OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http://www.cga.ct.gov/ofa

SB-623

AN ACT ESTABLISHING THE 7/7 PROGRAM TO ENCOURAGE THE REDEVELOPMENT OF BROWNFIELDS AND UNDERUTILIZED PROPERTY.

As Amended by Senate "A" (LCO 7668), Senate "C" (LCO 8121)

Senate Calendar No.: 421


OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 18 $

FY 19 $

Department of Revenue Services

GF - Revenue Loss

None

Potential Significant

Note: GF=General Fund

Municipal Impact:

Municipalities

Effect

FY 18 $

FY 19 $

Various Municipalities

Grand List Reduction

None

Potential

Explanation

The bill results in potential revenue losses to the state and various municipalities, detailed below, by providing various tax credits, exemptions and property tax assessment freezes under the “7/7 program.”

The bill specifies that benefits under the “7/7 program” may be provided only when the most recent Fiscal Accountability Reports as required by CGS 2-36b forecast a surplus for the current biennium.

State Tax Revenue Loss

The bill provides various tax credits and exemptions for participants in the program. Specifically the bill provides:

1. a nonrefundable seven year 100% corporation business tax credit for corporations and a nonrefundable income tax credit for pass through entities.

2. an exemption from the sales tax for any items purchased for the purpose of redeveloping the property.

The actual revenue loss to the state from these credits and exemptions would depend upon (1) the number of participants in the program; (2) the level of redevelopment required for the property (with regard to purchases necessary that the sales tax would otherwise apply to); and (3) the level of business activity on the property once business operations begin (with regard to the business and income tax credits).

The actual revenue loss to the state is uncertain but may be significant. Because such tax benefits are not available until a business begins on the remediated property, any revenue loss is not anticipated until FY 19 at the earliest.

Municipal Impact

The bill freezes, for five years, the assessment of property developed under the 7/7 program following the issuance of a building permit. This precludes any grand list increase a municipality would otherwise experience as a result of the cleanup and development of a brownfield.

Administration Costs

It is anticipated that the Department of Economic and Community Development (DECD) can administer this program within current resources. Given the parameters outlined under the bill, it is estimated that the number of potential projects may be limited and therefore can be administered with current resources under DECD's Office of Brownfield Remediation and Development.

Senate “A” makes a modification to the requirements for designation in the “7/7 program” which has no fiscal impact.

Senate “C” specifies that benefits under the “7/7 program” may be provided only when the most recent Fiscal Accountability Reports as required by CGS 2-36b forecast a surplus for the current biennium.

The Out Years

The annualized ongoing fiscal impact identified above would continue into the future subject to inflation.

The preceding Fiscal Impact statement is prepared for the benefit of the members of the General Assembly, solely for the purposes of information, summarization and explanation and does not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.