OLR Bill Analysis

sSB 1



This bill establishes a number of mechanisms to stimulate and support innovation and entrepreneurship in Connecticut.

It establishes within Connecticut Innovations, Inc. (CI) a new entity called “ImpaCT” to support the entrepreneurship community and new business development in Connecticut ( 1-4). It gives ImpaCT a number of broad and innovation-specific powers and duties and creates a board of directors to carry them out. ImpaCT must develop and administer a number of programs to promote, among other things, university-based entrepreneurship, including a technology transfer office and a website to connect entrepreneurs to existing resources in the state. The bill funds ImpaCT and its programs by earmarking $87.75 million in existing Manufacturing Assistance Act (MAA), CI, and Manufacturing Innovation Fund bond authorizations ( 10, 16 & 23).

The bill creates an Innovation District program to designate districts in compact geographic areas having innovation and entrepreneurial potential. These areas, among other things, must have access to public transit and be anchored by significant institutions (e.g., higher education institutions and major corporations). ImpaCT selects the districts through a competitive process and provides grants to develop them ( 5-9).

The bill also establishes a number of new programs to provide businesses, particularly new and young businesses, with financial and technical assistance. These programs include the following:

1. the “Startup CT” program, through which CI must (a) certify up to six privately-managed funds as “start-up funds” that must raise private capital and invest in early-stage businesses and (b) provide the start-up funds with tax credits to award to their investors ( 20) and forgivable loans;

2. the “Accelerate CT” program to provide grants to business accelerators and the businesses they assist ( 21); and

3. knowledge center enterprise zones around colleges and universities ( 22).

The bill creates the following initiatives to develop entrepreneurs and other talent in technology-based industries: (1) the “Innovation Talent Fund,” administered by ImpaCT, to provide grants to programs intended to increase technology talent in the state ( 24) and (2) a mentorship network to connect certain entrepreneurs to qualified mentors ( 15).

In addition to the programs above, the bill provides funding from existing bond authorizations for (1) UConn's entrepreneurship programs, (2) grants to technical high schools to expand skilled trade training programs, and (3) a grant to Waterbury for its UConn campus ( 10, 16, 25 & 26).

The bill also makes a number of changes to existing programs and laws by doing the following, among other things:

1. extending the angel investor tax credit until July 1, 2019 and allowing the credits to be sold or transferred ( 19);

2. requiring CI to (a) submit a performance audit that includes certain information, (b) relocate to an innovation district, and (c) invest with private partners ( 11, 13 & 14);

3. allowing the Department of Economic and Community Development (DECD) commissioner to give priority for Small Business Express funds to business in innovation districts ( 17); and

4. requiring money in the existing statewide tourism marketing account to also be used to market Connecticut as an entrepreneurship and innovation hub ( 18).

Finally, the bill makes technical and conforming changes.

EFFECTIVE DATE: Upon passage, unless otherwise noted below.

1-4, 11 & 12 — IMPACT

The bill establishes ImpaCT, a new entity within CI. CI is a quasi-public agency subject to the statutory procedural, operating, and reporting requirements for quasi-public agencies. The bill, however, does not specify (1) the type of entity ImpaCT is (e.g., subsidiary or department) or (2) with one exception, its relationship to CI. Consequently, it is unclear if certain government administration laws that generally apply to quasi-public agencies (e.g., employee indemnification and compliance audits by the auditors of public accounts) apply to ImpaCT. For the purpose of these laws, CI subsidiaries are deemed quasi-public agencies under existing law, but it is not clear if ImpaCT is a CI subsidiary (CGS 32-11e (c)).

Under the bill, ImpaCT must:

1. foster innovation, start-up businesses, and entrepreneur community building;

2. serve as a catalyst to protect and enhance the innovation ecosystem;

3. connect start-up entrepreneurs with each other and state, federal, and private resources;

4. facilitate (a) the establishment of innovation districts and (b) mentoring for start-up entrepreneurs; and

5. provide technical training and resources to start-up businesses and entrepreneurs.

ImpaCT continues as long as it has outstanding obligations and until it is legally terminated. Termination does not affect any of its outstanding contractual obligations. Upon termination, (1) the state succeeds to ImpaCT's obligations under any contract, and (2) ImpaCT's rights and properties pass to and vest in CI.

ImpaCT is not subject to state collective bargaining laws.

ImpaCT Board (1)

ImpaCT is governed by a seven-member board of directors, most of whom must be serial entrepreneurs. (Although the bill does not explicitly define the term, "serial entrepreneur," it presumably refers to someone who has created and developed more than one business or product.)

Board members must have education or experience in at least one of the following areas:

1. business start-up development and investment,

2. innovation district development,

3. urban planning, and

4. technology commercialization in higher education.

Appointment and Length of Terms. Three members of the board serve initial four-year terms, and four members serve initial two-year terms. The chairs of the Finance, Revenue and Bonding Committee jointly appoint two of the members serving initial four-year terms; the governor appoints the third such member. The House speaker, Senate president pro tempore, and House and Senate minority leaders each appoint one member to serve an initial two-year term. Successor members, appointed by the original appointing authorities, serve four-year terms.

