Waterbury’s Enterprise Zone
The Enterprise Zone in Waterbury is the second largest zone in the state of Connecticut. It consists of more than 1,600 properties. The general boundaries are Route 8 (westerly), South Main Street/Thomaston Avenue/Cherry Street to include Census Tract #3501 (easterly), the Waterbury/Watertown border (northerly), and the Waterbury/Naugatuck border (southerly). The Waterbury Development Corporation administers the Enterprise Zone program which offers incentives to applicants that undertake a project. It has two components: the State Component and the Local Component.
The benefits of the State Component are primarily intended to assist manufacturers, however, some wholesale businesses and certain financial and business-related services may also qualify. The benefits are:
- a 5-year, 80% tax abatement on real estate taxes and personal property taxes for personal property that is new to the city’s grand list;
- up to a 50% tax reduction on state corporate business taxes for a 10-year period, attributable to increases in income as a result of the project;
- an 80% tax abatement on personal property taxes for qualifying personal property that is acquired during the 5 year certificate period; said abatement applies to the number of years remaining in the certificate period from the time of purchase. This applies to personal property that has been reported on form M-47 (Future Acquisitions List)
- a sales tax exemption on the purchase of replacement parts for machinery and equipment used in the manufacturing process.
To qualify for these benefits, an applicant would have to meet all of the following requirements:
- the business must have the appropriate North American Industrial Classification designation, as recognized by the Connecticut Department of Labor;
- the location must have been vacant or idle for a period of up to one year, depending on the number of the business’ employees; and,
- if the business does not own the property, then the business must enter in a minimum 5-year lease with a 5-year option to renew.
Enterprise Zone benefits are granted on an annual basis on October 1st. By this date, a company would have to:
- have a signed lease, or acquired the property;
- have relocated its operations into the space;
- have the operation up and running;
- have formally filed an application for Enterprise Zone benefits through this office.
Should this be the case, then an applicant would be eligible to receive benefits as of that October 1st Grand Year list.
Please bear in mind that these requirements don’t apply to a sales tax exemption for replacement parts for machinery and equipment used in the manufacturing process. As long as a company is located in the Zone to do business, it can qualify for this benefit.
The Local component is geared towards residential projects and commercial or retail developments, as well as certain manufacturing operations that may be considered ineligible under the State component. The sole benefit is:
A tax abatement for a 7-year period on a sliding scale (100% - 1st year; 100% - 2nd year; 50% - 3rd year; 40% - 4th year; 30% - 5th year; 20% - 6th year; 10% - 7th year) for real and personal property taxes applicable to increases to the city’s grand list.
To qualify for this benefit, the following requirements must be satisfied:
- the total cost of the expansion, renovation, new construction or purchase of new machinery and equipment, or any combination of said costs, must be greater than 50% of the assessed property value (building only) prior to the commencement of the project;
- if the project consists of any renovation, expansion or new construction, it must be evidenced by a building permit and a certificate of occupancy, as well as bills, invoices and/or contracts substantiating the cost of the project; and
- if the proposed project is of a residential nature, all residential occupants that lease apartments must have incomes that do not exceed 200% of the city’s median income.
There may be minor deviations of structuring or approaching a claim for benefits. Prior to undertaking a project or executing a lease, it is strongly suggested that a business client discuss the issue with a WDC official in order to determine eligibility.