OLR Bill Analysis
AN ACT CONCERNING THE PUBLIC HOUSING PILOT PROGRAM AND THE LOW AND MODERATE INCOME HOUSING TAX ABATEMENT.
This bill protects tenants in public and privately owned low- and moderate-income housing from rent increases in FY 08 by prohibiting public housing authorities (PHAs), towns, and private owners from taking specified actions.
It prohibits towns from imposing taxes and other charges on any state-funded moderate rental housing project a PHA operates. Although the law exempts these projects from property taxes and other charges, it currently requires PHAs to make payments in lieu of taxes to the town. The bill also prohibits (1) PHAs from increasing rents based on actual or anticipated FY 08 property taxes or other charges and (2) state agencies from approving any such rent increases.
The bill prohibits towns and property owners from taking similar actions with respect to certain privately owned multifamily housing. These prohibitions apply if the owner accepted a tax abatement for charging affordable rents and the state failed to reimburse the town in FY 08 after having done so in FY 07.
By law, the Department of Economic and Community Development (DECD) commissioner may reimburse towns for the property tax revenue they forgo on both types of housing. But it currently limits the reimbursement period for privately owned housing to 40 consecutive fiscal years. The bill eliminates this sunset.
Lastly, the bill allows the commissioner to reimburse towns for the tax exemption on state-funded moderate rental housing that was redeveloped and transferred to a private entity with her approval.
EFFECTIVE DATE: July 1, 2008, except for the prohibitions which take effect upon passage.
STATE FUNDED MODERATE RENTAL HOUSING (§ 1)
The bill prohibits towns from charging PHAs the statutory payment in lieu of taxes, assessments, and fees. The payment equals 12. 5% of the annual rent they collect from the housing. The law allows the DECD commissioner to reimburse towns for the resulting revenue loss (CGS §§ 8-71 and 8-216(b)).
The bill also prohibits towns from imposing any tax, assessment, or charge in lieu of these payments. And it requires them to withdraw, reverse, or refund any payment they charged or collected. These prohibitions apply only during FY 08.
For FY 08, the bill also prohibits PHAs from increasing the base or percentage rent of moderate rental housing tenants based on an actual or anticipated property tax, assessment, or charge. Because moderate rental housing was developed with state dollars, PHAs cannot increase rents without the approval of the commissioner or the Connecticut Housing Finance Authority. Consequently, the bill bans both parties from approving rent increases.
The bill also requires PHAs to withdraw or reverse the portion of any rent increase based on an actual or anticipated property tax, assessment, or charge in FY 08. They must also refund or credit any payments they collected based on these taxes, assessments, or charges.
PRIVATELY OWNED MODERATE RENTAL HOUSING
The bill imposes similar prohibitions on towns and private owners under a local property tax abatement program. By law, towns may adopt ordinances abating property taxes on multifamily housing if the owner agrees to keep the rents affordable to low- and moderate-income people (CGS § 8-215). The commissioner may reimburse the town for the revenue loss.
The bill prohibits a town from imposing or collecting any tax, assessment, or charge in lieu of the state reimbursement. This prohibition applies in FY 08 if the town received a reimbursement in FY 07 but not the one scheduled for FY 08 because the state budget provided no funds for this purpose. The town must withdraw or reverse any assessment or charge. It must also refund any owner who paid them.
The bill also prohibits the housing owner from increasing the rents based on actual or anticipated taxes, assessments, or charges. Like the town, the owner must withdraw or reverse any assessment or charge and refund or credit the tenant for any payments he or she made.
The Planning and Development Committee reported two bills that appropriate the same amounts for the reimbursements for the tax exemptions and tax abatements, respectively for public and privately owned moderate rental housing. SB 2 and HB 5031 each appropriates $ 2. 2 million in FY 08 and FY 09 for the reimbursements for state-funded moderate rental housing. Both bills also appropriate $ 1. 7 million in FY 08 and FY 09 for privately owned rental housing.
Planning and Development Committee
Joint Favorable Substitute