Board members are eligible for reappointment, and the original appointing authority fills any vacancy for the balance of an unexpired term. The appointing authority may remove, for misfeasance, malfeasance, or willful neglect of duty, any member it appoints.

Reimbursement and Conflicts of Interest. Board members are reimbursed for the actual and necessary expenses they incur performing their official duties. They are public officials and may engage in private employment or in a profession or business, subject to applicable state laws, rules, and regulations on ethics and conflict of interest.

It does not constitute a conflict of interest for a trustee, director, partner, or officer of any person, firm, or corporation or any individual with a financial interest in a person, firm, or corporation to serve on the board, provided such trustee, director, partner, officer, or individual complies with the State Code of Ethics. Among other things, this means that members must abstain from taking official action on a matter if they have a substantial conflict of interest.

By law, directors, officers, and employees of quasi-public agencies, including CI and their subsidiaries, are generally not personally liable for the debts, obligations, or liabilities of the agency, and such agencies must generally protect, save harmless, and indemnify them from financial loss and expense arising from claims against the agency (CGS 1-125 and 32-11e (e)). It is unclear whether these provisions apply to ImpaCT's directors, officers, and employees.

Officers, Meetings, and Quorum. The board must designate its chairperson from among its members. Initial appointments to the board must be made by July 1, 2016, and CI's chief executive officer must schedule the board's first meeting, which must be held by July 15, 2016.

Five members of the board constitute a quorum to transact business and exercise any power. Except as the bill provides otherwise, the board may act by a majority of the members present at any meeting at which there is a quorum. A board member may not, in his or her absence, designate a representative to perform his or her official duties under the bill (e.g., entering into contracts or promoting technology-based development).

Executive Director. The chairperson, with board approval, must appoint an executive director to supervise ImpaCT's administrative affairs and technical activities as the board directs. The executive director is an ImpaCT employee and receives a salary set by the board.

ImpaCT Powers and Duties ( 2, 11 & 12)

General Administrative Powers. The bill gives ImpaCT many of the general powers and duties of state quasi-public agencies. It specifically allows ImpaCT to do the following:

1. sue and be sued in its own name and plead and be impleaded;

2. employ assistants, agents, and other employees, who, under the bill, are not state employees;

3. establish necessary and appropriate personnel practices and policies, including hiring, promotion, compensation, retirement, and collective bargaining policies, which may align with CI's but do not have to align with the state's;

4. engage consultants, attorneys, and appraisers to fulfill its purposes;

5. receive and accept grants or contributions from any source to fulfill its purposes, subject to the source's terms and conditions;

6. enter into contracts and agreements to execute its powers and fulfill its purposes, including contracts for professional services;

7. insure its property, assets, and employees;

8. audit its funds and those of the parties it funds; and

9. establish advisory committees to help fulfill ImpaCT's duties.

Powers and Duties Specific to Innovation and Entrepreneurship. The bill also grants broad powers and duties to ImpaCT that it needs to fulfill its purpose. ImpaCT may do the following:

1. encourage younger generation start-up entrepreneurs to stay in Connecticut,

2. promote entrepreneurship at colleges and universities, and

3. do all things necessary to carry out its purposes and execute its powers.

The other powers and duties the bill assigns to ImpaCT are narrower. ImpaCT may do the following:

1. counsel and assist start-up entrepreneurs with preparing business plans and managing, financing, and marketing their businesses;

2. hold workshops, seminars, and conferences on business topics with other organizations, including chambers of commerce and small business development organizations;

3. facilitate partnerships between innovative start-up businesses and research institutions and venture capitalists or financial institutions;

4. increase the capital supply for entrepreneurs and start-up companies, including capital supplied by angel investors and venture capitalists; and

5. award planning grants to entities seeking designation as an innovation districts, as long as the entities demonstrate that the proposed district meets the innovation district program's purposes (see 5-9).

The bill reassigns the following CI powers to ImpaCT:

1. promoting technology-based development in Connecticut;

2. encouraging and promoting the establishment of advanced technology centers and, within available resources, providing financial assistance to them;

3. maintaining an inventory of information concerning state and federal technology programs and serving as a clearinghouse and referral service for such data and information;

4. promoting and encouraging the establishment, maintenance, and operation of incubator facilities and, within available resources, providing financial assistance to them;

5. promoting and encouraging the coordination of public and private resources and activities in Connecticut aimed at helping technology-based entrepreneurs and business enterprises;

6. promoting science, engineering, mathematics, and other disciplines necessary for developing and applying technology;

7. coordinating efforts with existing business outreach centers; and

8. providing financial aid to people developing smart buildings, incubator facilities, or other offices and laboratories that rely heavily on information technology.

