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Connecticut Public Acts 1996

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Substitute House Bill No. 5756

PUBLIC ACT NO. 96-260*

*(Vetoed June 13, 1996. Veto sustained June 24, 1996.)

AN ACT CONCERNING REFORM AND SIMPLIFICATION OF CORPORATION BUSINESS TAX CREDITS.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. (NEW) (a) For purposes of chapter 208 of the general statutes, "fixed capital" means tangible personal property which (1) has a class life, in years, of more than four years, as described in Section 168(e) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, (2) is acquired by purchase from a person other than a related person, (3) is not acquired to be leased, and is not leased, to another person or persons during the twelve full months following its acquisition, and (4) will be held and used in this state by a corporation in the ordinary course of the corporation's trade or business in this state for not less than twelve full months following its acquisition. "Fixed capital" does not include inventory, land, buildings or structures, or mobile transportation property. With respect to a corporation claiming a credit under this section, a "related person" means a corporation, partnership, association or trust controlled by such corporation; an individual, corporation, partnership, association or trust that is in control of such corporation; a corporation, partnership, association or trust controlled by an individual, corporation, partnership, association or trust that is in control of such corporation; or a member of the same controlled group as such corporation. For purposes of this section, "control", with respect to a corporation, means ownership, directly or indirectly, of stock possessing fifty per cent or more of the total combined voting power of all classes of the stock of such corporation entitled to vote; with respect to a trust, means ownership, directly or indirectly, of fifty per cent or more of the beneficial interest in the principal or income of such trust. The ownership of stock in a corporation, of a capital or profits interest in a partnership or association or of a beneficial interest in a trust shall be determined in accordance with the rules for constructive ownership of stock provided in Section 267(c) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, other than Paragraph (3) of such section.

(b) There shall be allowed a credit for any corporation against the tax imposed under chapter 208 of the general statutes in an amount paid or incurred by such corporation for any new fixed capital investment during the income year in which such fixed capital is acquired as follows: For any income year commencing on or after January 1, 1998, and prior to January 1, 1999, equal to three per cent of such amount paid or incurred by the corporation during such income year; for any income year commencing on or after January 1, 1999, and prior to January 1, 2000, equal to four per cent of such amount paid or incurred by the corporation during such income year; and for any income year commencing on or after January 1, 2000, and prior to January 1, 2003, equal to five per cent of such amount paid or incurred by the corporation during such income year.

(c) The amount of such credit allowed to any corporation under this section shall not exceed the amount of tax due from such corporation under chapter 208 of the general statutes with respect to such income year or twenty thousand dollars, whichever is less.

(d) No corporation claiming the credit under this section with respect to the acquisition of electronic data processing equipment, as defined in section 12-217t of the general statutes, may claim a credit under said section 12-217t against any tax with respect to the same acquisition.

(e) Any tax credit not used in the income year during which the acquisition was made may be carried forward for the five immediately succeeding income years until the full credit has been allowed.

(f) If the fixed capital on account of which a corporation has claimed the credit allowed by this section is not held and used in this state in the ordinary course of the corporation's trade or business in this state for three full years following its acquisition as provided in subsection (a) of this section, the corporation shall recapture one hundred per cent of the amount of the credit allowed under this section on its corporation business tax return required to be filed for the immediately succeeding income year. If the fixed capital on account of which a corporation has claimed the credit allowed by this section is not held and used in this state in the ordinary course of the corporation's trade or business in this state for five full years following its acquisition as provided in subsection (a) of this section, the corporation shall recapture fifty per cent of the amount of the credit allowed under this section on its corporation business tax return required to be filed for the immediately succeeding income year.

Sec. 2. (NEW) (a) For purposes of chapter 208 of the general statutes, "human capital investment" means the amount paid or incurred by a corporation on (1) job training which occurs in this state for persons who are employed in this state; (2) work education programs in this state including, but not limited to, programs in public high schools and work education-diversified occupations programs in this state; (3) apprenticeship training programs in this state for apprentices who are employed in this state; (4) worker training for persons who are employed in this state provided by institutions of higher education in this state; (5) donations or capital contributions to institutions of higher education in this state for improvements or advancements of technology, including physical plant improvements; (6) planning, site preparation, construction, renovation or acquisition of facilities in this state for the purpose of establishing a day care facility in this state to be used primarily by the children of employees who are employed in this state; and (7) subsidies to employees who are employed in this state for child care to be provided in this state.

(b) There shall be allowed a credit for any corporation against the tax imposed under chapter 208 of the general statutes in an amount spent by such corporation, as a human capital investment as follows: For any income year commencing on or after January 1, 1998, and prior to January 1, 1999, equal to three per cent of such amount paid or incurred by the corporation during such income year; for any income year commencing on or after January 1, 1999, and prior to January 1, 2000, equal to four per cent of such amount paid or incurred by the corporation during such income year; and for any income year commencing on or after January 1, 2000, and prior to January 1, 2003, equal to five per cent of such amount paid or incurred by the corporation during such income year.

(c) The amount of credit allowed to any corporation under this section shall not exceed the amount of tax due from such corporation under chapter 208 of the general statutes with respect to such income year or twenty thousand dollars, whichever is less.

(d) No corporation claiming the credit under this section with respect to human capital investment shall claim a credit under chapter 228a of the general statutes against any tax with respect to the same investment.

(e) Any tax credit not used in the income year during which the investment was made may be carried forward for the five immediately succeeding income years until the full credit has been allowed.

