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General Assembly Raised Bill No. 1108
January Session, 2021
LCO No. 6483
Referred to Committee on FINANCE, REVENUE AND
BONDING
Introduced by:
(FIN)
AN ACT CONCERNING A CONNECTICUT NEW MARK ETS TAX
CREDIT PROGRAM.
Be it enacted by the Senate and House of Representatives in General
Assembly convened:
Section 1. (NEW) (Effective July 1, 2021) (a) As used in this section: 1
(1) "CHEFA Community Development Corporation" means the 2
community development corporation established as a subsidiary of the 3
Connecticut Health and Educational Facilities Authority pursuant to 4
subsection (k) of section 10a-179 of the general statutes; 5
(2) "Community benefits" means activities that address a low-income 6
community's needs and social and economic priorities, primarily 7
through (A) the creation or retention of quality and accessible jobs, as 8
determined by the CHEFA Community Development Corporati on, 9
within such community, (B) increasing access to high-quality goods or 10
services or healthy food for residents of such community, or (C) the 11
making or facilitation of environmental improvements to such 12
community; 13 Raised Bill No. 1108
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(3) "Community business" means: 14
(A) Any organization exempt from taxation pursuant to Section 15
501(c)(3) of the Internal Revenue Code of 1986, or any subsequent 16
corresponding internal revenue code of the United States, as amended 17
from time to time, that is located in the state and for which (i) a 18
substantial portion of the use of the tangible property of such business, 19
whether owned or leased, is within a low-income community, and (ii) a 20
substantial portion of the services performed for such business by its 21
employees are performed in a low-income community; or 22
(B) A subsidiary of such organization, which subsidiary (i) is located 23
in the state, (ii) satisfies the provisions of subparagraphs (A)(i) and 24
(A)(ii) of this subdivision, and (iii) has as its purpose the furtherance of 25
the charitable mission of the organization; 26
(4) "Community development entity" means a corporation or limited 27
liability company that (A) is a subsidiary established pursuant to 28
subdivision (2) of subsection (b) of this section of the CHEFA 29
Community Development Corporation, (B) has a primary mission of 30
serving or providing capital for low-income communities or residents 31
of low-income communities, and (C) maintains accountability to 32
residents of low-income communities through such residents' 33
representation on any governing board of such entity or any advisory 34
board of such entity; 35
(5) "Eligible costs" means, for purposes of the provision of a 36
community benefit: (A) Capitalization required for a program that is 37
developed, sponsored or managed by a community business and that 38
benefits a low-income community; (B) the costs (i) of construction and 39
for the acquisition of lands, structures, real or personal property, rights, 40
rights-of-way, franchises, easements and interest, necessary for a 41
project, (ii) of the demolition or removal of any buildings or structures 42
on land so acquired, and (iii) for the acquisition of any land to which 43
such buildings or structures may be moved; (C) the costs for (i) the 44
acquisition of machinery and equipment, (ii) the provision of working 45 Raised Bill No. 1108
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capital, and (iii) enlargements, additions, extensions, replacements, 46
renovations and improvements; (D) the costs of engineering, financial 47
and legal services and for plans, specifications, studies, surveys and 48
estimates of costs and revenues; and (E) administrative expenses, 49
expenses necessary or incident to determining the feasibility or 50
practicability of constructing a project and such other expenses as may 51
be necessary or incident to (i) the construction and acquisition of a 52
project, (ii) the financing of such construction or acquisition, and (iii) the 53
placing of a project in operation; 54
(6) "Low-income community" means a census tract in the state for 55
which (A) the poverty rate for such tract is at least twenty per cent, (B) 56
the median family income for such tract, if such tract is not located in a 57
metropolitan area, does not exceed eighty per cent of the state-wide 58
median family income, or (C) the median family income for such tract, 59
if such tract is located in a metropolitan area, does not exceed eighty per 60
cent of the greater of the state-wide median family income or the 61
metropolitan area median family income; 62
(7) "Project" means a building or structure owned in its entirety by, or 63
suitable for use in accordance with the charitable mission of, a 64
community business, including machinery, equipment and other 65
similar items necessary or convenient for the operation of the building, 66
structure or community business; 67
(8) "Qualified equity investment" means an equity investment, 68
acquired at its original issuance on or after July 1, 2021, solely in 69
exchange for cash, in a community development entity and that is 70
designated as a qualified investment by the CHEFA Community 71
Development Corporation pursuant to subsection (b) of this section; and 72
(9) "Qualified low-income community investment" means an equity 73
investment in or a loan to a community business. 74
(b) There is established a Connecticut new markets tax credit 75
program to stimulate economic development in low -income 76
communities. The CHEFA Community Development Corporation shall 77 Raised Bill No. 1108
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adopt written procedures in accordance with section 1-121 of the general 78
statutes to establish any requirements of the program and to implement 79
the provisions of this section. 80
(1) (A) Any taxpayer may make an equity investment in a community 81
development entity for the calendar years 2022 and 2023. For said 82
calendar years, the CHEFA Community Development Corporation may 83
designate an equity investment in a community development entity as 84
a qualified equity investment and the holder of such equity investment 85
shall be eligible for a credit against the tax imposed under chapter 207, 86
208, 208a, 209, 210, 211 or 212a of the general statutes or section 38a-743 87
