Connecticut 2021 Regular Session

Connecticut Senate Bill SB01108 Compare Versions

Only one version of the bill is available at this time.

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7	7	LCO No. 6483 1 of 7
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9	9	General Assembly Raised Bill No. 1108
10	10	January Session, 2021
11	11	LCO No. 6483
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14	14	Referred to Committee on FINANCE, REVENUE AND
15	15	BONDING
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18	18	Introduced by:
19	19	(FIN)
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24	24	AN ACT CONCERNING A CONNECTICUT NEW MARK ETS TAX
25	25	CREDIT PROGRAM.
26	26	Be it enacted by the Senate and House of Representatives in General
27	27	Assembly convened:
28	28
29	29	Section 1. (NEW) (Effective July 1, 2021) (a) As used in this section: 1
30	30	(1) "CHEFA Community Development Corporation" means the 2
31	31	community development corporation established as a subsidiary of the 3
32	32	Connecticut Health and Educational Facilities Authority pursuant to 4
33	33	subsection (k) of section 10a-179 of the general statutes; 5
34	34	(2) "Community benefits" means activities that address a low-income 6
35	35	community's needs and social and economic priorities, primarily 7
36	36	through (A) the creation or retention of quality and accessible jobs, as 8
37	37	determined by the CHEFA Community Development Corporati on, 9
38	38	within such community, (B) increasing access to high-quality goods or 10
39	39	services or healthy food for residents of such community, or (C) the 11
40	40	making or facilitation of environmental improvements to such 12
41	41	community; 13 Raised Bill No. 1108
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45	45	LCO No. 6483 2 of 7
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47	47	(3) "Community business" means: 14
48	48	(A) Any organization exempt from taxation pursuant to Section 15
49	49	501(c)(3) of the Internal Revenue Code of 1986, or any subsequent 16
50	50	corresponding internal revenue code of the United States, as amended 17
51	51	from time to time, that is located in the state and for which (i) a 18
52	52	substantial portion of the use of the tangible property of such business, 19
53	53	whether owned or leased, is within a low-income community, and (ii) a 20
54	54	substantial portion of the services performed for such business by its 21
55	55	employees are performed in a low-income community; or 22
56	56	(B) A subsidiary of such organization, which subsidiary (i) is located 23
57	57	in the state, (ii) satisfies the provisions of subparagraphs (A)(i) and 24
58	58	(A)(ii) of this subdivision, and (iii) has as its purpose the furtherance of 25
59	59	the charitable mission of the organization; 26
60	60	(4) "Community development entity" means a corporation or limited 27
61	61	liability company that (A) is a subsidiary established pursuant to 28
62	62	subdivision (2) of subsection (b) of this section of the CHEFA 29
63	63	Community Development Corporation, (B) has a primary mission of 30
64	64	serving or providing capital for low-income communities or residents 31
65	65	of low-income communities, and (C) maintains accountability to 32
66	66	residents of low-income communities through such residents' 33
67	67	representation on any governing board of such entity or any advisory 34
68	68	board of such entity; 35
69	69	(5) "Eligible costs" means, for purposes of the provision of a 36
70	70	community benefit: (A) Capitalization required for a program that is 37
71	71	developed, sponsored or managed by a community business and that 38
72	72	benefits a low-income community; (B) the costs (i) of construction and 39
73	73	for the acquisition of lands, structures, real or personal property, rights, 40
74	74	rights-of-way, franchises, easements and interest, necessary for a 41
75	75	project, (ii) of the demolition or removal of any buildings or structures 42
76	76	on land so acquired, and (iii) for the acquisition of any land to which 43
77	77	such buildings or structures may be moved; (C) the costs for (i) the 44
78	78	acquisition of machinery and equipment, (ii) the provision of working 45 Raised Bill No. 1108
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84	84	capital, and (iii) enlargements, additions, extensions, replacements, 46
85	85	renovations and improvements; (D) the costs of engineering, financial 47
86	86	and legal services and for plans, specifications, studies, surveys and 48
87	87	estimates of costs and revenues; and (E) administrative expenses, 49
88	88	expenses necessary or incident to determining the feasibility or 50
89	89	practicability of constructing a project and such other expenses as may 51
90	90	be necessary or incident to (i) the construction and acquisition of a 52
91	91	project, (ii) the financing of such construction or acquisition, and (iii) the 53
92	92	placing of a project in operation; 54
93	93	(6) "Low-income community" means a census tract in the state for 55