Sec. 3. Section 12-213 of the general statutes, as amended by section 3 of public act 95-2, is repealed and the following is substituted in lieu thereof:

When used in this part, unless the context otherwise requires, "taxpayer" and "company" mean any corporation, foreign municipal electric utility, as defined in section 12-59, joint stock company or association or any fiduciary thereof but not a municipal utility as defined in chapter 212 and chapter 212a, and any dissolved corporation which continues to conduct business; "dissolved corporation" means any company which has terminated its corporate existence by resolution, expiration, decree or forfeiture; "Commissioner of Revenue Services" or "commissioner" means the Commissioner of Revenue Services; "tax year" means the calendar year in which the tax is payable; "income year" means the calendar year upon the basis of which net income is computed under this part, unless a fiscal year other than the calendar year has been established for the purpose of the federal corporation net income tax, in which case it means the fiscal year so established or a period of less than twelve months ending as of the date on which liability under this chapter ceases to accrue by reason of dissolution, forfeiture, withdrawal, merger or consolidation; "fiscal year" means the income year ending on the last day of any month other than December or an annual period which varies from fifty-two to fifty-three weeks elected by the taxpayer in accordance with the provisions of the Internal Revenue Code; "paid" means "paid or accrued" or "paid or incurred", construed according to the method of accounting upon the basis of which net income is computed under this part; "received" means "received" or "accrued", construed according to the method of accounting upon the basis of which net income is computed under this part; "gross income" means gross income as defined in the federal corporation net income tax law in force on the last day of the income year and, in addition, means any interest or exempt interest dividends as defined in Section 852(b)(5) of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, received or interest paid by the taxpayer or losses of other calendar or fiscal years, retroactive to include all calendar or fiscal years beginning after January 1, 1935, incurred by the taxpayer which are excluded from gross income for purposes of assessing the federal corporation net income tax, and in addition, notwithstanding any other provision of law, means interest or exempt interest dividends as defined in said Section 852(b)(5) of the Internal Revenue Code of 1986, accrued on or after the application date, with respect to any obligation issued by or on behalf of the state, its agencies, authorities, commissions and other instrumentalities, or by or on behalf of its political subdivisions and their agencies, authorities, commissions and other instrumentalities; but "gross income" shall not include [(1)] the amount which for federal income tax purposes is treated as a dividend received by a domestic United States corporation from a foreign corporation on account of foreign taxes deemed paid by such domestic corporation, when such domestic corporation elects the foreign tax credit for federal income tax purposes [and (2) the amount of net gain to any taxpayer, engaged in the business of farming in Connecticut, from the sale or exchange of any cattle raised from birth on a farm in this state operated by such taxpayer, provided not less than seventy-five per cent of such taxpayer's gross income is derived from farming;] "net income" means net earnings received during the income year and available for contributors of capital, whether they are creditors or stockholders, computed by subtracting from gross income the deductions allowed by the terms of section 12-217, except that in the case of a domestic insurance company which is a life insurance company "net income" means life insurance company taxable income (a) increased by any amount or amounts which have been deducted in the computation of gain or loss from operations in respect of (1) the life insurance company's share of tax-exempt interest, (2) operations loss carry-backs and capital loss carry-backs and (3) operations loss carry-overs and capital loss carry-overs arising in any taxable year commencing prior to January 1, 1973, and (b) reduced by any amount or amounts which have been deducted as operations loss carry-backs or capital loss carry-backs in the computation of gain or loss from operations for any taxable year commencing on or after January 1, 1973, but only to the extent that such amount or amounts, would, for federal tax purposes, have been deductible in the taxable year as operations loss carry-overs or capital loss carry-overs if they had not been deducted in a previous taxable year as carry-backs; for purposes of the preceding exception the terms "life insurance company", "life insurance company taxable income", "life insurance company's share", "operations loss carry-back", "capital loss carry-back", "operations loss carry-over", "capital loss carry-over" and "gain or loss from operations" have the same meaning as they have in the federal corporation income tax law effective and in force on the last day of the income year; "fiduciary" means any receiver, liquidator, referee, trustee, assignee or other fiduciary or officer or agent appointed by any court or by any other authority, except the Commissioner of Banking acting as receiver or liquidator under the authority of the provisions of sections 36a-210 AS AMENDED and 36a-218 to 36a-239, inclusive AS AMENDED; "carrying on or doing business" means and includes each and every act, power or privilege exercised or enjoyed in this state, as an incident to, or by virtue of, the powers and privileges acquired by the nature of any organization whether the form of existence is corporate, associate, joint stock company or fiduciary; "interest paid" means and includes, in the case of state banks and trust companies, national banks, mutual savings banks, cooperative banks, savings and loan associations, amounts paid to, or credited to the accounts of, depositors or holders of accounts as dividends on their deposits or withdrawable accounts, if such amounts paid or credited are withdrawable on demand subject only to customary notice of intention to withdraw; "alternative energy system" means design systems, equipment or materials which utilize as their energy source: (1) Solar, (2) wind, (3) water or (4) biomass energy in providing space heating or cooling, water heating or generation of electricity, but shall not include wood-burning stoves; "S corporation" means any corporation which is an S corporation for federal income tax purposes.

Sec. 4. Section 12-214 of the general statutes, as amended by section 32 of public act 95-160, is repealed and the following is substituted in lieu thereof:

