AN ACT INCREASING CERTAIN BOND AUTHORIZATIONS FOR CAPITAL IMPROVEMENTS, CONCERNING THE COLLECTION OF COSTS BY THE PROBATE COURT AND CONCERNING A HOUSING TRUST FUND.

AN ACT INCREASING CERTAIN BOND AUTHORIZATIONS FOR CAPITAL IMPROVEMENTS, CONCERNING THE COLLECTION OF COSTS BY THE PROBATE COURT AND CONCERNING A HOUSING TRUST FUND.

For the FY 06-07 biennium, this bill authorizes additional state general obligation (GO) bonds for various programs. They include $ 150 million for urban development projects under the Urban Act, $ 60 million for local capital improvement projects for cities and towns, $ 40 million for the Small Town Economic Assistance Program (STEAP), $ 18 million for farmland preservation, and $ 10 million for the Manufacturing Assistance Act. The bill also authorizes $ 100 million in revenue bonds for Clean Water Fund projects.

The bill expands eligibility for STEAP, changes the basis for establishing probate court costs for settling an estate, and reduces certain GO bond authorizations to the Office of Policy and Management (OPM) and the Department of Social Services (DSS). It also gives Enfield an extra Clean Water Fund grant to pay additional costs for upgrading its wastewater treatment plant.

The bill creates a Housing Trust Fund and authorizes the State Bond Commission to capitalize it by issuing up to $ 100 million in bonds, with $ 20 million effective each July 1, from 2005 to 2009. It establishes a Housing Trust Fund Program to expand affordable housing opportunities for low- and moderate-income people and requires the bond proceeds to be used for this purpose.

The bill specifies that the bond commission may only authorize bonds for the Housing Trust Fund when there has been an authorization request filed with it. The Office of Policy and Management (OPM) secretary must have signed the request, which must state the terms and conditions the commission may require.

The bill establishes housing trust fund program goals and defines the types of housing to be developed and who is eligible for it. It (1) requires the Department of Economic and Community Development (DECD) to develop and administer the program, including adopting regulations and forming a Housing Trust Fund Program Advisory Committee, the membership of which the bill details, and (2) gives the DECD commissioner the power to inspect records and other financial or project-related information of those who receive financial assistance under the program to protect the state’s interest or obligations concerning such assistance.

The bill allows large municipalities to create water authorities and to transfer all or part of their water systems to it. It establishes procedures for creating such authorities and establishes their powers, tax status, rights, and liabilities.

EFFECTIVE DATE: July 1, 2005, except the following provisions, which are effective on passage:

1. the grant for Enfield,

2. the regulations the DECD commissioner must adopt for rating proposals for funds under the housing trust fund program and may adopt for the program as a whole,

3. establishment of the housing trust fund advisory committee, and

4. provisions allowing the DECD commissioner to inspect records and other financial or project-related information.

The change in probate court costs for settling an estate is effective on passage and applies to estates of those who die on or after January 1, 2005.

The bill authorizes bonds for FYs 06 and 07 in the amounts and for the purposes shown in Table 1. Unless otherwise stated, all authorizations are for GO bonds.

Of the $ 150 million authorized for Urban Act projects, the bill earmarks $ 1. 4 million for renovating and rehabilitating the Black Rock Library in Bridgeport and $ 2. 5 million for site acquisition, renovation, and rehabilitation of the Institute for the Hispanic Family in Hartford.

The bill eliminates the population restrictions for STEAP eligibility, thus making the following six towns eligible for the program: Fairfield, Glastonbury, Greenwich, Southington, Trumbull, and Wallingford. Under current law, towns with populations of 30,000 or more are ineligible. The bill retains the current requirements that STEAP towns not be economically distressed, not have urban centers according to any state plan of conservation and development adopted by the General Assembly, and not be public investment communities.

1. OPM for compensating certain state and municipal bondholders for the state taking their rights to exclude certain bond interest from state corporation taxes, from $ 35. 5 million to $ 33. 26 million (§ 7) and

2. DSS for grants to municipalities and state agencies for child care facilities primarily for their employees, from $ 7,775,000 to $ 6,024,798 (§ 8).

Despite limits on the amount of Clean Water Funds that may be distributed as grants, the bill makes Enfield eligible for a grant of up to $ 2. 8 million to pay for additional costs of upgrading its wastewater treatment plant.

