Planning and Development Committee

JOINT FAVORABLE REPORT

Bill No.:

SB-677

Title:

AN ACT ESTABLISHING TAX INCREMENT FINANCING DISTRICTS.

Vote Date:

3/27/2015

Vote Action:

Joint Favorable Substitute

PH Date:

3/6/2015

File No.:

695

SPONSORS OF BILL:

Committee on Planning And Development

Sen. John A. Kissel, 7th Dist.

Rep. Tami Zawistowski, 61st Dist.

Rep. Peggy Sayers, 60th Dist.

Rep. Jason Rojas, 9th Dist.

Rep. Theresa W. Conroy, 105th Dist.

Sen. Kevin D. Witkos, 8th Dist.

REASONS FOR BILL:

Recently, municipalities have been making investments in financial resources in order to improve commercial zoning areas. In order to ensure municipalities are able to pay the bonds issues for the project, different financing options have been considered and implemented. The bill would streamline TIF financing, and allows municipalities to create a TIF district, while also broadening the use of TIFs to increase employment opportunities. It would also retain existing employment, public transportation system and industrial, commercial, residential, retail and mixed use buildings or any combination the municipality deems appropriate.

Substitute Language:

The substitute language makes minor technical changes, eliminates eminent domain language, and requires an annual audit for the tax increment financing (TIF) district fund. The annual audit is subject to the Freedom of Information Act.

RESPONSE FROM ADMINISTRATION/AGENCY:

Julia Evans Starr, Executive Director, Connecticut's Legislative Commission on Aging, CLCA:

On behalf of CLCA, Julia Starr expressed support for the bill. CLCA is a non-partisan, public policy and research office for the General Assembly. Connecticut is the 7th oldest state in the nation, with the 3rd longest-lived constituency. According to its analysis, between 2010 and 2040, Connecticut's population of people age 65 and older is expected to grow by 57%. This is much higher than the anticipated 2% growth in the age 20 to 64 age bracket. Tax increment financing, also known as TIF, is a funding mechanism where anticipated future increases in property taxes are used to repay debt issued for both development and redevelopment projects. The proposed legislation would broaden the availability of TIF funding to different communities. Broadening the financing options to make communities more livable for residents of all ages is critical for economic development. Due to the enactment of Public Act 13-109, CLCA works with the General Assembly to work on these issues, which includes affordable housing, providing transportation options, creating public spaces and building plans, and providing positive community support.

NATURE AND SOURCES OF SUPPORT:

Abdi Aidid and Joseph Nawrocki, Students, Community and Economic Development Clinic, Yale Law School:

Students from Yale Law School's Economic and Development Clinic, who have been studying TIFs and working on a project for Connecticut Main Street Clinic, came out in support of the bill. Their group studied the differences in TIF funding and legislation between Connecticut and other states. Their work reached conclusions like that the creation and issuance of TIFs are often times handled by municipalities, with a centralized decision-making procedure in order to eliminate bureaucratic mandates.

Their 34-page report on TIF programs and financing (found at this link: http://www.cga.ct.gov/2015/PDdata/Tmy/2015SB-00677-R000306-Abdi%20Aidid,%20Yale%20Law%20School-TMY.PDF) also goes into greater detail about these conclusions, and discusses the strengths and weakness in each state, while also summarizing effective strategies in improving TIFs.

For example, flaws in the Connecticut TIF statutes prevent them from effectively financing downtown developments, for they limit the types of projects. Current TIF statutes require approval from the State Senate President, Senate Minority Leader, House Speaker and Minority Leader, Joint Standing committees, Department of Economic and Community Development, and Connecticut Innovations Project.

S.B. 677 reduces the complexity and restrictions of the current TIF legislation, and allows for increase municipal control, easier approval process, wider range of projects, and a creation of a broad TIF districts.

Betsy Gara, Executive Director, Connecticut Council of Small Towns (COST):

On behalf of COST, Betsy Gara supports the bill. TIFs are a powerful tool in financing much-needed infrastructure projects to enhance the local economy. With the passage of SB-677, Connecticut's municipalities will be able to pursue TIFs financing. The bill will allow for streamlining the approval process, lowering the overall financing costs, set aside fund future projects, and authorize towns to expend a portion of the TIFs districts. TIF funding would help municipalities utilize non-state resources to invest in infrastructure and development projects.

Bill Finch, Mayor, City of Bridgeport:

On behalf of the City of Bridgeport, Mayor Finch supports the bill, for TIFs allow municipalities to fund developments now by using anticipated increases in future property taxes. There is a TIF district around Steelpointe Harbor that, once completed, will comprise of 2.8 million square feet of mixed-use retail, commercial, hotel, and residential space, and anchored by Bass Pro Shop. 3,000 jobs will be created, and the project will approximately collect $18.5 million in tax revenue for the city annually.

The Mayor also testified that while he has had success in his city with TIF districts, some of the laws in Connecticut provide unnecessary hardship and difficulty in the process. The bill allows municipalities to create TIF districts through a local process, and issue general obligation bonds for credit-worthy projects. Fixing TIF laws could also increase property taxes revenue and economic prosperity. Mayor Finch concluded his testimony by urging the committee to pass S.B. 677.