(a) Every mutual savings bank, savings and loan association and every company engaged in the business of carrying passengers for hire over the highways of this state in common carrier motor vehicles doing business in this state, and every other company carrying on, or having the right to carry on, business in this state, including a dissolved corporation which continues to conduct business, except (1) as to income years beginning prior to January 1, 1973, insurance companies, and as to income years beginning on or after January 1, 1973, insurance companies incorporated or organized under the laws of any other state or foreign government, (2) companies exempt by the federal corporation net income tax law, and any company which qualifies as a Domestic International Sales Corporation (DISC) as defined in Section 992 of the Internal Revenue Code of 1986, or any subsequent corresponding internal revenue code of the United States, as from time to time amended, and as to which a valid election under Subsection (b) of said Section 992 to be treated as a DISC is effective, but excluding companies, other than any company which so qualifies as, and so elects to be treated as, a DISC, which elect not to be subject to such tax under any provision of said Internal Revenue Code other than said Subsection (b) of said Section 992, (3) companies subject to gross earnings taxes under chapter 210, (4) companies all of whose properties in this state are operated by companies subject to gross earnings taxes under chapter 210, (5) cooperative housing corporations, as defined for federal income tax purposes, AND (6) any organization or association of two or more persons established and operated for the exclusive purpose of promoting the success or defeat of any candidate for public office or of any political party or question or constitutional amendment to be voted upon at any state or national election or for any other political purpose, [(7) any company which is not owned or controlled, directly or indirectly, by any other company, the gross annual revenues of which in the most recently completed year did not exceed one hundred million dollars and which engaged in the research, design, manufacture, sale or installation of alternative energy systems or motor vehicles powered in whole or in part by electricity, natural gas or solar energy including their parts and components, provided at least seventy-five per cent of the gross annual revenues of such company are derived from such research, design, manufacture, sale or installation and (8) any company which engages in the research, design, manufacture or sale in Connecticut of aero-derived gas turbine systems in advanced industrial applications, which applications are developed after October 1, 1992, which are limited to simple-cycle systems, humid air, steam or water injection, recuperation or intercooling technologies, including their parts and components, to the extent that such company's net income is directly attributable to such purposes,] shall pay, annually, a tax or excise upon its franchise for the privilege of carrying on or doing business, owning or leasing property within the state in a corporate capacity or as an unincorporated association taxable as a corporation for federal income tax purposes or maintaining an office within the state, such tax to be measured by the entire net income as herein defined received by such corporation or association from business transacted within the state during the income year and to be assessed for each income year commencing prior to January 1, 1995, at the rate of eleven and one-half per cent, for income years commencing on or after January 1, 1995, and prior to January 1, 1996, at the rate of eleven and one-quarter per cent, for income years commencing on or after January 1, 1996, and prior to January 1, 1997, at the rate of ten and three-fourths per cent, for income years commencing on or after January 1, 1997, and prior to January 1, 1998, at the rate of ten and one-half per cent, for income years commencing on or after January 1, 1998, and prior to January 1, 1999, at the rate of nine per cent and one-half per cent, for income years commencing on or after January 1, 1999, and prior to January 1, 2000, at the rate of eight and one-half per cent, and for income years commencing on or after January 1, 2000, at the rate of seven and one-half per cent. [The exemption of companies included in subdivisions (7) and (8) of this section shall not be allowed with respect to any income year of any such company commencing on or after January 1, 1998, and any such company claiming such exemption for any income years commencing on or after January 1, 1985, but prior to January 1, 1998, shall be required to file a corporation business tax return in accordance with section 12-222 for each such income year.]

(b) (1) With respect to income years commencing on or after January 1, 1989, and prior to January 1, 1992, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, for each such income year, an additional tax in an amount equal to twenty per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter. (2) With respect to income years commencing on or after January 1, 1992, and prior to January 1, 1993, any company subject to the tax imposed in accordance with subsection (a) of this section shall pay, for each such income year, an additional tax in an amount equal to ten per cent of the tax calculated under said subsection (a) for such income year, without reduction of the tax so calculated by the amount of any credit against such tax. The additional amount of tax determined under this subsection for any income year shall constitute a part of the tax imposed by the provisions of said subsection (a) and shall become due and be paid, collected and enforced as provided in this chapter.

Sec. 5. Section 12-217p of the general statutes is repealed and the following is substituted in lieu thereof:

(a) As used in this section, "business firm" means any business entity authorized to do business in this state and subject to the corporation business tax imposed under this chapter, or any insurance company, hospital or medical services corporation subject to the insurance companies, hospital and medical services corporations tax imposed under chapter 207, any air carrier subject to the air carriers tax imposed under chapter 209, or any railroad company subject to the railroad companies tax imposed under chapter 210, or any regulated telecommunications service, express, telegraph, cable or community antenna television company subject to the regulated telecommunications service, express, telegraph, cable and community antenna television companies tax imposed under chapter 211, or any telecommunications service company subject to the telecommunications service company tax imposed under chapter 210a, or any utility company subject to the utility companies tax imposed under chapter 212 or any public service company subject to the public service companies tax imposed under chapter 212a.

(b) There shall be allowed as a credit against the tax imposed by this chapter or chapter 207, 209, 210, 210a, 211, 212 or 212a in any income year COMMENCING PRIOR TO JANUARY 1, 2003, an amount equal to SIXTY PER CENT OF the amount paid by a business firm into a revolving loan fund established to provide loans for housing located in the state for low and moderate income employees of the business firm or any subsidiary thereof. Loans from any such fund shall be spent in this state and used for (1) the cost of housing that is to be a principal residence and falls within one hundred fifty per cent of the price guidelines established for programs administered by the Connecticut Housing Finance Authority, including costs for down payments, mortgage interest rate buy-downs, closing costs and other costs determined to be eligible under written procedures adopted by the Connecticut Housing Finance Authority under subsection (c) of this section and (2) payments for security deposits and advance payments for rental housing.

(c) The Connecticut Housing Finance Authority shall adopt written procedures in accordance with the provisions of section 1-121 for establishment and operation of employer revolving loan funds eligible for the credit provided in this section. Such procedures shall (1) include provisions for employee eligibility [and shall] (2) specify expenses for which loans may be made and (3) provide the documentation and procedures necessary for a business firm to qualify for the tax credit.

(d) Any business firm claiming the credit allowed by this section shall submit documentation to the Commissioner of Revenue Services that the revolving loan fund complies with written procedures for revolving loan funds established by the Connecticut Housing Finance Authority under subsection (c) of this section.

(e) Nothing in this section shall be construed to prevent two or more business firms from participating jointly in one or more programs under the provisions of this section. Such joint programs shall be submitted, and acted upon, as a single program by the business firms involved.

(f) Any business firm which desires to apply for the credit allowed by this section shall submit the documentation required under subsection (d) of this section to the authority on or before November first of each year. The authority shall randomly select from among all qualified business firms, those firms allowed said credit for the succeeding tax year. The sum of all tax credit granted pursuant to the provisions of this section shall not exceed one hundred thousand dollars annually per business firm. In no event shall the total amount of all tax credits allowed to all business firms pursuant to the provisions of this section exceed one million dollars in any one fiscal year.

(g) No tax credit shall be granted to any bank, bank and trust company, insurance company, trust company, national bank, savings association, or building and loan association or any other business entity for activities that are a part of its normal course of business.