94	94	which (A) the poverty rate for such tract is at least twenty per cent, (B) 56
95	95	the median family income for such tract, if such tract is not located in a 57
96	96	metropolitan area, does not exceed eighty per cent of the state-wide 58
97	97	median family income, or (C) the median family income for such tract, 59
98	98	if such tract is located in a metropolitan area, does not exceed eighty per 60
99	99	cent of the greater of the state-wide median family income or the 61
100	100	metropolitan area median family income; 62
101	101	(7) "Project" means a building or structure owned in its entirety by, or 63
102	102	suitable for use in accordance with the charitable mission of, a 64
103	103	community business, including machinery, equipment and other 65
104	104	similar items necessary or convenient for the operation of the building, 66
105	105	structure or community business; 67
106	106	(8) "Qualified equity investment" means an equity investment, 68
107	107	acquired at its original issuance on or after July 1, 2021, solely in 69
108	108	exchange for cash, in a community development entity and that is 70
109	109	designated as a qualified investment by the CHEFA Community 71
110	110	Development Corporation pursuant to subsection (b) of this section; and 72
111	111	(9) "Qualified low-income community investment" means an equity 73
112	112	investment in or a loan to a community business. 74
113	113	(b) There is established a Connecticut new markets tax credit 75
114	114	program to stimulate economic development in low -income 76
115	115	communities. The CHEFA Community Development Corporation shall 77 Raised Bill No. 1108
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121	121	adopt written procedures in accordance with section 1-121 of the general 78
122	122	statutes to establish any requirements of the program and to implement 79
123	123	the provisions of this section. 80
124	124	(1) (A) Any taxpayer may make an equity investment in a community 81
125	125	development entity for the calendar years 2022 and 2023. For said 82
126	126	calendar years, the CHEFA Community Development Corporation may 83
127	127	designate an equity investment in a community development entity as 84
128	128	a qualified equity investment and the holder of such equity investment 85
129	129	shall be eligible for a credit against the tax imposed under chapter 207, 86
130	130	208, 208a, 209, 210, 211 or 212a of the general statutes or section 38a-743 87
131	131	of the general statutes, in accordance with the provisions of subsection 88
132	132	(d) of this section. 89
133	133	(B) The aggregate amount of qualified equity investments designated 90
134	134	under this section shall not exceed ten million dollars for calendar year 91
135	135	2022 and ten million dollars for calendar year 2023. 92
136	136	(2) The CHEFA Community Development Corporation may form 93
137	137	one or more subsidiaries for the purposes of carrying out the public 94
138	138	purposes of this section. Any such subsidiary may be organized as a 95
139	139	stock or nonstock corporation or a limited liability company. The 96
140	140	CHEFA Community Development Corporation shall adopt a resolution 97
141	141	prescribing the purposes for which such subsidiary is formed and the 98
142	142	powers of the CHEFA Community Development Corporation such 99
143	143	subsidiary shall have and may exercise. 100
144	144	(3) Each community development entity shall use substantially all of 101
145	145	the cash purchase price of a qualified equity investment, within twelve 102
146	146	months of the date of issuance of such investment, to make qualified 103
147	147	low-income community investments in a community business or 104
148	148	businesses. Thereafter, each community development entity shall 105
149	149	maintain not less than eighty-five per cent of such cash purchase price 106
150	150	in qualified low-income community investments in a community 107
151	151	business or businesses for the term of the qualified equity investment. 108
152	152	(c) (1) Any community business may apply to the CHEFA 109 Raised Bill No. 1108
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156	156	LCO No. 6483 5 of 7
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158	158	Community Development Corporation for approval as a business 110
159	159	eligible to receive qualified low-income community investments under 111
160	160	this section. The application shall include (A) the name of the business 112
161	161	and a copy of the organizational documents of such business, (B) a 113
162	162	description of the community benefit such business provides or seeks to 114
163	163	provide, (C) a description of the eligible costs for which the community 115
164	164	business will use the proceeds of the qualified low-income community 116
165	165	investment and the expected amount of such eligible costs, and (D) such 117
166	166	other information as the CHEFA Community Development 118
167	167	Corporation may require. 119