Under the bill, ImpaCT, instead of CI, must coordinate the development and implementation of strategies regarding technology-based talent and innovation among state and quasi-public agencies. This includes creating and administering the Connecticut Small Business Innovation Research Office to provide information and technical assistance to businesses seeking to participate in the federal small business research and development programs. The bill makes a conforming change requiring CI to fund ImpaCT's operation of the office.

The bill also requires the ImpaCT board to perform some of the advisory responsibilities that the law currently assigns to CI. Specifically, ImpaCT must advise several state officials on science, engineering, and technology matters that may affect (1) state policies, programs, employers, and residents and (2) the state's efforts to create and retain jobs. Those officials are the governor, legislators, the economic and community development commissioner, and the Board of Regents for Higher Education president.

EFFECTIVE DATE: The provisions eliminating CI's ability to exercise the powers and duties the bill reassigns to ImpaCT are effective October 1, 2016.

Specific Powers and Duties Given to the ImpaCT Board. The bill requires the board to make recommendations regarding the designation of innovation districts (see 5-9). It must also do several things to promote university-based entrepreneurship and innovation, including the following:

1. develop a plan to support entrepreneurial research and develop entrepreneurial talent by strengthening the relationships between the state's businesses and institutions of higher education;

2. establish an investment fund that supports student-owned business start-ups;

3. develop a “gap year” program model in which cybersecurity, data science, software development, or other technology start-up businesses hire college students for one year before they graduate and provide them with matching funds to cover their living expenses; and

4. develop a program to defer or forgive student loans for students who immediately start a business in Connecticut after graduating.

Statewide Technology Transfer Office. ImpaCT must also establish a statewide technology transfer office to encourage faculty and students to find commercial applications for university research and perform other specified tasks. The statewide technology transfer office must do the following:

1. promote and support (a) entrepreneurship at the state's public and private higher education institutions and (b) the commercialization of ideas from college and university faculty and students;

2. identify the most efficient and effective place for locating the office;

3. recommend annual funding levels for the office; and

4. advise and assist public and private research institutions on technology transfer strategies, including (a) assessing the viability and value of developing technologies, (b) defining and exploring potential markets for such technologies, (c) technology commercialization, (d) technology licensure and other intellectual property issues, and (e) business development.

Informational Website. The board must also (1) create an informational Internet website (also called “ImpaCT”) that offers information and services of value to entrepreneurs and (2) publicize the website and other workshops, seminars, and conferences ImpaCT offers. (In practice, CI maintains a website called CTNext that provides similar information.) The website must:

1. list services, programs, and events aimed at entrepreneurs;

2. advertise Connecticut-based start-ups seeking funding and provide links to other websites where such funding opportunities are available;

3. function as an online community for entrepreneurs;

4. list entrepreneurial and innovation-related research projects that professors at higher education institutions are undertaking;

5. provide information about college and university innovation and entrepreneurial programs, including those related to engineering, computer science, and bioscience; and

6. connect businesses seeking to buy Connecticut-made products for their business inputs.

Marketing. The board must also annually develop, update, and implement a strategic statewide plan for promoting Connecticut as a hub for innovation and entrepreneurship. ImpaCT's executive director must report on the plan to the Commerce and Finance, Revenue and Bonding committees by January 1, 2017 and annually thereafter.

ImpaCT Written Policies and Procedures ( 3)

ImpaCT's board must adopt written procedures, according to the laws that quasi-public agencies follow, for the following:

1. adopting an annual budget and operations plan that take effect only after the board approves them;

2. hiring, dismissing, promoting, and compensating ImpaCT employees, which may be consistent with CI's procedures, as long as they (a) include an affirmative action policy and (b) require the board to approve new positions or fill vacant ones;

3. acquiring personal property and personal services, including a requirement that the board approve any non-budgeted expenditure above a board-determined amount;

4. contracting for financial, legal, and professional services, including a requirement that ImpaCT solicit proposals at least once every three years for the services it uses;

5. awarding grants and other financial assistance, including specifying eligibility criteria, the application process, and the roles of ImpaCT's staff and board; and

6. using surplus funds, to the extent allowed under the bill and the law.

ImpaCT Fund ( 4)

The bill establishes the ImpaCT Fund as a nonlapsing fund outside the General Fund and requires CI to administer it. The fund must contain any money the law requires and any contributions, gifts, grants, donations, bequests, or devises from any public or private source.

CI may invest the fund's money in any institution it chooses, and these institutions must invest or pay that money as CI directs. CI may tap the fund, with approval by the ImpaCT board, for (1) grants to fund ImpaCT programs, specifically innovation districts, innovation places, and business accelerators; (2) technology transfer purposes; and (3) other ImpaCT purposes as the bill specifies.

Under the bill, the ImpaCT's board must approve individual and budgeted expenditures under the conditions it established when it approved the budget.

CI must administer the fund, providing any staff, office space, office systems, and administrative support needed to operate it. CI can do so by using all of its statutory powers but must obtain the board's approval before it can spend funds.

Starting January 1, 2017, CI must annually prepare an operations plan and capital budget for the fund and submit it to the board for review and approval at least 90 days before the fiscal year begins.