(h) Any tax credit not used in the period during which the investment was made may be carried forward or backward for the five immediately succeeding or preceding calendar or fiscal years until the full credit has been allowed.

Sec. 6. Section 12-217s of the general statutes, as amended by section 34 of public act 95-160 and section 14 of public act 95-325, is repealed and the following is substituted in lieu thereof:

There shall be allowed as a credit against the tax imposed on any corporation under this chapter, except corporations employing fewer than one hundred employees, with respect to any taxable year of such corporation commencing on or after January 1, 1997, AND PRIOR TO JANUARY 1, 2000, an amount equal to fifty per cent of the amount spent by such corporation, on or after January 1, 1995, for the direct costs of transportation management programs and services related thereto instituted by such corporation in response to the provisions of sections 13b-38o to 13b-38y, inclusive, AS AMENDED not to exceed two hundred fifty dollars annually per employee participating in alternative means of commuting pursuant to transportation management programs. The total amount of credits available under the provisions of this section shall not exceed one million five hundred thousand dollars. The Department of Transportation shall adopt regulations in accordance with the provisions of chapter 54 which shall include, but not be limited to, establishing procedures for a corporation to obtain and qualify for the tax credit.

Sec. 7. Section 8-395 of the general statutes, as amended by sections 1 and 23 of public act 95-250 and section 11 of public act 95-309, is repealed and the following is substituted in lieu thereof:

(a) As used in this section, "business firm" means any business entity authorized to do business in the state and subject to the corporation business tax imposed under chapter 208, or any insurance company, hospital or medical services corporation subject to the insurance companies, hospital and medical services corporations tax imposed under chapter 207, or any air carrier subject to the air carriers tax imposed under chapter 209, or any railroad company subject to the railroad companies tax imposed under chapter 210, or any regulated telecommunications service, express, telegraph, cable, or community antenna television company subject to the regulated telecommunications service, express, telegraph, cable, and community antenna television companies tax imposed under chapter 211, or any utility company subject to the utility companies tax imposed under chapter 212, or any public service company subject to the public service companies tax imposed under chapter 212a.

(b) The Commissioner of Revenue Services shall grant a credit against any tax due IN ANY INCOME YEAR COMMENCING PRIOR TO JANUARY 1, 2003, under the provisions of chapter 207, 208, 209, 210, 211, 212 or 212a in an amount equal to the amount specified by the Connecticut Housing Finance Authority in any tax credit voucher issued by said authority pursuant to subsection (c) of this section.

(c) The Connecticut Housing Finance Authority shall administer a system of tax credit vouchers within the resources, requirements and purposes of this section, for business firms making contributions to housing programs developed, sponsored or managed by a nonprofit corporation, as defined in subsection (w) of section 8-39, which benefit low and moderate income persons or families which have been approved prior to the date of any such contribution by the authority. Such vouchers may be used as a credit against any of the taxes to which such business firm is subject and which are enumerated in subsection (b) of this section. TO BE ELIGIBLE FOR APPROVAL A HOUSING PROGRAM SHALL BE SCHEDULED FOR COMPLETION NOT MORE THAN THREE YEARS FROM THE DATE OR APPROVAL. EACH PROGRAM SHALL SUBMIT TO THE AUTHORITY QUARTERLY PROGRESS REPORTS AND A FINAL REPORT UPON COMPLETION, IN A MANNER AND FORM PRESCRIBED BY THE AUTHORITY. IF A PROGRAM FAILS TO BE COMPLETED AFTER THREE YEARS, OR AT ANY TIME THE AUTHORITY DETERMINES THAT A PROGRAM IS UNLIKELY TO BE COMPLETED, THE AUTHORITY MAY RECLAIM ANY REMAINING FUNDS CONTRIBUTED BY BUSINESS FIRMS AND REALLOCATE SUCH FUNDS TO ANOTHER ELIGIBLE PROGRAM.

(d) No business firm shall receive a credit pursuant to both this section and chapter 228a in relation to the same contribution.

(e) Nothing in this section shall be construed to prevent two or more business firms from participating jointly in one or more programs under the provisions of this section. Such joint programs shall be submitted, and acted upon, as a single program by the business firms involved.

(f) The sum of all tax credit granted pursuant to the provisions of this section shall not exceed fifty thousand dollars annually per business firm and no tax credit shall be granted to any business firm for any individual amount contributed of less than two hundred fifty dollars.

(g) No tax credit shall be granted to any bank, bank and trust company, insurance company, trust company, national bank, savings association, or building and loan association or any other business entity for activities that are a part of its normal course of business.

(h) Any tax credit not used in the period during which the contribution was made may be carried forward or backward for the five immediately succeeding or preceding calendar or fiscal years until the full credit has been allowed.

(i) In no event shall the total amount of all tax credits allowed to all business firms pursuant to the provisions of this section exceed one million dollars in any one fiscal year.

(j) No tax credit shall be granted to any business firm unless such firm furnishes proof to the Commissioner of Revenue Services that the amount of funds expended for contributions for the support of housing programs by such business firm is not less in the year for which such credit is sought than the amount expended in the year immediately preceding the year for which such credit is sought.

(k) No organization conducting a housing program or programs eligible for funding with respect to which tax credits may be allowed under this section shall be allowed to receive an aggregate amount of such funding for any such program or programs in excess of three hundred thousand dollars for any fiscal year.

(l) Nothing in this section shall be construed to prevent a business firm from making any contribution to a housing program to which tax credits may be applied which contribution may result in the business firm having a limited equity interest in the program.

