OFFICE OF FISCAL ANALYSIS

Legislative Office Building, Room 5200

Hartford, CT 06106 (860) 240-0200

http: //www. cga. ct. gov/ofa

sHB-5224

AN ACT ESTABLISHING AN URBAN REVITALIZATION PILOT PROGRAM.

OFA Fiscal Note

State Impact:

Agency Affected

Fund-Effect

FY 13 $

FY 14 $

Treasurer, Debt Serv.

GF - Cost

See Below

See Below

Note: GF=General Fund

Municipal Impact: None

Explanation

The bill authorizes $62. 5 million in new General Obligation bonds for housing development and rehabilitation.

In addition, the bill requires the Department of Economic and Community Development (DECD) to establish an urban revitalization pilot program with $5. 0 million of the proposed bond funds set aside for the administration of the pilot program.

Bond Authorizations

The bill authorizes $62. 5 million in General Obligation (GO) bonds for housing development and rehabilitation. The total General Fund debt service cost for principal and interest payments to bond this amount over 20 years at a 5. 0% interest rate is $95. 3 million (comprised of $32. 8 million in interest and $62. 5 million in principal). The first year that the state will experience debt service costs associated with the bonds depends on when they are allocated through the State Bond Commission and when the funds are expended.

Urban Revitalization Pilot Program

The bill permits DECD to contract with a non-profit organization to administer the pilot program. While it is expected that the agency will contract with a non-profit to administer the program, it should be noted that the bill does not preclude DECD from running the program itself. At least one to three staffers at a cost of approximately $250,000 annually would be required to administer the program's goals. The program will incur additional costs related to providing assistance and supportive services to the program's participants. The annual cost for assistance and supportive services is dependent upon the number of participants and the administration of the program.

It is anticipated that DECD will utilize the full $5. 0 million in proposed FY 13 bond funds to support the program. However, it is uncertain how much of the funding DECD will expend each fiscal year.

The bill also permits the program's administrator to draw upon public funding sources including quasi-public agencies like the Connecticut Housing Finance Authority, private funding sources. Any additional revenue generated through this provision would supplement the $5. 0 million in bond funds proposed in the bill.

The Out Years

The General Fund fiscal impact identified above would continue into the future for the term of issuance of the bonds.

It is anticipated that costs to the Urban Revitalization Pilot Program identified above would continue into the future subject to inflation. Funding for the program is dependent upon the amount of the proposed $5. 0 million in bonding that DECD chooses to expend each fiscal year.