Starting April 15, 2017, CI must also submit an annual report on the fund's activities to the board for review and approval. The report must provide available information on fund's status and operations, including information on the grants it awarded. After the board approves the report, it must submit the report to the Commerce and Finance, Revenue and Bonding committees.


The bill establishes, within ImpaCT, an innovation district program to foster innovation and entrepreneurship in compact, mixed use geographic areas with “anchor institutions” and access to public transit. Under the bill, an “anchor institution” is an entity having a significant and stable presence in the community, including an institution of higher education, hospital, major corporation, research institution, or existing business incubator or accelerator. “Public transit” means the New Haven rail line (including the Danbury, Waterbury, and New Canaan branch lines), the Shore Line East rail line, the New Haven Hartford Springfield rail line, and the New Britain to Hartford busway and any planned expansion of such busway.

Under the bill, entities such as corporations, associations, nonprofit organizations, municipalities, and institutions of higher education may submit applications for the designation of an innovation district. The bill (1) establishes eligibility and selection criteria and (2) specifies the information an application must include. Among other things, an application must outline a plan for developing the district and leveraging private investment. Designated districts are eligible for grants for initial development costs. Additionally, “innovation places” are eligible for grants, if they serve the program's purposes.

Applications are due by September 1, 2016. By January 1, 2017, the ImpaCT board must recommend applications for approval to ImpaCT's executive director.

The bill requires ImpaCT's executive director to report by July 1, 2017 and annually for three years thereafter to the Commerce and Finance, Revenue and Bonding committees on the operation and effectiveness of the innovation district program and grants distributed under it.

Program's Purposes

Under the bill, the purpose of the innovation district program is to do the following:

1. foster innovation and entrepreneurship by facilitating the designation and establishment of innovation districts in compact geographic areas having entrepreneurial and innovation potential where (a) existing anchor institutions, companies, institutions, and recreational spaces are in close proximity to start-up businesses; (b) public transit is accessible; (c) a significant portion of the underlying zoning allows for mixed-use development; and (d) foot traffic is promoted;

2. identify, designate, and fund the initial costs associated with developing an innovation district;

3. encourage collaboration among higher education institutions, medical institutions, hospitals, existing companies, start-up businesses, researchers, and investors;

4. encourage the leveraging of private investment in innovation districts;

5. connect entrepreneurs who are facing similar opportunities and challenges with other entrepreneurs and with private and public resources; and

6. assist in the establishment of innovation places in municipalities having a connection to an innovation district by transit, labor market patterns, or some other relationship, provided such places have entrepreneurial and innovation potential and are located in a compact geographic area of high density land use within a walkable commercial and residential center.

Applying for Innovation District Designation

The bill requires the ImpaCT board to screen all submitted applications and select several finalists. It specifies the required application contents and the criteria by which the board must judge them.

The bill requires the ImpaCT board to publicize and post on its website the deadline (September 1, 2016) by which entities must submit an application for innovation district designation. (This requirement applies on passage, but ImpaCT does not yet have a website.) The bill also requires DECD to publicize and post on its website, by June 1, 2016, the (1) application deadline and (2) portion of the bill setting forth definitions related to the innovation district program, the program's purposes, and the application and review process.

Application Contents. Applicants must submit an application on a board-prescribed form and include with it information on the proposed innovation district, including (1) a plan for its development (“district plan,” see below), (2) a list of municipal and state legislative action that may be required to execute such plan, and (3) information concerning the capability of the applicant and its partners to implement and administer the plan and how such partners will be involved in the decision-making process.

The application must also include information on the following topics:

1. the proposed district's conformity with the program's purposes;

2. the district's geographical boundaries (including a map) and walkability;

3. at least two anchor institutions in the district and how they will participate in its development and activities;

4. existing and proposed transportation-related infrastructure in and around the district;

5. existing and proposed businesses, recreational facilities, public parks, and other public or private gathering spaces in the district; and

6. the proposal's consistency with the State Plan of Conservation and Development.

The application must also include a letters of support from (1) private investors and (2) the chief elected official of the affected municipality. The latter letter must include a statement that the municipality's legislative body has, by majority vote, indicated its support for the proposed district and for any municipal legislative action recommended in the district plan. A chief elected official may submit a letter of support for only one proposed district in his or her municipality.

District Plan. As noted above, the application must include a district plan outlining the applicant's plans for developing the district. The plan must include a proposal for connecting the district to public transit via rail or bus and leveraging private investment. It must also establish a proposed budget and timeline for spending grant money awarded by the ImpaCT board. The budget must indicate spending priorities, should grants be insufficient to cover the entire proposed budget.

Applicants may include in their submitted plan letters of support from community members and plans for the following initiatives:

1. attracting and directing support to start-up businesses and attracting anchor institutions;

2. developing, in collaboration with private partners, a business incubator, co-working space, business accelerator, or public meeting space;

3. events, community building, marketing, and outreach; and

4. open space improvement, housing development, bicycle paths, and improved technology infrastructure, including broadband.