The bill amends the OPM Implementer bill (HB 7502 § 56) to change the base probate court costs for settling an estate. Under current law, the costs are based on, among other things, the gross estate for succession tax purposes. PA 05-251 eliminated the succession tax for deaths on or after January 1, 2005 and created a new estate tax. Because under PA 05-251 the succession tax applies only to estates of those who died before January 1, 2004, HB 7502 expanded the basis for the probate court costs to either the gross estate for succession tax purposes or the Connecticut taxable estate under the new tax, whichever is greater. This bill adds a third alternative, which is the gross estate for state estate tax purposes, if it is greater than the other two.

The gross estate for succession tax purposes is the fair market value of all the property transferred, except for farmland, which is valued at its use value if certain conditions apply, and certain types of payments, such as Social Security survivor benefits, which are excluded (CGS § 12-349).

The Connecticut taxable estate under the new state estate tax is (1) the gross estate minus all federally allowable deductions except the one for state death taxes paid plus (2) the aggregate value of all Connecticut taxable gifts the decedent made during his life starting on January 1, 2005 (PA 05-251, § 69). Federally allowable deductions include the value of property passing to a surviving spouse, debts owed at the time of death, and funeral expenses paid out of the estate (IRC § 2051 et. seq. ).

The gross estate for state estate tax purposes is the same as the gross estate under the federal estate tax (CGS § 12-391 (c)). It includes the value of all the decedent’s property at the time of death, including real property and tangible and intangible personal property (IRC § 2031 et. seq. ).

The bill establishes the "Housing Trust Fund" as a nonlapsing fund that is held by the state treasurer and separate from all other money, funds, and accounts. Under the bill, the following must be deposited in it:

1. proceeds from the bonds the bill authorizes;

2. all funds received in return for financial assistance awarded through the Housing Trust Fund Program; and

3. any private contributions.

The bill specifies that (1) investment earnings credited to the fund’s assets become part of the fund; (2) the treasurer must invest the money held by the Housing Trust Fund subject to use for financial assistance under the Housing Trust Fund Program, which the bill establishes; and (3) the funds are in addition to any other resources from state, federal, or other entities that support affordable housing.

The bill specifies (1) how the treasurer may invest, reinvest, or deposit proceeds and (2) that any unexpended or unallocated amounts in the Housing Trust Fund from one fiscal year may be carried over to the next fiscal year and that adjustments may be made for shortfalls.

DECD, with OPM approval, may solicit contributions from private entities, nonprofit and for-profit corporations, philanthropic organizations, and financial institutions, to support and expand the resources available through the Housing Trust Fund. But these funds must be distributed as specified by their contributor. If a contributor did not designate fund usage, the commissioner must use the funds for the program.

The bill establishes the Housing Trust Fund Program and requires the DECD to develop and administer it. The program must:

1. encourage the creation of housing for homeownership at a cost that makes it affordable for low- and moderate-income people, meaning they pay no more than 30% of their gross household income for it;

2. promote the rehabilitation, preservation, and production of quality, well-designed rental and homeownership housing affordable for these people;

3. maximize the leveraging of state and federal funds by encouraging private sector investment in housing developments that receive assistance;

4. encourage housing that maximizes housing choices of residents;

5. enhance economic opportunity for low- and moderate-income people and their families;

6. promote the application of efficient land use that uses existing infrastructure and the conservation of open spaces; and

7. encourage the development of housing that aids community revitalization.

The bill defines “low- and moderate-income families and persons” as those people whose income falls within income levels that the commissioner sets, except he may establish income levels up to and including 120% of the area median income, as determined by the U. S. Department of Housing and Urban Development. (Connecticut law bases affordability on the proportion of income a family spends on housing. A unit is affordable if a family earning no more than the town's median income pays no more than 30% of its income for the housing (CGS § 8-39a)).

Under the bill, Housing Trust Fund Program funding resources (e. g. , no- and low-interest loans) must be available, at least semiannually, on a competitive basis in accordance with the regulations and criteria the DECD commissioner and others establish.

Financial assistance under the program from the Housing Trust Fund may be in the form of (1) no-interest and low-interest loans, (2) loan guarantees, (3) grants, and (4) appraisal gap financing and other similar financing necessary to make rent or home prices affordable. Any financial assistance must supplement existing loan and tax credit programs available under state and federal law and grants, loans, or financial assistance from any nonprofit or for-profit entity.