Stewart "Chip" Beckett III, Chairman, and Chair of Glastonbury Town Council, Lyle D. Wray, Executive Director, both of Capitol Region Council of Governments (CRCOG):

On half of CROCG, and the Town of Glastonbury, both Chip Beckett and Lyle Wray support S.B. 677. This would allow municipalities to invest in greater development and redevelopment, given that future taxes fund current and future investments within a community. Bonds are also issued to pay for such development, which may lead to increased property values. Increased revenue from the increase value of property helps municipalities repay bonds. Current laws require different approvals from multiple state agencies. S.B. 677 provides for a more streamlined approval process, creates TIFs districts, and a portion of the TIF revenue can be retained by the municipality to pay for additional public services created by the development. CRCOG recommends passage for the bill would help ensure designing and developing projects that make a community desirable to do business, work, and live in.

Christopher Edge, Economic Development Director, Town of Berlin:

On behalf of the Town of Berlin, Christopher Edge supports the bill because TIF funding assists municipalities in regards to development and redevelopment plans. Mr. Edge spoke about this being a great option for the re-use of properties that have environmental issues, for absentee landlords. He sees this as benefiting properties that may not appear to be profitable in the short term, but have the potential to be in the long-term. The bill gives the municipalities, such as Berlin, to create specific districts where we could steer economic development. Berlin is working with the Connecticut Department of Transportation to create a new train station in town. The passage of S.B. 677 could assist with economic growth, increase the tax base, and create jobs across the state.

Fred Messore, Economic Development Director, Town of Seymour:

On behalf of Town of Seymour, Fred Messore spoke in supports the bill. TIFS gives municipalities an opportunity to fund developments by using anticipated increases in future property taxes. The passage of the bill would help with Seymour's Downtown Action Strategy.

Jana Butts Robinson, Chair, Connecticut Chapter of the American Planning Association (APACT):

On behalf of the APACT, Jana Butts Robinson expressed support of the bill, for TIFs are an innovated public finance tool that municipalities can use to promote economic development. Connecticut TIFs laws are difficult to implement. Students from the Community and Economic Development Clinic at Yale Law School prepared a report on how TIFs can be used effectively and as a versatile tool. Current state statutes make TIFs cumbersome. The bill creates TIFs as a flexible tool where tax increments could be used for a variety of purposes such as downtown revitalization projects, transit-oriented development, incentive housing developments, and even park and streetscape improvements. TIFs should be used for districts like downtown neighborhoods rather than individual development projects. There is great potential for TIF Districts to facilitate downtown redevelopment, like for smaller projects in small towns, rather than only for large-scale, multi-million dollar proposals in the largest cities. To help with this, Ms. Robinson testified that general obligation bonds (rather than revenue bonds) should be allowed when a municipality chooses to provide up-front funding.

John O'Toole, Co-Chairman of the Policy Committee, Connecticut Economic Development Association(CEDAS):

On behalf of the CEDAS, John O'Toole expressed support for the bill. The new legislation for TIF districts would facilitate redevelopment, transit-oriented development and other critical projects as the community sees fit.

S.B. 677 would:

1. Allows for the formation of TIF districts.

2. Creates community projects and opportunities for investors

3. Reduced cost for communities and investors

4. Reduces the delay of projects

5. Reduces the obstacles for important community investments.

John Simone, President, Connecticut Main Street Center (CMSC):

On behalf of the CMSC, John Simone expressed his support of the bill. The CMSC works to revitalize downtown areas in cities and towns across the state. The new TIFs legislation would create needed TIF districts. TIF districts are a needed to utilize some of the space available in many downtown places.TIFs are a financing mechanism by which an anticipated increase in future taxes is used to fund current investment in development and/or redevelopment.

CMSC commissioned Yale Law School's Community and Economic Development to research TIFs in the state of Connecticut. TIFs are underutilized because of current state statues. The proposed legislation will streamline the process for businesses, developers, and municipalities. Look at Abdi Aidid and Joseph Nawrocki, Students, Community and Economic Development Clinic Yale Law School the summary is the first one in support of the bill for research of the TIFs.

Kacie Costello, Town Planner, and Donald Roe, Economic Development Coordinator, Town of Wallingford:

On behalf of Town of Wallingford, Kacie Costello and Donald Roe expressed support for the bill. The proposed changes in this bill would make TIF financing an easier process, and will support economic vitality.

Metro Hartford Alliance:

The Metro Hartford Alliance supports the bill. The Metro Hartford Alliance serves as the region's economic development leader and the City of Hartford's Chamber of Commerce. They testified that TIFs are underutilized in Connecticut, and current Connecticut's TIF law helps to perpetuate vacant and underused space in our cities. The proposed changes in S.B. 677 would help eradicate some of these perpetual problems.

Randy Collins, Senior Legislative Associate, Connecticut Conference of Municipalities CCM:

On behalf of CCM, Randy Collins expressed support for the bill. The bill allows improvements to be made in infrastructure and other costs associated with new development. S.B. 677 is a reasonable option for municipalities that could encourage economic development and growth.

Richard Gentile, Assistant Corporation Counsel, Town of East Hartford:

On behalf of the Town of East Hartford, Richard Gentile expressed support of the bill. The bill would simplify the approval process of TIFs, and broaden the use of TIFs for development and redevelopment projects. The Town of East Hartford is supportive of legislations for proposed expansion of the types of projects that would be eligible for TIF funding. If legislation were to pass, the TIFs would allow for redevelopment the Town's Main Street, and recommend passage of the bill.

NATURE AND SOURCES OF OPPOSITION:

None Expressed

Reported by: Rico Dence

Date: April 13, 2015