Commerce Committee
Transportation Committee
Finance, Revenue and Bonding Committee
AN ACT ESTABLISHING A BRADLEY DEVELOPMENT ZONE
SUMMARY: This act creates a development zone around Bradley International Airport and extends enterprise zone property tax exemptions and corporation business tax credits to manufacturers and other specified businesses that develop or acquire property in the zone. The zone, called the Bradley Airport Development Zone (BADZ), encompasses specified contiguous census tract blocks in Windsor Locks, Suffield, East Granby, and Windsor.
The act also designates these blocks “distressed municipalities,” thus qualifying projects in the BADZ for state funds under different programs.
EFFECTIVE DATE: October 1, 2011 and (1) the property tax exemptions apply to assessment years beginning on or after October 1, 2012 and (2) the corporation business tax credit applies to income years beginning on or after January 1, 2013.
ZONE DESIGNATION
The act designates the BADZ based on census blocks, which it delineates. But it also specifies that the blocks must be those designated as of October 1, 2011, a date which falls after the 2010 census and the possible reconfiguration or consolidation of the delineated blocks.
ELIGIBLE BUSINESS FACILITIES
The act extends the existing enterprise zone property tax exemptions and corporation business tax credits to the BADZ, but for a narrower range of businesses. As under the enterprise zone program, a business qualifies for these tax incentives based on the facility's condition and use. The business must have:
1. constructed, substantially renovated, or expanded the facility or
2. acquired it after it was idle for at least one year from an unrelated seller.
The business qualifies for the exemption if it uses the improved or acquired facility for manufacturing, warehousing and motor freight distribution, and specified business services. As under the enterprise zone program, manufacturing includes:
1. manufacturing, processing, or assembling raw materials, parts, and manufactured products;
2. performing manufacturing related research and development; and
3. significantly servicing, overhauling, or rebuilding machinery and equipment for industrial uses.
Warehousing and motor freight distribution facilities qualify for the exemption, but only if they handle goods shipped by air. Those facilities located in the enterprise zone also qualify for the exemption without qualification.
Facilities housing business services, including information technology, also qualify for the incentives if the commissioner determines they depend upon or are directly related to the airport. The act specifically excludes facilities housing car dealerships and retailers. Facilities in the enterprise zones that house a wide range of services qualify for the incentives. These include financial and health services, and telemarketing or engineering, accounting, research, management, and related services.
TAX INCENTIVES
Property Tax Exemptions
The act extends the enterprise zone tax exemptions for real and personal property to eligible businesses in the BADZ. Businesses that construct, renovate, or expand a facility qualify for an exemption based on the facility's value. The exemption equals 80% of the improvement's assessed value, and it is generally good for five years. Businesses acquiring facilities also qualify for the same five-year exemption, which is based on the assessed value of the acquired facility.
As under the enterprise zone program, non-manufacturing businesses developing or acquiring a facility in the BADZ also qualify for a five-year, 80% exemption on the assessed value of machinery and equipment they install in the facility as part of its development or acquisition. (The law exempts all manufacturers from paying property taxes on new and existing machinery and equipment. )
The exemptions represent property tax revenues the municipalities forgo. As under the enterprise zone law, the act requires the state to reimburse the BADZ municipalities for half of the forgone revenue.
The act uses the enterprise zone program's administrative processes to administer the BADZ's property tax exemptions and the state reimbursements. Thus, a business must apply to the Department of Economic and Community Development (DECD) for a certificate certifying that the facility qualifies for the exemption. It must annually file for the exemption by November 1 with the municipality's tax assessor. It waives its right to do so if it misses this deadline, unless it requested an extension as the law allows.
The municipality must submit its reimbursement claims to the Office of Policy and Management (OPM) secretary by August 1 annually as the law provides. The secretary must certify the claim to the comptroller by December 15. The comptroller has five business days to issue the order directing the treasurer to pay the claim. The treasurer has until December 31 to do so.
Corporation Business Tax Credits
The act extends the enterprise zone's corporation business tax credits to the BADZ. Under the enterprise zone program, businesses that qualify for the property tax exemptions also qualify for a 10-year corporation business tax credit equal to the portion of the tax attributable to the facility. (The law specifies how businesses must calculate that amount. ) The credit equals 25% of the tax.
Businesses in the BADZ qualify for the credit under similar terms and conditions as businesses in the enterprise zone. The provisions authorizing the credit take effect October 1, 2011 and apply to income years beginning January 1, 2013. But the act also specifies that businesses may begin claiming the credits on or after January 1, 2012.
DISTRESSED MUNICIPALITY BENEFITS
The act automatically designates those sections of Windsor Locks, Suffield, East Granby, and Windsor in the BADZ “distressed municipalities. ” By law, DECD annually designates distressed municipalities based on demographic and economic criteria. It scores and ranks each municipality and designates the top 25 as distressed.
The designation qualifies the four towns for grants to acquire and preserve open spaces in the zone (CGS § 7-131g) and plan and develop municipal development projects there (CGS §§ 8-190 and 8-195). It also qualifies them and other entities for Urban Act funds, which can be used for community conservation and development projects in the zone (CGS § 4-66c(c)).
But the designation also disqualifies projects in the zone for Small Town Economic Assistance Program (STEAP) funds. Non-distressed municipalities qualify for STEAP funds if they do not have an urban center or qualify as a public investment community. But they may choose to remain eligible for STEAP funds in lieu of Urban Act funds if their legislative bodies (or boards of selectmen if the legislative body is a town meeting) vote to do so and notify the OPM secretary to that effect (CGS § 4-66c (g)). A BADZ town may choose to remain eligible for STEAP in that part of the town that is in the BADZ.
The designation allows DECD to spend funds in the zone on cleaning up environmentally contaminated sites (CGS § 22a-133m). It also allows housing development corporations to set higher income levels for state-funded projects in the zone. (Most of these projects are limited to people earning no more than 80% of the area median income (AMI). But corporations can set the limit at 250% of AMI in distressed municipalities. ) (CGS § 8-218)
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