AN ACT CONCERNING CHANGES TO ECONOMIC DEVELOPMENT STATUTES.

This bill allows municipalities to apply amnesty payments against any outstanding tax owed on property if they are implementing the one-time amnesty program authorized under PA 08-2, NSS. Under current law, municipalities must apply delinquent payments against the oldest outstanding tax owed on a property.

The bill makes it easier for state agencies to develop certain property located in floodplains. Under current law, agencies must obtain the environmental protection commissioner's approval before developing such property or doing other things that could affect land uses there. The bill exempts mills and other brownfields from this requirement if they are being remediated according to state standards and meet other specified criteria.

The bill changes income criterion improved condominiums and multifamily housing units must meet to qualify for enterprise zone property tax exemptions. Under current law, the units must be occupied by people earning no more than 200% of the municipality's median family income. Under the bill, they must be occupied by people earning no more than 200% of the median income of the area where the municipality is located, as determined by the U. S. Department of Housing and Urban Development (HUD). HUD annually determines area median income for families adjusted for size.

Lastly, the bill requires the Department of Economic and Community Development (DECD) to incorporate its separate annual reports for two programs it administers in its comprehensive annual report. In doing so, it changes how these reports must be prepared and who receives them. The bill makes many minor and technical changes to the economic development statutes, including those governing enterprise zone reporting and the strategic economic development plan.

EFFECTIVE DATE: Upon passage, except the provisions regarding the strategic plan and DECD's annual report take effect July 1, 2009.

The bill sets conditions under which state agencies can allow mills and other brownfields to be renovated or reconstructed in floodplains without obtaining an exemption from the environmental protection commissioner. In these cases, an agency does not need an exemption if this work:

1. is limited to the space where the property was originally used,

2. is being done above the 500-year flood elevation,

3. complies with state environmental cleanup standards, and

4. complies with the National Flood Insurance Program.

The state's 17 enterprise zones are relatively small economically distressed areas where businesses qualify for property and corporate business tax incentives if they improve property and create jobs. The law specifies a process for evaluating the zones that includes deadlines for submitting data and evaluation reports. The bill extends these deadlines.

Current law requires all businesses in the zones, regardless of whether they qualify for the tax incentives, to report specified information to their host municipalities every five years, beginning July 1, 2011. The bill limits the requirement to those businesses certified to receive the incentives and pushes back the reporting deadline to November 1, 2011.

Current law requires municipalities to submit performance reports to the DECD commissioner every five years, beginning July 1 2011. The bill pushes back this deadline to October 1, 2011. The reports must measure the extent to which the zones achieve their goals.

The law requires the commissioner to submit two consecutive reports to the legislature evaluating the enterprise zones and, with respect to the second report, recommending whether the enterprise zone designation should be removed from any area that has not met its goals. The bill pushes back the deadline for the first report from February 1, 2011 to February 1, 2012. It does not change the second report's deadline, which is January 1, 2013.

The law requires the DECD commissioner to prepare a five-year strategic plan addressing a wide range of issues including, the factors, issues, and forces that impede economic development. The first plan is due July 1, 2009. The bill requires her to include in the plan a review and evaluation of several programs providing incentives to businesses in designated areas. The programs are:

1. Urban Jobs, which provides grants to businesses in state-designated distressed municipalities;

2. Enterprise Zones, which provides property and corporate tax incentives for improving property and creating jobs; and

3. those programs providing enterprise zone benefits to other targeted areas, including railroad depots, entertainment districts, and enterprise corridors.

The review and evaluation must also include the incentives given to attract businesses to closed military bases and manufacturing plants in municipalities contiguous to those with enterprise zones.

The bill updates a reference to a manual used to determine if projects qualify for regional infrastructure grants. (The legislature has not funded the program since 1993. ) Under current law, the commissioner must determine if a project creates manufacturing jobs based on the Standard Industrial Classification System, which the federal government devised in the 1930s to classify different types of manufacturing industries. The bill substitutes the North American Industrial Classification System, which the federal government devised in cooperation with Canada and Mexico to implement the North American Free Trade Agreement.

The bill requires DECD to incorporate in its annual report two separate reports on the energy programs it administers. It also changes several reporting requirements. It eliminates the requirement that DECD prepare the report on the Biodiesel Distributors Grant Program in consultation with the entity DECD selected to run the program. It also eliminates the requirement that it submit the report to the Environment and Energy and Technology Committees.

The bill eliminates a reporting requirement that applies if DECD selects an entity to administer the Fuel Diversification Program. Under current law, the entity must submit annual reports to the commissioner about the program.

The law requires municipalities to grant two types of property tax exemptions to taxpayers in enterprise zones who improve their properties. They must exempt 80% of the assessed value of newly constructed or improved factories, warehouses, banks, and other specified property for five years. The state reimburses municipalities for this revenue loss.

Municipalities must also exempt a portion of the assessed value of other types of property, but under a different schedule. Homes, apartments, stores, offices, and other types of property ineligible for the five-year, 80% exemption, qualify for a seven-year exemption. The exemption is 100% of the improvement's assessed value in the first two years, drops to 50% in the third, and declines by 10% per year in each of the remaining four years. The state does not reimburse municipalities for this revenue loss.

HUD annually determines median family income for metropolitan and nonmetropolitan areas based on census data. It uses this data to determine whether someone is eligible for housing or housing assistance under many different programs.

sHB 6097 (File 314) also allows mills and other brownfields to be redeveloped in floodplains without having to obtain an exemption under similar criteria. The development can occur if:

1. it renovates an existing structure,

2. constructs a new structure on the site of the old one and the new structure's footprint does not exceed the former's structure historic footprint,

3. residential living space is above the 500-year flood elevations, and

4. the renovation complies with the National Flood Insurance Program.

Under sSB 887, the project must meet these criteria and comply with Department of Environmental Protection cleanup requirements.

Yea

Nay

(03/17/2009)