(m) The Connecticut Housing Finance Authority, with the approval of the Commissioner of Revenue Services, shall adopt written procedures in accordance with section [1-21] 1-121 to implement the provisions of this section. Such procedures shall include provisions for issuing tax credit vouchers for contributions to housing programs based on a system of ranking housing programs. In establishing such ranking system, the authority shall consider the following: (1) The readiness of the project to be built; (2) use of the funds to build or rehabilitate a specific housing project or to capitalize a revolving loan fund providing low-cost loans for housing construction, repair or rehabilitation to benefit persons of very low, low and moderate income; (3) the extent the project will benefit families at or below twenty-five per cent of the area median income and families with incomes between twenty-five per cent and fifty per cent of the area median income, as defined by the United States Department of Housing and Urban Development; (4) evidence of the general administrative capability of the nonprofit corporation to build or rehabilitate housing [,and] (5) evidence that any funds received by the nonprofit corporation for which a voucher was issued were used to accomplish the goals set forth in the application(6) USE OF THE FUNDS TO PROVIDE HOUSING OPPORTUNITIES IN URBAN AREAS AND THE IMPACT OF SUCH FUNDS ON NEIGHBORHOOD REVITALIZATION; AND (7) THE EXTENT TO WHICH TAX CREDIT FUNDS ARE LEVERAGED BY OTHER FUNDS.

(n) Vouchers issued or reserved by the Department of Housing under the provisions of this section prior to July 1, 1995, shall be valid on and after July 1, 1995, to the same extent as they would be valid under the provisions of this section in effect on June 30, 1995.

(o) On or before October 1, 1995, the authority shall adopt written procedures, in accordance with section 1-121, to implement the provisions of this section.

Sec. 8. Section 12-633 of the general statutes, as amended by section 4 of public act 95-268, is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services shall grant a credit against any tax due IN ANY TAXABLE YEAR COMMENCING PRIOR TO JANUARY 1, 2003, under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed forty per cent of the total cash amount invested during the taxable year by the business firm in programs operated or created pursuant to proposals approved pursuant to section 12-632, provided a tax credit not to exceed sixty per cent may be allowed for investment in certain energy conservation and employment and training projects as provided in section 12-635.

Sec. 9. Section 12-634 of the general statutes, as amended by sections 12 and 21 of public act 95-257 and section 5 of public act 95-268, is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services shall grant a credit against any tax due IN ANY TAXABLE YEAR COMMENCING PRIOR TO JANUARY 1, 2003, under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed forty per cent of the total cash amount invested during the taxable year by the business firm in programs operated or created pursuant to proposals approved pursuant to section 12-632 for planning, site preparation, construction, renovation or acquisition of facilities for purposes of establishing a child day care facility to be used primarily by the children of such business firm's employees and equipment installed for such facility, including kitchen appliances, to the extent that such equipment or appliances are necessary in the use of such facility for purposes of child day care, provided: (1) Such facility is operated under the authority of a license issued by the Commissioner of Public Health in accordance with sections 19a-77 to 19a-87, inclusive, (2) such facility is operated without profit by such business firm related to any charges imposed for the use of such facility for purposes of child day care, and (3) the amount of tax credit allowed any business firm under the provisions of this section for any income year may not exceed ten thousand dollars. If two or more business firms share in the cost of establishing such a facility for the children of their employees, each such taxpayer shall be allowed such credit in relation to the respective share, paid or incurred by such taxpayer, of the total expenditures for the facility in such income year. The commissioner shall not grant a credit pursuant to this section to any taxpayer claiming a credit for the same year pursuant to subsection (c) of section 17b-743.

Sec. 10. Section 12-635 of the general statutes, as amended by section 7 of public act 95-268, is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services shall grant a credit against any tax due IN ANY TAXABLE YEAR COMMENCING PRIOR TO JANUARY 1, 2003, under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed sixty per cent of the total cash amount invested during the taxable year by the business firm in programs operated or created pursuant to proposals approved pursuant to section 12-632 for energy conservation projects directed toward properties occupied by persons, at least seventy-five per cent of whom are at an income level not exceeding one hundred fifty per cent of the poverty level for the year next preceding the year during which such tax credit is to be granted, or at properties occupied by charitable corporations, foundations, trusts or other entities as determined under regulations adopted pursuant to this chapter; in employment and training programs directed at youth, at least seventy-five per cent of whom are at an income level not exceeding one hundred fifty per cent of the poverty level for the year next preceding the year during which such tax credit is to be granted; in employment and training programs directed at handicapped persons as determined under regulations adopted pursuant to this chapter; in employment and training programs for unemployed workers who are fifty years of age or older or in education and employment training programs for recipients in the aid to families with dependent children program. Any other program which serves persons at least seventy-five per cent of whom are at an income level not exceeding one hundred fifty per cent of the poverty level for the year next preceding the year during which such tax credit is to be granted and which meets the standards for eligibility under this chapter shall be eligible for tax credit under this section.

Sec. 11. Section 12-635a of the general statutes, as amended by section 6 of public act 95-268, is repealed and the following is substituted in lieu thereof:

The Commissioner of Revenue Services shall grant a credit against any tax due IN ANY TAXABLE YEAR COMMENCING PRIOR TO JANUARY 1, 2003, under the provisions of chapter 207, 208, 209, 210, 211 or 212 in an amount not to exceed forty per cent of the total cash amount invested during the taxable year by the business firm in community-based alcoholism prevention or treatment programs operated or created pursuant to proposals approved pursuant to section 12-632.

Sec. 12. Subsection (k) of section 12-217u of the general statutes, as amended by section 28 of public act 95-79, section 4 of public act 95-129 and section 1 of public act 95-250, is repealed and the following is substituted in lieu thereof:

(k) No taxpayer claiming the credit under this section is eligible for the credit allowed under section [12-217m] 1 OF THIS ACT.

Sec. 13. Section 19a-80e of the general statutes is repealed and the following is substituted in lieu thereof:

Each child day care center and group day care home, as defined in section 19a-77, AS AMENDED that is funded by the state pursuant to section 8-210, AS AMENDED 17b-737, AS AMENDED [17b-740, 17b-741] or 17b-752 shall provide for parents' participation in setting goals for and evaluating the progress of their children.