Application Review

The ImpaCT board must review and evaluate applications and recommend to the executive director by January 1, 2017 which should be approved, if any. The board must select from the applicants a limited number of finalists.

Minimum Requirements. The bill prohibits the board from recommending an application for approval unless the following occurs:

1. the proposed district is consistent with the program's purposes;

2. the district does not exceed one-half square mile, unless good cause exists for its extension;

3. a significant portion of the district is in an area zoned for mixed uses or mixed use zoning is proposed;

4. it was prepared in collaboration with the local chamber of commerce and the affected municipality's economic development department, or similar authority; and

5. it is supported by the affected municipality's legislative body, as demonstrated by a majority vote of the body.

Other Criteria. In determining whether to recommend an application for approval, the ImpaCT board must consider whether the entities partnering together to implement and administer the proposed district plan are of the quality to, and have demonstrated the commitment to, implement and administer the district plan in a manner sufficient to achieve program's purposes. The board must give preference to applicants with diverse partners (including anchor institutions) and partnerships with entities located within the proposed district.

The board must generally consider whether the plan is sufficient to achieve the program's purposes and specifically consider whether the plan leverages private investment and includes the following:

1. proposed boundaries that are sufficiently compact to achieve the program's purposes (see half-mile limit, above);

2. sufficient measures to (a) ensure walkability within the district and (b) enhance regular interpersonal interactions among the district's residents, workers, and visitors;

3. adequate and accessible public transportation; and

4. existing or proposed restaurants, affordable housing options, and indoor or outdoor retail and public spaces providing an adequate opportunity for interpersonal interaction.

The board must also consider whether the (1) district will be self-sustaining after it expends any ImpaCT grants and (2) district's underlying zoning provides for, or will be amended to provide for, dwellings with reduced square footage.

The bill authorizes the board to consider any other criteria it determines is relevant for evaluating whether the proposed district will achieve the program's purposes.

Finalists. The ImpaCT board must conduct a site walk of each finalist's proposed district and hold a public hearing on each finalist's application in the affected municipality. The board's chairperson must give at least 10 days' notice of the hearing. The notice must include the hearing's time and place and be posted (1) in a conspicuous place in or near the town clerk's office and (2) on the municipality's website. (It appears that some municipalities lack a website.)

At the public hearing, the applicant must present its proposal, and the public must be given an opportunity to comment. Applicants may revise their applications based on public hearing comments.

Application Approval

ImpaCT's executive director must approve any recommended application unless he or she determines that good cause exists, and is supported by substantial evidence, to reject such recommendation on the grounds that the proposed district fails to comply with the program's purposes.

The board may condition its recommendation on modifications agreed to by the applicant.

Grants to Innovation Districts and Innovation Places

Innovation Districts. Entities designated as innovation districts are eligible for grants for expenses (1) outlined in their application, (2) associated with application modifications suggested by the board, and (3) related to financial audits of grant spending. The grant amounts are determined by the ImpaCT board; it submits grant recommendations to the executive director at the same time that it submits applications recommended for approval. The executive director must award grants in the amounts recommended by the board.

Before awarding a grant, the executive director must enter into an agreement with the grantee (1) concerning allowable grant expenses (i.e., those recommended by the board) and (2) requiring an annual financial audit of grant expenditures prepared by an independent auditor. The executive director must also confirm that a significant portion of the underlying zoning of the proposed district allows for mixed-use development.

If a grantee uses grants for expenses other than those specified in the agreement, the executive director may require the grantee to repay the misused amounts.

Innovation Places. The bill requires the ImpaCT board to develop a program for making grants to “innovation places,” which are places (1) in municipalities connected to an innovation district by transit, labor market patterns, or some other relationship; (2) with entrepreneurial and innovation potential; and (3) located in a compact geographic area of high density land use within a walkable commercial and residential center.

In developing this program, the board must establish a process for applying for and approving grants and criteria for grant approval. Grants may only be provided to innovation places that serve the same purposes as innovation districts.

10, 16, 23, 25 & 26 — EARMARKED BOND FUNDS

Bonds for ImpaCT's Programs and Purposes

As shown in Table 1, the bill earmarks $87.75 million from existing bond authorizations to fund ImpaCTs programs and purposes.

Table 1: Bonds Earmarked for ImpaCT's Purposes

Existing Authorization

Total Amount






ImpaCT Fund

Innovation District program grants and planning grants




ImpaCT Fund

Innovation Places Grants




ImpaCT Fund

Accelerate CT




ImpaCT Fund

ImpaCT's general purposes1




ImpaCT Fund

Technology Transfer Program2


Manufacturing Innovation Fund


Innovation Talent Fund (see 24)

Providing grants under the technology talent program ImpaCT develops

1Under the bill, $5 million per year in each FY 17 to 21 must be deposited into the ImpaCT fund for these purposes.

2Under the bill, $1 million per year in each FY 17 to 21 must be deposited into the ImpaCT fund for these purposes.

