OLR Bill Analysis
AN ACT CONCERNING AN EXTENSION OF THE FIRST FIVE PLUS PROGRAM.
This bill extends the First Five Plus program's sunset date by three years, from June 30, 2016 to June 30, 2019, and increases the maximum number of business development projects the Department of Economic and Community Development (DECD) can fund under the program from 15 to 20. (The program has funded 13 projects since its inception in 2011.) The program combines financial assistance and tax incentives under existing programs for projects that create jobs and make capital investments within the law's timeframes (see BACKGROUND).
Although the bill extends the program's sunset date, it prohibits the DECD commissioner from funding additional First Five Plus projects after July 1, 2016 until certain tasks are completed: the commissioner must (1) determine the state's net rate of return on the value of financial assistance and tax incentives for all First Five projects and, based on that analysis, (2) recommend to the Commerce and Finance, Revenue and Bonding committees whether the state should continue the program. The commissioner cannot fund additional projects until those committees vote, in concurrence, to approve her recommendation.
The bill also allows the commissioner to give preference for First Five Plus assistance to more types of projects and makes technical changes conforming the program's biannual reporting requirements and periods during which the program is exempt from specified statutory requirements applicable to economic development funding.
EFFECTIVE DATE: July 1, 2016
FINANCIAL ANALYSIS AND LEGISLATIVE REVIEW
Beginning July 1, 2016, the bill prohibits the commissioner from funding any additional First Five Plus projects until certain actions are taken. The commissioner must submit a report to the Commerce and Finance, Revenue and Bonding committees analyzing the entire First Five Plus portfolio's net return on investment to the state. In calculating that return, the commissioner must include all loans she forgave and the tax credits she issued under the program. And, based on that analysis, she must recommend whether the program should be continued.
The committees must vote, in concurrence, whether to accept the commissioner's recommendation to continue before she can fund any additional projects.
FIRST FIVE PLUS PREFERENCES
The bill expands the types of projects to which the DECD commissioner may give preference for First Five Plus assistance to include those (1) located in the state's 25 distressed municipalities, which the commissioner annually determines based on social and economic criteria (see BACKGROUND) and (2) that are part of an industry that the state's strategic economic development plan targets for assistance. (The state's 2015 plan targets for priority investment health care, bioscience, insurance and financial services, advanced manufacturing, and digital media, tourism, and green technologies industries.)
Current law allows the commissioner to give preference to projects involving:
1. the relocation of an out-of-state or international manufacturer or corporate headquarters,
2. the relocation to Connecticut of jobs outside the U.S., and
3. redevelopment projects she believes will create jobs sooner than expected under the program's timeframes.
The bill makes conforming changes aligning certain expiration dates to the bill's extension of First Five Plus's sunset date. It extends, from FY 17 through FY 20, the time during which the commissioner can use Manufacturing Assistance Act Program funds to fund First Five Plus projects without adhering to its funding limits (i.e., up to 90% funding for projects in municipalities with enterprise zones (currently 17) and up to 50% in the other municipalities).
The bill extends, from FY 17 through FY 20, the time during which First Five Plus projects are exempt from the financial thresholds requiring legislative approval for large-scale economic development projects.
Lastly, the bill extends current law's biannual reporting requirements into 2019. Under the bill, the commissioner must submit reports to the Commerce and Finance, Revenue and Bonding committees twice a year, by January 1 and September 1 in 2017, 2018, and 2019.
First Five Plus Eligibility Criteria
Projects qualify for First Five Plus assistance if they can (1) create at least 200 new jobs within 24 months after the commissioner approved assistance or (2) invest at least $25 million and create at least 200 new jobs within five years after the commissioner approves the assistance.
The bill allows the commissioner to give preference for First Five Plus assistance to projects in the state's 25 distressed municipalities, which the DECD designates annually based on economic and social criteria. The most current designation is for 2015, and the distressed municipalities are Ansonia, Bridgeport, Bristol, Derby, East Hartford, Enfield, Griswold, Hartford, Killingly, Meriden, Naugatuck, New Britain, New Haven, New London, North Canaan, Norwich, Plymouth, Preston, Putnam, Sprague, Stafford, Torrington, Waterbury, West Haven, and Windham.
Joint Favorable Substitute