168	168	(2) Any community business that receives a qualified low-income 120
169	169	community investment shall use the proceeds of such investment for 121
170	170	eligible costs. The aggregate amount of qualified low-income 122
171	171	community investments made in any community business shall not 123
172	172	exceed forty per cent of the expected eligible costs or two million dollars, 124
173	173	whichever is less. 125
174	174	(d) (1) The credit allowed under this section may be claimed as 126
175	175	follows: (A) For the income year in which a qualified equity investment 127
176	176	is made and for the next succeeding income year, ten per cent of the 128
177	177	amount of the qualified equity investment; and (B) for each of the next 129
178	178	succeeding five income years, sixteen per cent of the amount of the 130
179	179	qualified equity investment. 131
180	180	(2) If any credit or any portion of a credit allowed under this section 132
181	181	is not used because the amount of the credit exceeds the tax due and 133
182	182	owing by the taxpayer, the unused amount may be carried forward for 134
183	183	the five immediately succeeding income years or until the full credit has 135
184	184	been claimed, whichever occurs earlier. 136
185	185	(3) Any taxpayer allowed a credit under this section may sell, assign 137
186	186	or otherwise transfer such credit, in whole or in part, to one or more 138
187	187	taxpayers, provided such credit may not be sold, assigned or transferred 139
188	188	more than three times. 140
189	189	(4) Any taxpayer allowed a credit under this section may be subject 141 Raised Bill No. 1108
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195	195	to a credit recapture if the qualified low-income community investment 142
196	196	ceases to be used for the purposes of providing a community benefit, a 143
197	197	qualified low-income community investment is repaid or returned to a 144
198	198	community development entity or a qualified equity investment is 145
199	199	repaid or returned to the holder of such qualified equity investment. 146
200	200	(f) (1) Not later than forty-five days after the CHEFA Community 147
201	201	Development Corporation designates an equity investment as a 148
202	202	qualified equity investment pursuant to subsection (b) of this section, 149
203	203	said corporation shall submit a form to the Department of Revenue 150
204	204	Services, in a form and manner prescribed by the Commissioner of 151
205	205	Revenue Services, that includes the date of issuance and the amount of 152
206	206	the qualified equity investment, the identity of the taxpayer that holds 153
207	207	such qualified equity investment and such other information the 154
208	208	department deems necessary. 155
209	209	(2) After the CHEFA Community Development Corporation 156
210	210	designates its first qualified equity investment under subsection (b) of 157
211	211	this section, said corporation shall submit a quarterly report to the 158
212	212	Department of Revenue Services that includes the amounts of qualified 159
213	213	low-income community investments made, the dates such qualified 160
214	214	low-income community investments were made and verification that 161
215	215	the qualified low-income community investments were made, and 162
216	216	continue to be invested, in eligible community businesses. 163
217	217	(g) If the CHEFA Community Development Corporation or the 164
218	218	Commissioner of Revenue Services determines that a recapture of a 165
219	219	credit or a portion of a credit allowed under this section is warranted, 166
220	220	the commissioner shall notify the affected taxpayer of the proposed 167
221	221	recapture. The affected taxpayer shall have ninety days after receipt of 168
222	222	such notice to cure any deficiency noted in the commissioner's recapture 169
223	223	notice. If the affected taxpayer fails or is unable to cure the deficiency, 170
224	224	the commissioner shall issue a final order of recapture to the affected 171
225	225	taxpayer that includes the amount and any penalty and interest to be 172
226	226	recaptured on such taxpayer's next tax return required to be filed, and 173
227	227	shall provide a copy of such final order to the CHEFA Community 174 Raised Bill No. 1108
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233	233	Development Corporation. 175
234	234	This act shall take effect as follows and shall amend the following
235	235	sections:
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237	237	Section 1 July 1, 2021 New section
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239	239	Statement of Purpose:
240	240	To establish a Connecticut new markets tax credit program for calendar
241	241	years 2022 and 2023.
242	242	[Proposed deletions are enclosed in brackets. Proposed additions are indicated by underline, except
243	243	that when the entire text of a bill or resolution or a section of a bill or resolution is new, it is not
244	244	underlined.]
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