Sec. 14. Section 22a-9 of the general statutes is repealed and the following is substituted in lieu thereof:

The commissioner shall act as the official agent of the state in all matters affecting the purposes of this title and sections 2-20a, AS AMENDED 5-238a, subsection (c) of section 7-131a, AS AMENDED sections 7-131e, 7-131f, subsection (a) of section 7-131g, AS AMENDED sections 7-131i, 7-131l, subsection (a) of section 10-321, AS AMENDED subdivisions (51) and (52) of section 12-81, [sections 12-217c, 12-217d, 12-252a, 12-252b, 12-258b, 12-258i, 12-265b, 12-265c,] subsections (21) and (22) of section 12-412, subsections (a) and (b) of section 13a-94, AS AMENDED sections 13a-142a, 13b-56, 13b-57, 14-100b, 14-164c, chapter 268, sections 16a-103, AS AMENDED22-91c, 22-91e, subsections (b) and (c) of section 22a-148, section 22a-150, subdivisions (2) and (3) of section 22a-151, sections 22a-153, 22a-154, 22a-155, 22a-156, 22a-158, chapter 446c, sections 22a-295, AS AMENDED 22a-300, AS AMENDED 22a-308, AS AMENDED 22a-416, AS AMENDED chapters 446h to 446k, inclusive, chapters 447 and 448, sections 23-35, 23-37a, 23-41, chapter 462, section 25-34, AS AMENDED chapter 477, section 25-127, subsection (b) of section 25-128, AS AMENDED subsection (a) of section 25-131, chapters 490 and 491 and sections 26-257, 26-297, 26-303 and 47-46a, under any federal laws now or hereafter to be enacted and as the official agent of any municipality, district, region or authority or other recognized legal entity in connection with the grant or advance of any federal or other funds or credits to the state or through the state, to its political subdivisions.

Sec. 15. Section 32-9o of the general statutes is repealed and the following is substituted in lieu thereof:

It is hereby found and declared as a matter of legislative determination that: (a) There is a serious need for the investment of private capital in business enterprises located in municipalities experiencing conditions of high unemployment, poverty, aging housing stock and low or declining rates of growth in job creation, population and per capita income; (b) high property tax rates and the unavailability or high cost of credit to business organizations have discouraged industrial activity in such municipalities and perpetuated prevailing patterns of economic and social stress; (c) private capital investment in the construction, renovation and expansion of manufacturing and other industrial facilities will best contribute to increasing employment and an expanding tax base in such municipalities and the development of a more productive and balanced economy in the state; and (d) the tax, grant and other financial incentives provided by subdivisions (59) and (60) of section 12-81 and sections [12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p to encourage such private investment are important and necessary applications of the resources of the state in the exercise of its responsibility to preserve and foster the health, safety and general welfare of the state and its people. Accordingly the necessity, in the public interest and for the public benefit and good, of the provisions under said sections is hereby declared as a matter of legislative determination.

Sec. 16. Section 32-9p of the general statutes, as amended by section 1 of public act 95-250, is repealed and the following is substituted in lieu thereof:

As used in subdivisions (59) and (60) of section 12-81 and sections [12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p, the following words and terms have the following meanings:

(a) "Area of high unemployment" means, as of the date of any final and official determination by the authority or the department to extend assistance under said sections, any municipality which is a distressed municipality as defined in subsection (b) of this section, and any other municipality in the state which in the calendar year preceding such determination had a rate of unemployment which exceeded one hundred ten per cent of the average rate of unemployment in the state for the same calendar year, as determined by the Labor Department, provided no such other municipality with an unemployment rate of less than six per cent shall be an area of high unemployment.

(b) "Distressed municipality" means, as of the date of the issuance of an eligibility certificate, any municipality in the state which, according to the United States Department of Housing and Urban Development meets the necessary number of quantitative physical and economic distress thresholds which are then applicable for eligibility for the urban development action grant program under the Housing and Community Development Act of 1977, as amended, or any town within which is located an unconsolidated city or borough which meets such distress thresholds. Any municipality which, at any time subsequent to July 1, 1978, has met such thresholds but which at any time thereafter fails to meet such thresholds, according to said department, shall be deemed to be a distressed municipality for a period of five years subsequent to the date of the determination that such municipality fails to meet such thresholds, unless such municipality elects to terminate its designation as a "distressed municipality", by vote of its legislative body, not later than September 1, 1985, or not later than three months after receiving notification from the commissioner that it no longer meets such thresholds, whichever is later. In the event a distressed municipality elects to terminate its designation, the municipality shall notify the commissioner and the Secretary of the Office of Policy and Management in writing within thirty days. In the event that the commissioner determines that amendatory federal legislation or administrative regulation has materially changed the distress thresholds thereby established, "distressed municipality" shall mean any municipality in the state which meets comparable thresholds of distress which are then applicable in the areas of high unemployment and poverty, aging housing stock and low or declining rates of growth in job creation, population and per capita income as established by the commissioner, consistent with the purposes of subdivisions (59) and (60) of section 12-81 and sections [12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p, in regulations adopted in accordance with chapter 54. For purposes of sections 32-9p to 32-9s, inclusive, AS AMENDED "distressed municipality" shall also mean any municipality adversely impacted by a major plant closing, relocation or layoff, provided the eligibility of a municipality shall not exceed two years from the date of such closing, relocation or layoff. The Commissioner of Economic and Community Development shall adopt regulations, in accordance with the provisions of chapter 54, which define what constitutes a "major plant closing, relocation or layoff" for purposes of sections 32-9p to 32-9s, inclusive AS AMENDED. "Distressed municipality" shall also mean the portion of any municipality which is eligible for designation as an enterprise zone pursuant to subdivision (2) of subsection (b) of section 32-70 AS AMENDED.

