June 25, 2008
ANALYSIS OF STATUTE REQUIRING PAYMENTS IN LIEU OF TAXES ASSESSMENTS AND CHARGES FOR LOW-INCOME HOUSING PROJECTS
By: John Rappa, Principal Analyst
You asked us to determine if the law requiring public housing authorities (PHAs) to make payments in lieu of taxes, special benefit assessments, and sewerage use charges to municipalities for state-funded low-income housing projects applies to municipal water pollution control authority (WPCA) charges. The answer to this question requires an official legal opinion, which the Office of Legislative Research cannot give. Consequently, you should not regard this report as providing one.
The law requires PHAs to make payments to municipalities in lieu of property taxes, special benefit assessments, and sewerage system use charges the municipality would otherwise impose on state-funded public housing projects. It specifies how PHAs must calculate these payments, which must be approved by the economic and community development commissioner.
It does not appear that PHAs can make payments-in-lieu of sewerage system charges imposed by a quasi-public municipal water pollution control authority (WPCA). The law authorizing the in-lieu payments specifically limits them to taxes, benefits, and charges imposed by a municipality, which it defines as any city, town, or borough. But laws governing other policies and programs include authorities and other entities in their definition of municipality, which suggests that the legislature intended to limit the in-lieu payments to municipal taxes, benefits, and charges.
Two other factors support this conclusion. The law governing WPCAs specifies that municipalities and tax-exempt property owners must pay charges under the same conditions as other customers. Also, legal writings suggest that authorities, unlike municipal departments or state agencies, operate independently of the municipality or state that created them.
PAYMENTS IN LIEU OF TAXES, ASSESSMENTS, AND CHARGES
Different laws exempt PHAs from paying municipal property taxes, special benefit assessments, and sewerage system use charges. CGS § 8-58 exempts them from paying property taxes on any property they own and operate. Other statutes implicitly exempt PHAs from paying the assessments and charges (e.g., sewer use charges) imposed on specific types of housing projects that were built with state moderate rental, elderly, elderly congregate, or low-income housing program funds (CGS §§ 8-71, 8-118a, 8-119k, and 8-119gg, respectively).
But these statutes also require PHAs to make payments-in-lieu of the taxes, assessments, and charges their host municipality would have imposed on these projects. The payment total depends on whether a project receives federal funds for covering these expenses. If it does, then the payment cannot exceed the total taxes, assessments, and charges the PHA would have paid on the project if it were not exempt. If the project receives no federal funds, then the payment cannot exceed 12.5% of the annual rent collected from the project. In both cases, the economic and community development commissioner must approve the payment.
It appears that PHAs must pay sewerage system use charges when imposed by a municipal WPCA. The statutes authorizing the in-lieu payments for public housing projects apply them only to taxes, benefits, and charges “otherwise payable to a municipality.” Other statutes and legal writings suggest that authorities, as a type of government organization, are not municipalities unless the statutes specifically designate them as such.
Although separate statutes authorize in-lieu payments for each type of state funded housing project, they share the same definition of municipality: “any city, borough, or town” (CGS § 8-39 (l)). But other statutory definitions of municipality include authorities and other entities. Consequently, an entity is a municipality only when the legislature defines it as such.
For example, the statute protecting municipal officers and employees from damage suits defines municipality to include an “authority established by the general statutes, a special act or local law, ordinance or charter” (CGS § 7-101a). This definition includes WPCAs because municipalities can establish them only by ordinance. Consequently, WPCA officials and employees enjoy the same protection as zoning commissioners and public works employees.
Because the statutes authorizing in-lieu payments do not explicitly include WPCA charges, PHAs must comply with the statute authorizing WPCAs to impose sewer connection and use charges (CGS § 7-255). That statute requires municipal agencies and tax-exempt property owners, which includes PHAs, to pay the charges under the same conditions as the system's other users.
Authorities as Government Entities
Legal writings also suggest that authorities, including WPCAs, operate independently of the state or municipality that created them. These general purpose governments create authorities to “perform a special purpose or purposes, or to perform some of the functions of privately-owned public service corporations.”
To fulfill that special purpose, authorities receive “a good deal of independence in administering the particular activity of the authority...” Consequently, “such authorities have not been considered to be 'municipal corporations' in the strict sense of that term, although they may be clothed with some of their attributes and be publicly owned and controlled” (McQuillin, Municipal Corporations, § 2.29.10).
The special purpose of a municipal WPCA is to “acquire, construct, and operate a sewerage system within the municipality” (Fuller, Connecticut Land Use Law and Practice, § 12.4). To fulfill this purpose, the WPCA can adopt and revise rules for managing the system. Its power to acquire land includes taking it by eminent domain. The WPCA develops and manages the system by levying benefit assessments on the land and buildings using the system. It does not receive municipal property tax revenues for this purpose.