OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

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sSB-495

AN ACT CONCERNING THE PUBLIC HOUSING PILOT PROGRAM AND THE LOW AND MODERATE INCOME HOUSING TAX ABATEMENT.

OFA Fiscal Note

State Impact: None

Municipal Impact: See Below

Explanation

The bill prohibits municipalities from imposing or collecting any tax, assessment, or charge in lieu of the state reimbursement under the moderate rental housing Payment-in-Lieu of Taxes (PILOT) and Tax Abatement programs. The bill also requires municipalities to refund any payments they received from participating PILOT and Tax Abatement entities. These provisions only apply in FY 08 if municipalities received a reimbursement in FY 07, but not the payment scheduled for FY 08 because funding was not included in the FY 08-09 biennial budget.

To the extent that municipalities collected related payments, they will experience a revenue loss. In FY 07, 22 municipalities received a total of $1. 7 million in state assistance under the Tax Abatement program, and 14 municipalities received a total of $2. 2 million under the moderate rental PILOT program.

Currently the Department of Economic and Community Development (DECD) can reimburse towns, for not more than 40 consecutive fiscal years, for the property tax revenue that municipalities forgo. The bill removes the forty year limit, which could result in a continuation of abatement costs. Fifty-seven existing contracts, receiving state reimbursements totaling $1. 7 million in FY 07, are set to expire between 2009 and 2017.

The bill also expands reimbursement eligibility to include successor owners, potentially continuing reimbursement costs.

HB 5031, “AAC Payment in lieu of Taxes for Public Housing and the Low and Moderate Income Tax Abatement Program,” as favorably reported by the Appropriations Committee, transfers funding from the Department of Social Services to DECD for the PILOT program ($2,204,000) and for the Tax Abatement program($1,704,890) for FY 08.

The Out Years

State Impact: None

Municipal Impact:

The restriction and reimbursement requirements under the bill are effective only in FY 08. The potential costs associated with the removal of the 40 year limit and inclusion of successor owners will continue into the future subject to inflation.