually, a municipality could qualify for STEAP grants one year and Urban Act the next. But this change could pose a challenge for small rural municipalities because it forces them to compete for Urban Act grants against larger, more economically distressed municipalities.

The legislature recognized this problem when it allowed municipalities that became ineligible for STEAP grants to decide if they wanted to remain eligible for these grants and forgo their eligibility for Urban Act grants. To do so, a municipality's legislative body (or board of selectmen if that body is a town meeting) must approve the decision and notify the OPM secretary to that effect. Once the municipality does so, it continues qualifying for STEAP grants for another four years and can renew its eligibility for the grants after that period for another four years.

URBAN ACT GRANTS VERSUS STEAP GRANTS

Municipalities can use both grants for the same purpose, but the STEAP statute caps the total amount of grants a municipality can receive each year at $500,000. The Urban Act statute imposes no annual cap on the amount of grants the municipality can receive, but it allocate the funds for specified projects and activities, such as up to $1 million for a pilot demonstration program to leverage private contributions for redeveloping designated historic preservation areas (CGS 4-66c (b) (2)).

Municipalities can use grant funds under both programs for economic development, urban transit, recreation, solid waste, social services, housing, historic preservation, and redevelopment projects. They can also use the grants to fund economic and community development, transportation, environmental protection, public safety, and social service programs.

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