(c) "Eligibility certificate" means a certificate issued by the department pursuant to section 32-9r AS AMENDED evidencing its determination that a facility for which an application for assistance has been submitted qualifies as a manufacturing facility and is eligible for assistance under [section 12-217e and] subdivisions (59) and (60) of section 12-81. (d) "Manufacturing facility" means any plant, building, other real property improvement, or part thereof, (1) which (A) is constructed or substantially renovated or expanded on or after July 1, 1978, in a distressed municipality, a targeted investment community as defined in section 32-222, AS AMENDED or an enterprise zone designated pursuant to section 32-70, AS AMENDED or (B) is acquired on or after July 1, 1978, in a distressed municipality, a targeted investment community as defined in section 32-222, AS AMENDED or an enterprise zone designated pursuant to said section 32-70, AS AMENDED by a business organization which is unrelated to and unaffiliated with the seller, after having been idle for at least one year prior to its acquisition and regardless of its previous use; (2) which is to be used for the manufacturing, processing or assembling of raw materials, parts or manufactured products, for research and development facilities directly related to manufacturing, for the significant servicing, overhauling or rebuilding of machinery and equipment for industrial use, or, except as provided in this subsection, for the warehousing and distribution in bulk of manufactured products on other than a retail basis or, (i) if located in an enterprise zone designated pursuant to said section 32-70, AS AMENDED which is to be used by an establishment, an auxiliary or an operating unit of an establishment as such terms are defined in the Standard Industrial Classification Manual, in the categories of depository institutions, nondepository credit institutions, insurance carriers, holding or other investment offices, business services, health services, fishing, hunting and trapping, motor freight transportation and warehousing, water transportation, transportation by air, transportation services, security and commodity brokers, dealers, exchanges and services or engineering, accounting, research, management and related services from the Standard Industrial Classification Manual, which establishment, auxiliary or operating unit shows a strong performance in exporting goods and services, as defined by the commissioner through regulations adopted under chapter 54 or (ii) if located in a municipality with an entertainment district designated under section 32-76 AS AMENDED or established under section 2 of public act 93-311, is to be used in the production of entertainment products, including multimedia products, or as part of the airing, display or provision of live entertainment for stage or broadcast, including support services such as set manufacturers, scenery makers, sound and video equipment providers and manufacturers, stage and screen writers, providers of capital for the entertainment industry and agents for talent, writers, producers and music properties and technological infrastructure support including, but not limited to, fiber optics, necessary to support multimedia and other entertainment formats, except entertainment provided by or shown at a gambling or gaming facility or a facility whose primary business is the sale or serving of alcoholic beverages; and (3) for which the department has issued an eligibility certificate in accordance with section 32-9r AS AMENDED. In the case of facilities which are acquired, the department may waive the requirement of one year of idleness if it determines that, absent qualification as a manufacturing facility under subdivisions (59) and (60) of section 12-81, and sections [12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p, there is a high likelihood that the facility will remain idle for one year. In the case of facilities located in an enterprise zone designated pursuant to said section 32-70, AS AMENDED (i) the idleness requirement in subparagraph (B) of subdivision (1), for business organizations which over the six months preceding such acquisition have had an average total employment of between six and nineteen employees, inclusive, shall be reduced to a minimum of six months, and (ii) the idleness requirement shall not apply to business organizations with an average total employment of five or fewer employees, provided no more than one eligibility certificate shall be issued under this subparagraph (ii) for the same facility within a three-year period. Of those facilities which are for the warehousing and distribution of manufactured products on other than a retail basis, only those which are newly constructed or which represent an expansion of an existing facility qualify as manufacturing facilities. In the event that only a portion of a plant is acquired, constructed, renovated or expanded, only the portion acquired, constructed, renovated or expanded constitutes the manufacturing facility. A manufacturing facility which is leased may for the purposes of subdivisions (59) and (60) of section 12-81 and sections [12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p, be treated in the same manner as a facility which is acquired if the provisions of the lease serve to further the purposes of subdivisions (59) and (60) of section 12-81, and [sections 12-217e,] 32-9p to 32-9s, inclusive, AS AMENDED 32-23n and 32-23p and demonstrate a substantial, long-term commitment by the occupant to use the manufacturing facility, including a contract for lease for an initial minimum term of five years with provisions for the extension of the lease at the request of the lessee for an aggregate term which shall not be less than ten years, or the right of the lessee to purchase the facility at any time after the initial five-year term, or both. For a facility located in an enterprise zone designated pursuant to said section 32-70, AS AMENDED and occupied by a business organization with an average total employment of ten or fewer employees over the six-month period preceding acquisition, such contract for lease may be for an initial minimum term of three years with provisions for the extension of the lease at the request of the lessee for an aggregate term which shall not be less than six years, or the right of the lessee to purchase the facility at any time after the initial three-year term, or both, and may also include the right for the lessee to relocate to other space within the same enterprise zone, provided such space is under the same ownership or control as the originally leased space or if such space is not under such same ownership or control as the originally leased space, permission to relocate is granted by the lessor of such originally leased space, and such relocation shall not extend the duration of benefits granted under the original eligibility certificate. Except as provided in subparagraph (B) above, a manufacturing facility does not include any plant, building, other real property improvement, or part thereof used or usable for such purposes which existed before July 1, 1978.

(e) "Authority", "capital reserve fund bond", "commissioner", "department", "industrial project" and "insurance fund" shall have the meaning such words and terms are given in section 32-23d.

(f) "Municipality" means any town, city or borough in the state.

Sec. 17. Section 32-9r of the general statutes, as amended by section 11 of public act 95-334, is repealed and the following is substituted in lieu thereof:

