Authorized by the Connecticut general statues (CSG sec 32-285), sales tax increment financing, also known as sales tax TIF, is a financing tool used to provide state assistance to an economically significant project by giving a grant to the project’s developer. The TIF grant is funded by the sale of state general revenue bonds in an amount of up to 30 percent of the new, incremental sales tax revenue generated by the project.
Notable Connecticut projects that have benefited from the program include Lake Compounce in Bristol, the Oakdale Theater in Wallingford, Dodd Stadium in Norwich, The Meadows in Hartford and Cabela’s in East Hartford.
After CI receives a TIF application, our chief executive officer makes the preliminary determination as to whether the project is economically significant. If she determines that it is, CI will then hire an independent, nationally recognized consultant to conduct a feasibility study to evaluate the probability of a successful TIF.
Once CI receives the consultant’s report, which describes whether the TIF can be supported by the projected sales tax revenues from the project and in what amount, as well as the project’s additional benefits to the state, if it is favorable, the project then requires approval by the CI board and two legislative committees, which have 45 days to respond. If the project is approved to move forward, CI then submits a request for bond commission approval to enable CI and the State Treasurer’s office to undertake bond financing to support the project.
If the grant is made, CI approves the final documents and the sale of the bond. CI then distributes the proceeds for infrastructure and building construction. The TIF is subsequently audited annually to make sure that the sales tax revenues generated by the project cover the TIF bonds’ debt service. The bonds are repaid by the incremental taxes that are collected.
For more information or an application, contact Karin Lawrence at 860-258-7814 or Karin.Lawrence@ctinnovations.com.