Bonds for Other Purposes

As shown in Table 2, the bill earmarks $77 million from existing bond authorizations for other purposes.

Table 2: Bonds Earmarked for Other Purposes

Existing Authorization

Total Amount






Startup CT1

Startup CT Loans (see 20)




State Department of Education (SDE)

Grants to technical high schools (see below)





UConn's Entrepreneurship programs (see below)

25 & 26

UConn 2000, Phase III


City of Waterbury

UConn Waterbury Campus (see below)

1Presumably, this means to CI for the purposes of the Startup CT program.

Grants to Technical High Schools. Under the bill, the bond funds the State Department of Education (SDE) receives for technical high school grants must be used to provide evening training programs in the skilled trades, including, but not limited to, manufacturing, masonry, electrical, plumbing, and carpentry trades. The purpose of any program that receives grants must be to prepare participants for earning a credential or degree recognized by employers or trade associations, as applicable.

UConn Entrepreneurship Programs. Under the bill, UConn receives $1 million per year in each FY 17 to 21, for a total of $5 million, in order to hire staff for its entrepreneurship program. UConn may only receive the money if it (1) provides matching funds and (2) establishes a partnership with a designated innovation district in which UConn agrees to establish a branch campus in the district for programs that related to the district's specialty. It is unclear whether UConn could receive funds in the event that the ImpaCT board does not designate any innovation districts.

Grant to Waterbury for UConn Branch Campus. The bill adds a new $7 million project to Phase III of the UConn 2000 infrastructure improvement program and reduces the cost of another project by the same amount. Specifically, it adds this funding to an existing Waterbury property purchase project and expands it to include grants to Waterbury for acquisition, construction, reconstruction, renovations, or improvements. It decreases an existing Academic and Research Facilities project from $450 million to $443 million.

The bill also specifies that the proceeds of any bond issuance, up to the total amount of bonds authorized under UConn 2000, must be used to provide grants to the city of Waterbury, administered by the Department of Administrative Services, to acquire, construct, reconstruct, renovate, and improve real property in the city to be leased to UConn as part of its downtown Waterbury campus. Presumably, this provision refers to a bond issuance for the $7 million grant to Waterbury described above.

EFFECTIVE DATE: The provisions providing bond funds for a grant to Waterbury are effective July 1, 2016.

11, 13 & 14 — CI CHANGES

Relocation of CI to Innovation District ( 11)

The bill requires CI to relocate, by January 1, 2018, its main office to an innovation district designated under the bill and establish a satellite office each of the other designated districts.

EFFECTIVE DATE: October 1, 2016

Venture Investments ( 13)

The bill requires CI to enter into venture capital agreements, investment agreements, and other similar agreements with one or more private investor partners. By law, CI invests in people and businesses in Connecticut that research, develop, or apply specific technologies, procedures, services, and techniques. In exchange, CI receives rights to products or inventions, a share of the proceeds from their sale, or equity in the businesses that make the products or provide the services. The equity can be in the form of common and preferred stocks (CGS 32-39 (2)). CI makes these investments by entering into venture agreements with a person or business.

Performance Audit ( 14)

The bill requires CI to have an independent accounting or management consulting firm conduct a performance audit of its operation and submit it to an unspecified party by December 1, 2016. The audit must make recommendations concerning the following:

1. whether CI's staffing levels are appropriate;

2. in which innovation district CI should relocate its office, if such districts have been designated by the audit's submission date;

3. whether CI should make its investments indirectly by lending money to private investment funds investing in business start-ups, as the bill specifies (i.e., Startup CT; see below); and

4. how CI can improve its ranking in two or more systems that rank public venture capital entities based on various measures.

The audit must also analyze (1) CI performance based on performance measures ImpaCT's board recommends and (2) private investment firms' compensation policies. The analysis of the compensation policies must include recommendations for a compensation policy that will maximize the performance of CI's employees in way that allows CI to achieve its public purposes.


The bill requires the DECD commissioner to (1) establish a mentorship network connecting start-up entrepreneurs in technology-based ventures with qualified mentors and (2) provide training to businesses seeking to participate in the network. Eligible start-up ventures include those in the cybersecurity, data science, and software development areas.

The bill allows the commissioner to forgive a portion of state assistance provided to a technology-based business according to a formula she must develop that bases the forgiveness on the number of hours the business spends mentoring a start-up entrepreneur.


DECD's EXP program provides grants, loans, and other forms of financial assistance to eligible businesses with fewer than 100 employees. The bill allows the commissioner to give priority to businesses located in designated innovation districts. Current law requires her to give priority to businesses that create jobs and allows her to give priority to businesses that sell most of their products or services to customers located outside Connecticut (i.e., economic base businesses) or attempt to export them to foreign markets.

EFFECTIVE DATE: October 1, 2016


The bill provides a source to fund the strategic statewide innovation and entrepreneurship marketing plan that ImpaCT's board must prepare. It requires the funds deposited in the existing statewide tourism marketing account to be used for this purpose and renames the account the “statewide tourism, innovation and entrepreneurship account.” By law, the account must contain any funds appropriated to it, and any year-end fund balances must be carried forward to the next fiscal year.