of the general statutes, in accordance with the provisions of subsection 88
(d) of this section. 89
(B) The aggregate amount of qualified equity investments designated 90
under this section shall not exceed ten million dollars for calendar year 91
2022 and ten million dollars for calendar year 2023. 92
(2) The CHEFA Community Development Corporation may form 93
one or more subsidiaries for the purposes of carrying out the public 94
purposes of this section. Any such subsidiary may be organized as a 95
stock or nonstock corporation or a limited liability company. The 96
CHEFA Community Development Corporation shall adopt a resolution 97
prescribing the purposes for which such subsidiary is formed and the 98
powers of the CHEFA Community Development Corporation such 99
subsidiary shall have and may exercise. 100
(3) Each community development entity shall use substantially all of 101
the cash purchase price of a qualified equity investment, within twelve 102
months of the date of issuance of such investment, to make qualified 103
low-income community investments in a community business or 104
businesses. Thereafter, each community development entity shall 105
maintain not less than eighty-five per cent of such cash purchase price 106
in qualified low-income community investments in a community 107
business or businesses for the term of the qualified equity investment. 108
(c) (1) Any community business may apply to the CHEFA 109 Raised Bill No. 1108
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Community Development Corporation for approval as a business 110
eligible to receive qualified low-income community investments under 111
this section. The application shall include (A) the name of the business 112
and a copy of the organizational documents of such business, (B) a 113
description of the community benefit such business provides or seeks to 114
provide, (C) a description of the eligible costs for which the community 115
business will use the proceeds of the qualified low-income community 116
investment and the expected amount of such eligible costs, and (D) such 117
other information as the CHEFA Community Development 118
Corporation may require. 119
(2) Any community business that receives a qualified low-income 120
community investment shall use the proceeds of such investment for 121
eligible costs. The aggregate amount of qualified low-income 122
community investments made in any community business shall not 123
exceed forty per cent of the expected eligible costs or two million dollars, 124
whichever is less. 125
(d) (1) The credit allowed under this section may be claimed as 126
follows: (A) For the income year in which a qualified equity investment 127
is made and for the next succeeding income year, ten per cent of the 128
amount of the qualified equity investment; and (B) for each of the next 129
succeeding five income years, sixteen per cent of the amount of the 130
qualified equity investment. 131
(2) If any credit or any portion of a credit allowed under this section 132
is not used because the amount of the credit exceeds the tax due and 133
owing by the taxpayer, the unused amount may be carried forward for 134
the five immediately succeeding income years or until the full credit has 135
been claimed, whichever occurs earlier. 136
(3) Any taxpayer allowed a credit under this section may sell, assign 137
or otherwise transfer such credit, in whole or in part, to one or more 138
taxpayers, provided such credit may not be sold, assigned or transferred 139
more than three times. 140
(4) Any taxpayer allowed a credit under this section may be subject 141 Raised Bill No. 1108
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to a credit recapture if the qualified low-income community investment 142
ceases to be used for the purposes of providing a community benefit, a 143
qualified low-income community investment is repaid or returned to a 144
community development entity or a qualified equity investment is 145
repaid or returned to the holder of such qualified equity investment. 146
(f) (1) Not later than forty-five days after the CHEFA Community 147
Development Corporation designates an equity investment as a 148
qualified equity investment pursuant to subsection (b) of this section, 149
said corporation shall submit a form to the Department of Revenue 150
Services, in a form and manner prescribed by the Commissioner of 151
Revenue Services, that includes the date of issuance and the amount of 152
the qualified equity investment, the identity of the taxpayer that holds 153
such qualified equity investment and such other information the 154
department deems necessary. 155
(2) After the CHEFA Community Development Corporation 156
designates its first qualified equity investment under subsection (b) of 157
this section, said corporation shall submit a quarterly report to the 158
Department of Revenue Services that includes the amounts of qualified 159
low-income community investments made, the dates such qualified 160
low-income community investments were made and verification that 161
the qualified low-income community investments were made, and 162
continue to be invested, in eligible community businesses. 163
(g) If the CHEFA Community Development Corporation or the 164
Commissioner of Revenue Services determines that a recapture of a 165
credit or a portion of a credit allowed under this section is warranted, 166
the commissioner shall notify the affected taxpayer of the proposed 167
recapture. The affected taxpayer shall have ninety days after receipt of 168
such notice to cure any deficiency noted in the commissioner's recapture 169
notice. If the affected taxpayer fails or is unable to cure the deficiency, 170
the commissioner shall issue a final order of recapture to the affected 171
taxpayer that includes the amount and any penalty and interest to be 172
recaptured on such taxpayer's next tax return required to be filed, and 173
shall provide a copy of such final order to the CHEFA Community 174 Raised Bill No. 1108
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Development Corporation. 175
This act shall take effect as follows and shall amend the following
sections:
Section 1 July 1, 2021 New section
Statement of Purpose:
To establish a Connecticut new markets tax credit program for calendar
years 2022 and 2023.
[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
underlined.]