Map of East Hartford's Enterprise Zone
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Benefits - Enterprise Zone
There are basically two business incentives associated with an enterprise zone location:
A five year, 80% abatement of local property taxes on qualifying real and personal property, subject to the property being new to the grand list of the municipality as a direct result of a business expansion or renovation project, or in the case of an existing building, having met the vacancy requirement. The property tax abatement is for a full five year period and takes effect with the start of the first full assessment year following the issuance of a "Certificate of Eligibility." Statutory reference to these benefits can be found in CGS '32-9p, '32-9r, '32-9s, '12-81(59) and '12-81(60).
A ten year, 25% credit on that portion of the state's corporation business tax that is directly attributable to a business expansion or renovation project as determined by the Connecticut Department of Revenue Services. The corporation tax credit is available for a full ten year period and takes effect with the start of the business' first full fiscal year following the issuance of a "Certificate of Eligibility." The corporate tax credit increases to 50% if a minimum of 30% of the new full time positions are filled by either zone residents or are residents of the municipality and are JTPA eligible. The statutory reference for this benefit is CGS '12-217(e).
As of January 1, 1997, newly formed corporations located in a zone qualify for a 100% corporate tax credit for their first three taxable years, and a 50% tax credit for the next seven taxable years. This is subject to if the corporation has at least 375 employees at least 40% of which are either zone residents or are residents of the municipality and who qualify for the Job Training Partnership Act, or has less than 375 employees at least 150 of which are zone residents or are residents of the municipality and who qualify for the Job Training Partnership Act.
Public Act 96-264 Any businesses engaged in biotechnology, pharmaceutical, or photonics research, development or production, with not more than three hundred employees, are eligible for Enterprise Zone benefits if they are located anywhere in a municipality with (1) a major research university with programs in biotechnology, pharmaceuticals, or photonics and (2) an Enterprise Zone. Benefits are subject to the same conditions as those for businesses located in an Enterprise Zone.
The maximum amount the Connecticut Development Authority can lend to an Enterprise Zone business under the Connecticut Growth Fund is increased from $250,000 to $300,000.
Eligible businesses are defined by their Standard Industrial Classification Code (SIC):
In an Enterprise Zone, in addition to manufacturers and distribution warehousing (new construction/expansion only), certain service sector firms (also defined by SIC code), may also qualify. An eligible applicant must occupy a facility that meets the criteria as defined below under Eligible Projects.
If the business occupant leases the qualifying facility (as defined below) the lease term must satisfy certain minimum requirements:
In an Enterprise Zone the term of the lease for a business occupant must be for an initial minimum term of five years with the option to renew, at the request of the lessee, for an aggregate term of not less than ten years, or the option to purchase the facility after the first five years. However, for those with an average of ten or fewer employees, the lease may be for an initial minimum term of three years with an option to renew, at the request of the lessee, for an aggregate term of not less than six years, or the option to purchase the facility after the first three years.
The project eligibility for both targeted investment communities and enterprise zones is defined in CGS '32-9p. Benefits accrue to projects whose central activity revolves around capital improvements to land and/or building. A real estate transaction has to take place in order to qualify the facility that will be occupied by the eligible business. The transaction must meet one of the following criteria:
Substantial renovation of an existing facility involving capital expenditures of at least 50% of the assessed value of the facility prior to its renovation. All renovation activities must be permitted by the town in order for their value to be recognized. The only costs that matter in meeting the 50% test are those costs that were incurred for work that required the use of a building permit.
Construction of a new facility. The expanded portion of an existing facility is considered new construction.
Acquisition of a facility by new owners after having been idle for at least one year prior to acquisition. Within an enterprise zone, the idleness requirement does not apply to companies with an average of five or fewer employees in the six months preceding acquisition of the facility, and is at least six months for businesses that have an average of between six and nineteen employees in the preceding six months. A one year idleness is required if there are more than nineteen employees involved.
Idleness is determined if the facility was unused, unoccupied or substantially under utilized for the appropriate period of time prior to being acquired for productive use. A community may request that the commissioner waive the idleness requirement for a facility for a specific client.
Application and Certification Process
An enterprise zone business applicant must complete a preliminary application to determine if all eligibility criteria will be met. This preliminary questionnaire does not constitute a formal application. If the enterprise zone applicant demonstrates that all of the requirements will be met, a formal application is provided.
All applicants must submit a completed application to the Department of Economic and Community Development prior to October 1 of the assessment year in which the project is completed. In addition to the completion of the formal application a business applicant must provide the following in order to be certified:
1. a copy of the lease, if the facility is being leased
2. a copy of the deed to the property if it is acquired by purchase
3. a notarized letter (preferably from a municipal official) testifying to the idleness condition if that
criteria is being used to qualify a facility
4. a copy of the company's Certificate of Good Standing from the Secretary of State.
Completed applications are reviewed and Certificates of Eligibility are issued within 2-3 weeks after receipt. The department does not impose any charges or fees for the application and certification process. Monitoring consists of inspections of certified facilities and businesses by department officials as well as local and municipal program administrators. These inspections may be announced or unannounced and may include the municipal assessor.
For more information contact
Economic Development Coordinator
Town of East Hartford
740 Main Street
East Hartford, CT 06108