Financial assistance, paid from the Housing Trust Fund for the development of quality rental and ownership housing for low- and moderate-income people is available to:

1. nonprofit entities;

2. municipalities and municipal developers;

3. housing authorities;

4. the Connecticut Housing Finance Authority (CHFA)

5. community development financial institutions;

6. businesses that have as one of their purposes the construction, financing, acquisition, rehabilitation, or operation of affordable housing, including (a) corporations incorporated or authorized to do business, by law, that have a CHFA-approved certificate or articles of incorporation and (b) any partnership, limited partnership, limited liability company, joint venture, sole proprietorship, trust, or association that has CHFA-approved basic documents or organization;

7. any combination of these.

Under the bill, “housing,” “housing development,” or “development” means a work or undertaking whose primary goal is safe, well-designed, and adequate housing and related facilities for low- and moderate-income families and people. This (1) includes existing housing for low- and moderate-income people and housing whose primary purpose is to provide dwelling accommodations for these people, but also has dwelling accommodations for others.

In each fiscal year that the Housing Trust Fund has funds available for distribution, the DECD commissioner must allocate $ 300,000 from it for funding matching grants dedicated to funding purchases of primary residences for people participating in the state’s Individual Development Account Program.

Under the bill, the DECD commissioner, in consultation with the OPM secretary and CHFA, must establish regulations and criteria for rating the proposals for funds under the program. He must do so after considering recommendations of the Housing Trust Fund Program Advisory Committee that the bill establishes.

The bill creates a Housing Trust Fund Program Advisory Committee. The committee must meet at least semi-annually advise the commissioner on (1) the administration, management, and objectives of the Housing Trust Fund Program and (2) the development of regulations, procedures and rating criteria for the program.

The committee includes a (1) chairman and (2) the chairpersons and ranking members of the Housing and Planning and Development committees. The commissioner, in consultation with the treasurer and the OPM secretary, appoints the members, including representatives from:

1. the for- and non-profit housing development communities;

2. a housing authority;

3. a community development financial institution;

4. CHFA;

5. a state-wide housing organization;

6. an elected or appointed official of a municipality with a population of (a) less than 50,000, (b) between 50,000 and 100,000, and (c) more than 100,000; and

7. state employers, which may be a representative from a state business and industry association or regional chambers of commerce.

Under the bill, the DECD commissioner (1) must establish regulations and criteria, with consultation and input from others, for rating the proposals for funds under the program and (2) may adopt regulations for the program in general. He may request, inspect, and audit reports, books, and records and any other financial or project-related information with respect to eligible applicants that receive financial assistance, including, without limitation, resident or employment information, financial and operating statements, and audits. The commissioner may investigate the accuracy and completeness of the reports, books, and records.

It allows the commissioner to take all reasonable steps and exercise all available remedies necessary or desirable to protect the obligations or interests of the state, regarding financial assistance from the Housing Trust Fund. This includes (1) amending any term or condition of a contract or agreement, provided such amendment is allowed or agreed to pursuant to such contract or agreement, or (2) purchasing or redeeming, pursuant to foreclosure proceedings, bankruptcy proceedings or in other judicial proceedings, any property on which such commissioner or the department holds a mortgage or other lien, or in which the commissioner or the department has an interest.

The bill requires the commissioner to prepare and submit an annual report for the prior fiscal year to the governor and the legislature concerning (1) the activities for of the Housing Trust Fund and the Housing Trust Fund Program and (2) DECD’s efforts to obtain private support for the fund and the program. A copy of the report must be filed with the clerks of each house of the General Assembly and the chairpersons and ranking members of the Housing Committee.

The bill allows any municipality with a population greater than 100,000 (Bridgeport, Hartford, New Haven, Stamford, or Waterbury) to create, by ordinance, a water authority and transfer all or part of its water supply system to the authority. The transfer is subject to the provisions of the municipal charter governing the transfer of municipal property, including any requirements for a referendum. But the creation of the authority is not subject to municipal bidding requirements. The ordinance creating the authority must include a brief statement of purpose and set forth the authority’s articles of incorporation.

The municipality must, by ordinance, prepare a preliminary operational plan for the proposed authority. The plan must be reviewed and approved by the departments of Environmental Protection and Public Health, in consultation with the Office of Policy and Management. The departments must approve or reject the plan within 60 days of receiving it. These approvals are the only state approvals needed to create the authority and transfer the system to the authority.