(a) Any person may apply to the department for a determination as to whether the facility described in an application qualifies as a manufacturing facility. Applications for eligibility certificates are to be made on the forms and in the manner prescribed by the department. In evaluating each application the department may require the submission of all books, records, documents, drawings, specifications, certifications and other evidentiary items which it deems appropriate. No eligibility certificate shall be issued after March 1, 1991, for a manufacturing facility located in a distressed municipality which does not qualify as a targeted investment community unless the department has issued to the applicant a commitment letter for such facility prior to March 1, 1991. Notwithstanding the provisions of this subsection, an eligibility certificate may be issued by the department after March 1, 1991, for a qualified manufacturing facility acquired, constructed or substantially renovated in a distressed municipality provided the commissioner determines that such acquisition, construction or substantial renovation was initiated prior to March 1, 1991, and was legitimately induced by the prospect of assistance under [section 12-217e and] subdivisions (59) and (60) of section 12-81, respectively. The department may issue an eligibility certificate for a qualified manufacturing facility located in a targeted investment community upon determination by the commissioner (A) that the acquisition, construction or substantial renovation relating to the qualified manufacturing facility in such community was induced by the prospect of assistance under [section 12-217e and] subdivisions (59) and (60) of said section 12-81; and (B) the applicant demonstrates an economic need or there is an economic benefit to the state. The department shall issue an eligibility certificate if the commissioner determines (1) that the facility is located in an enterprise zone designated pursuant to section 32-70 AS AMENDED and is a qualified manufacturing facility or (2) that the facility is a plant, building, other real property improvement, or part thereof, which is located in a municipality with an entertainment district designated under section 32-76 AS AMENDED or established under section 2 of public act 93-311, and which qualifies as a "manufacturing facility" under subsection (d) of section 32-9p AS AMENDED in that it is to be used in the production of entertainment products, including multimedia products, or as part of the airing, display or provision of live entertainment for stage or broadcast, including support services such as set manufacturers, scenery makers, sound and video equipment providers and manufacturers, stage and screen writers, providers of capital for the entertainment industry and agents for talent, writers, producers and music properties and technological infrastructure support including, but not limited to, fiber optics, necessary to support multimedia and other entertainment formats, except entertainment provided by or shown at a gambling or gaming facility or a facility whose primary business is the sale or serving of alcoholic beverages.

(b) The department shall reach a determination as to the eligibility of a facility within a reasonable time period, but may postpone the determination to the extent required to verify to its satisfaction that there is a high likelihood that any proposed facility will actually be constructed, expanded, substantially renovated or acquired. Upon a favorable finding, the department shall issue to the applicant a certificate to the effect that the facility concerned is a manufacturing facility and is eligible for assistance under [section 12-217e and] subdivisions (59) and (60) of section 12-81.

(c) Upon an unfavorable determination the department shall issue a notice to the applicant to the effect that the facility concerned has been determined not to be a manufacturing facility, together with a statement in reasonable detail as to the reasons for the unfavorable determination. Any aggrieved applicant shall be afforded an opportunity for a public hearing on the matter within thirty days following issuance of the notice. The department shall reconsider the application based upon the information presented at the public hearing and reaffirm or change its earlier determination within ten days of the hearing.

(d) The decision of the department to issue an eligibility certificate or to deny an application for the issuance of an eligibility certificate either upon the expiration of thirty days without a public hearing following an initial unfavorable determination or upon any reconsideration of the application pursuant to subsection (c) of this section is conclusive and final as to the matters thereby decided, and chapter 54 shall not apply to the administrative determinations authorized to be made by this section.

(e) Any person who claims a benefit under [section 12-217e or] subdivisions (59) and (60) of section 12-81 shall notify the department of any change in fact or circumstance which may bear upon the continued qualification as a manufacturing facility for which an eligibility certificate has been issued. Upon receipt of such information or upon independent investigation, the department may revoke the eligibility certificate in the manner provided in subsection (c) of this section.

(f) The commissioner shall adopt regulations in accordance with chapter 54 to carry out the provisions of this section. Such regulations shall provide that establishments in the category of business services, as defined in the Standard Industrial Classification Manual, shall be eligible for a certificate if they are located in an enterprise zone.

Sec. 18. Subsection (e) of section 32-56 of the general statutes is repealed and the following is substituted in lieu thereof:

(e) Any business facility located in a municipality declared by the commissioner to be severely impacted by a prime defense contract cutback pursuant to subsection (c) of this section, which facility would be a "manufacturing facility", as defined in subsection (d) of section 32-9p, AS AMENDED but for the fact that the facility is not in a "distressed municipality", as defined in subsection (b) of section 32-9p, AS AMENDED will be deemed a manufacturing facility for the purposes of sections 32-9p to 32-9s, inclusive, AS AMENDED [section 12-217e,] and subdivisions (59) and (60) of section 12-81, if the purpose of the construction, expansion, renovation or acquisition of such facility is not dependent on prime defense contracts or related subcontracts.

Sec. 19. Section 32-340 of the general statutes is repealed and the following is substituted in lieu thereof:

Sections 32-340 to 32-346, inclusive, AS AMENDEDand [sections 12-3f and 12-217o] SECTION 12-3f, AS AMENDED shall be known and may be cited as the "Small Business Financial Recovery Act of 1993".

Sec. 20. Subsection (m) of section 38a-88a of the general statutes, as amended by section 2 of public act 95-303, is repealed and the following is substituted in lieu thereof:

(m) No taxpayer shall be eligible for a credit under this section and [either section 12-217e or section 12-217m for the same investment] SECTION 1 OF THIS ACT. No two taxpayers shall be eligible for any tax credit with respect to the same investment, employee or facility.

Sec. 21. Notwithstanding the repeal of subdivisions (7) and (8) of subsection (a) of section 12-214, sections 12-217c, 12-217d, 12-217e, 12-252a, 12-252b, 12-258b, 12-258c, 12-265b, 12-265c and 17b-740 of the general statutes, any taxpayer or business firm eligible for a tax credit pursuant to any of said sections may carry any remaining tax credit forward to any income year commencing on or after January 1, 1998, as the provisions of the appropriate section would have allowed prior to said repeal.

Sec. 22. Sections 12-217c, 12-217d, 12-217e, 12-217f, 12-217g, as amended by section 1 of public act 95-284, 12-217j, 12-217k, 12-217m, as amended by section 1 of public act 95-250, 12-217o, as amended by section 33 of public act 95-160, 12-252a, 12-252b, 12-258b, 12-258c, 12-265b, 12-265c, 17b-740 as amended by sections 12 and 21 of public act 95-257, 17b-741 and 17b-742 of the general statutes, and public act 95-288 are repealed.

Sec. 23. This act shall take effect from its passage, except that section 5 shall be applicable to income years commencing on or after January 1, 1997, and sections 1 to 4, inclusive, and 6 to 22, inclusive, shall be applicable to income years commencing on or after January 1, 1998.

Vetoed June 13, 1996. Veto sustained June 24, 1996.

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