The bill extends the sunset date for the angel investor tax credit by three years, from July 1, 2016 to July 1, 2019, and allows taxpayers to sell, assign, or transfer all or part of the credit to other taxpayers.

The credits, which are available through CI, apply against the personal income tax and equal 25% of the amount taxpayers invest in technology-based businesses, up to $250,000.

EFFECTIVE DATE: July 1, 2016 and applicable to taxable years beginning on or after January 1, 2016


The bill creates a venture loan program called “Startup CT” in order to increase the amount of preseed and seed financing in the state. By law, “preseed financing” means financial aid provided for research and formulation of a concept, and “seed financing” means financial aid to an inventor or entrepreneur to assess the viability of a concept and to qualify for start-up financing (CGS 32-34).

Under the bill, CI must certify up to six entities as “start-up funds” and may provide up to $60 million in forgivable loans to the entities, as long as one start-up fund invests exclusively in intellectual property and start-ups developed by UConn students and faculty researchers. (It appears that, in order to comply with the bill, the first entity CI approves as a start-up fund must invest exclusively in UConn start-ups and intellectual property.) The loans are contingent on the start-up funds raising matching capital. Under the bill, CI also allocates tax credits to approved start-up funds, which provide them to people and businesses that invest in their fund. These credits are capped at $60 million overall.

CI must develop guidelines for certifying businesses as eligible for investments from a start-up fund. The guidelines must require that the business be (1) principally located in or willing to relocate to Connecticut and (2) in the early stages of development. Before a start-up fund invests in a business, CI must certify that the business is eligible according to the guidelines.

Start-up Fund Approval

Beginning September 1, 2016, entities may apply to CI, in a form CI prescribes, for approval as a start-up fund. The applications must include the following:

1. a detailed description of the fund's intended industry targets, preferred stage of investment, and any geographic cluster strategy;

2. a detailed description of key fund managers' track records, with an emphasis on seed and early-stage investment experience;

3. the specific strategy the fund manager will pursue to raise the private capital needed to qualify for a loan and a fundraising track record for funds with similar characteristics and targets; and

4. any other information CI reasonably requires.

Within 30 days of receipt, CI must review and consider each application for approval as a start-up fund. If CI has not approved six start-up funds by October 15, 2016, approved start-up funds may submit applications for additional loans.

Loan and Tax Credit Agreement. Upon approving an entity as a start-up fund, CI must (1) enter into a loan agreement with the fund and (2) allocate tax credits to the fund, if applicable. The loan agreement must (1) provide up to a $10 million loan, conditioned on the start-up securing at least $20 million in private capital, and (2) include the economic goals the start-up fund must achieve to be granted loan forgiveness.

Loan Issuance and Forgiveness

Under the bill, start-up funds must collect $20 million in private capital within 60 days of receiving approval for a CI loan. (Presumably, “receiving approval for a loan” refers to entering into a loan agreement with CI.) Within 65 days of the approval, the start-up fund must send CI sufficient documentation to prove it has collected the required private capital. After receiving the documentation, CI must make the loan to the start-up fund.

By December 31st of the year containing the fifth anniversary of the closing date of the loan, the start-up fund must provide a state revenue impact assessment prepared by a nationally-recognized third-party independent economic forecasting firm using a dynamic economic forecasting model that analyzes the economic impact of the start-up fund's investments. The impacts analyzed must include, but are not limited to, jobs created or retained by the investments. CI must forgive all or part of the loan when the start-up fund achieves the economic development goals agreed to in the loan agreement.

Tax Credits

The bill creates a tax credit, applicable against the corporation business and insurance premium taxes, for investing in a start-up fund. The credit amount equals 50% of the investment. Half of the credit may be claimed in each of the third and fourth years after making the investment. Under the bill, the credit (1) is earned and vested when a person or business invests in the start-up fund and (2) may be sold, assigned, or otherwise transferred, in whole or in part.

Under the bill, these credits are subject to recapture if a start-up fund fails to invest $30 million within a certain time period. It is unclear whether this time period is four or five years. If a start-up fund does not invest the required amount, CI must notify the start-up fund's officers, in writing, of the potential recapture 90 days before the recapture. CI must recapture the credits unless it waives the deficiency or the start-up fund corrects the deficiency within 90 days.

EFFECTIVE DATE: July 1, 2016, and applicable to taxable years beginning on or after January 1, 2016.


The bill establishes, within ImpaCT, the Accelerate CT program to provide grants to qualified business accelerators. The grants may be up to $400,000 and must be dispersed over two years. The bill does not define “business accelerator”, but it is generally understood to mean an organization that provides a variety of support services, with or without office space, to help later-stage start-ups grow.

