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Connecticut Opportunity Zones – Adding Modern Function to Historic Sites

 

Connecticut is currently home to over seventy “Opportunity Zones”, or areas specifically designated to attract private investment in hopes of improving economic growth, community wealth, business development, and even housing opportunities.  Created in some of Connecticut’s most challenged areas, the promise of converting these areas into vibrant downtowns, thriving businesses, and trendy housing complexes, paired with robust transit options has naturally grasped the attention of investors and the general public alike.

From Stamford to Bridgeport, New Haven to Putnam, and several cities in between; these Opportunity Zones can be a great way for investors to not only help improve their neighborhoods, but to also take advantage of some significant tax incentives.  Still in the early stages, Opportunity Zones are relatively new, only being designated by the federal government as part of the Tax Cuts and Jobs Act in December of 2017.  Since their inception however, 18 states have followed suit in offering their own incentives (in addition to federal benefits), with Connecticut being one of them.

Projects within these zones are either executed through new development or in an existing building already in need of substantial renovation.  The Department of Economic and Community Development (DECD) may award tax credits to business entities rehabilitating certain historic structures within these zones. Bill No. 570, signed by Governor Ned Lamont on June 21, 2019, concerning Connecticut Opportunity Zones has brought these tax credits to the forefront.  While a 30% credit of eligible expenditures for projects that include affordable housing, and a 25% credit for other projects had been already offered by the state, this bill is intended to focus the attention of developers on the renovation of existing structures.  This bill not only extends the 30% credit to rehabilitation projects located within the various opportunity zones, but it actually requires the DECD to give historic structure rehabilitation projects preference over new construction.  The DECD is also now required to evaluate applications for certified historic structure rehabilitation credits, and give priority to these projects. 

To be eligible for rehabilitation, the properties must be listed individually on the National or State Register of Historic Places or located in a district listed on either register and certified by the state historic preservation officer as contributing to the district’s historic character.  Prior to beginning any rehabilitation work on a certified historic structure, the owner must submit a rehabilitation plan, with a detailed estimate of plan expenditures to the DECD.  If the DECD certifies that the rehabilitation plan conforms to the above qualifications, then the 30% tax credit shall be reserved for the benefit of the owner(s).  Credits authorized by the DECD shall be available in the tax year in which the substantially rehabilitated certified historic structure is placed in service. No project shall receive tax credits in an amount exceeding $4.5 million.

With the added incentive for investors to purchase and renovate these historic places in and around our state, one can only hope that the old rundown buildings can be restored to modern function while maintaining a classic charm.  When you look over at the once abandoned warehouse next to the highway and see new loft apartments, or the old gristmill turned restaurant, stop and appreciate the ideas like this one that help make the changes possible.

 
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