The authority is created once the ordinance is adopted and the plan is approved. It must promptly reimburse the municipality for its costs in creating the authority. It remains in existence until terminated by law or as prescribed in its articles of incorporation.

In connection with the transfer of the system from the municipality to the authority:

1. the system employees must either be transferred to the authority, with all of their leave and pension benefits, or stay with the municipality;

2. employees remaining with the municipality must provide services to the authority under an agreement between it and the municipality;

3. the authority must assume all of the pension obligations of the municipality with regard to current and former employees, other than those retained by the municipality;

4. the authority must observe the municipality’s collective bargaining agreements and personnel policies with regard to all of the transferred employees;

The authority is subject to the municipal employee labor relations law. However, the authority has normal management prerogatives with regard to such things as promotion, demotion, and discharge of employee.

1. acquire real and personal property by purchase, gift, or condemnation;

2. sell and lease property that it no longer needs, including, under narrow conditions, class I and II water company land (land located close to water supply sources such reservoirs);

3. locate, own, operate, and maintain its water supply system;

4. build, replace, and extend such systems;

5. enter into contracts for (a) professional services; (b) system construction, operation, and management; and (c) the provision of water;

6. adopt bylaws, rules, and regulations consistent with the authority’s articles of incorporation;

7. invest fund, borrow money and issue bonds;

8. issue loans from the bond proceeds for planning, designing, and building the authority’s water supply system;

9. establish fees and charges on the system’s users and levy assessments on property that benefits from the system, with unpaid amounts treated as unpaid taxes; and

10. employ a staff and retain legal and other professional advisors.

The authority’s property is exempt from property taxes, but it must make equivalent payments in lieu of taxes (PILOT). If the authority does not have funds to make its PILOTs, it must adjust its rates and charges in order to do so. In addition, the authority must reimburse the municipality for its expenses in providing services to improvements made by the authority, other than water pipes.

The authority must be audited annually by a certified public accountant it selects.

The Department of Public Utility Control does not have jurisdiction over the authority’s rates or charges.

The authority has all of the rights as a municipality, including the right to take and use water supply sources. In condemning land it must follow the procedures that municipalities must.

The authority can assign liens it has filed in connection with unpaid rates and charges, for consideration negotiated between the authority and the assignee.

Neither the authority nor a person acting on its behalf is subject to personal liability resulting from erecting, maintaining, or operating the water supply system, or from carrying out the authority’s powers.

The state pledges with the authority’s bondholders not to limit or alter the authority’s rights or to impair the bondholders’ rights until the bonds are paid off.

Public agencies and financial institutions can invest in the authority’s bonds. The authority has the same powers as a municipality in issuing bonds.

If there is a conflict between the bill and the statutes, special act, or municipal charter, this bill is controlling.

The bill establishes procedures by which a person aggrieved by the authority can appeal to the courts. The authority is not considered an agency for purposes of the Uniform Administrative Procedures Act.

By law, a statewide IDA program allows certain low-income and qualified disabled people to open savings accounts and receive matching funds from the Department of Labor as an incentive for saving for specified purposes. Withdrawals from the accounts may only be made for (1) education and job training costs, (2) a home purchase, (3) entrepreneurial activity, (4) an automobile purchase to obtain or maintain employment, or (5) a lease deposit on a primary residence.

§	*Agency*	*Purpose/Fund*	*Total Authorization*	*FY 2006*	*FY 2007*
1	OPM	Urban development projects	$ 150,000,000	$ 85,000,000	$ 65,000,000
2	OPM	Small Town Economic Assistance Program	40,000,000	20,000,000	20,000,000
3	OPM	Capital Equipment Purchase Fund	52,550,000	27,500,000	25,050,000
4	OPM	Local Capital Equipment Improvement Program	60,000,000	30,000,000	30,000,000
5	Education	School construction projects	1,230,000,000	580,000,000	650,000,000
6	Education	School construction interest subsidy grants	50,000,000	25,000,000	25,000,000
9	Agriculture	Farmland Preservation	18,000,000	8,000,000	10,000,000
10	Environmental Protection	Clean Water Fund general obligation bonds	40,000,000	20,000,000	20,000,000
11	Environmental Protection	Clean Water Fund revenue bonds	100,000,000	0	100,000,000
12	Economic and Community Development	Manufacturing Assistance	10,000,000	5,000,000	5,000,000
13	Environmental Protection	Special Contaminated Property Remediation and Insurance Fund	1,000,000	0	1,000,000