Under the bill, accelerators may use the grants for (1) overhead and operation expenses related to the accelerator, including, but not limited to, up to two years of lease payments, information technology infrastructure, and management personnel costs and (2) providing financial assistance to growth stage businesses using the accelerator. For the purposes of the Accelerate CT program, a “growth stage company” is one who has, as determined by the accelerator, $500,000 to $5,000,000 in revenue; at least one intern; defendable intellectual property; strong management; and proven sales.

ImpaCT must establish, for Accelerate CT grants, an application process, an approval process, and approval criteria. The criteria must consider, but is not limited to, (1) the sufficiency of matching private capital, (2) the accelerator's location, (3) investment team expertise, (4) network capacity, and (5) the number of growth stage companies committed to using the accelerator.


The bill authorizes the DECD commissioner to establish up to 10 knowledge center enterprise zones in the state based on proposals submitted by higher education institutions.

Proposing and Approving Zones

Under the bill, a higher education institution may submit a proposal to DECD to establish a knowledge center enterprise zone, which must include the following components:

1. the proposed zone's geographic scope, including all of the census blocks incorporated in the zone, which may extend for up to a two-mile radius beyond the institution's boundaries;

2. the nature of the business and industry that will be developed in the zone;

3. how the business and industry (a) aligns with the institution's mission and (b) will collaborate with the institution to create jobs;

4. the (a) number of jobs, (b) state and local revenue loss, and (c) economic and community development anticipated from the zone's establishment; and

5. the institution's experience collaborating with businesses or planning for such collaboration.

The bill authorizes the DECD commissioner to approve a zone if she determines that (1) its economic development benefits outweigh the anticipated costs to the state and affected municipalities and (2) the proposal complies with the State Plan of Conservation and Development. She may modify the proposed zone's geographic scope to improve the balance between its anticipated economic benefit and cost to the state and affected municipalities.

Zone Benefits

Under the bill, businesses located in knowledge center enterprise zones receive the same benefits, subject to the same conditions, as those located in general enterprise zones.

By law, benefits given to businesses in enterprise zones include the following:

1. property and real estate conveyance tax exemptions and corporation business tax credits mainly for developing facilities, with the state reimbursing municipalities for a portion of the revenue loss from the property tax exemption (CGS 12-81, 12-498, & 12-217e) and

2. a 10-year corporation business tax credit for any newly formed corporations locating in the zones (CGS 12-271v).

Performance Assessment

The bill requires the DECD commissioner to assess each zone's performance within 10 years of its establishment. It authorizes her to remove a zone's designation if it fails to meet the established goals and standards outlined in regulations.


The bill requires the DECD commissioner to adopt regulations to implement the knowledge center enterprise zone program, including regulations on (1) reviewing and approving proposals, (2) establishing zone goals and performance standards, and (3) assessing their performance.

EFFECTIVE DATE: October 1, 2016



The bill establishes an “Innovation Talent Fund” to provide grants for increasing the development talent in the software technology and other unspecified technology fields. It requires ImpaCT to administer grants, presumably allowing it to determine grant amounts and eligible uses and recipients.

Fund Administration

The bill establishes the fund as a nonlapsing fund outside the General Fund and capitalizes it with (1) $2.75 million in bonds authorized for DECD's Connecticut Manufacturing Innovation Fund; (2) any other funds the law requires or allows to be deposited in the fund; and (3) public or private contributions, gifts, grants, donations, bequests, or devises made to the fund.

Although CI administers the ImpaCT fund, ImpaCT must hold and administer the Innovation Talent Fund, which includes investing and dispersing its money. ImpaCT may deposit the fund's money in an institution for investment as ImpaCT directs. Any returns on these investments must remain with the fund and be used for its benefit. ImpaCT may use the fund only to make grants for developing technology talent.

ImpaCT must provide staff, office space, office systems and administrative support needed to operate the fund and may do so by using all of its authorized powers. But it cannot spend funds without its board's approval.

Beginning January 1, 2017, ImpaCT must prepare the fund's annual operations plan and operations and capital budget and submit it to the board of directors for its review and approval at least 90 days before the fiscal year begins.

Grant Administration

ImpaCT must initially award grants for increasing talent in the software technology field and then may award them for increasing talent in other technology fields. ImpaCT's board of directors must approve each expenditure from the fund, including budgeted expenditures subject to any variations the board allows.

Annual Report

Starting in 2017, ImpaCT must submit an annual report to the board on the fund's activities by April 15 annually. After the board approves the report, the board must submit it to the Commerce and Finance, Revenue and Bonding committees. The report must contain any available information on the fund's status and progress, including the types and amount of grants ImpaCT awarded and the grant recipients.


Related Bill

sHB 5592 (File 610), favorably reported by the Finance, Revenue and Bonding Committee, suspends the angel investor tax credit program in FY 17 and restarts it in FY 18 with no sunset date.

SB 383 (File 385), favorably reported by the Education Committee, requires the technical high school system's superintendent to create a manufacturing training for incumbent workers pilot program at one of the technical high schools after regular school hours.


Finance, Revenue and Bonding Committee

Joint Favorable Substitute