Connecticut Seal

General Assembly

File No. 190

    February Session, 2016

Substitute House Bill No. 5399

House of Representatives, March 24, 2016

The Committee on Housing reported through REP. BUTLER of the 72nd Dist., Chairperson of the Committee on the part of the House, that the substitute bill ought to pass.

AN ACT CONCERNING STATE REIMBURSEMENT FOR TAX ABATEMENTS AND PAYMENTS IN LIEU OF TAXES.

Be it enacted by the Senate and House of Representatives in General Assembly convened:

Section 1. Section 8-215 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

(a) Any municipality may by ordinance provide for the abatement in part or in whole of real property taxes on any housing solely for low or moderate-income persons or families and may by ordinance classify the property on which such housing is situated as property used for housing solely for low or moderate-income persons or families. Such tax abatement shall be used for one or more of the following purposes: (1) To reduce rents below the levels which would be achieved in the absence of such abatement and to improve the quality and design of such housing; (2) to effect occupancy of such housing by persons and families of varying income levels within limits determined by the Commissioner of Housing by regulation; or (3) to provide necessary related facilities or services in such housing. Such abatement shall be made pursuant to a contract between the municipality and the owner of any such housing, which contract shall provide the terms of such abatement, that moneys equal to the amount of such abatement shall be used for any one or more of the purposes herein stated, and that such abatement shall terminate at any time when such housing is not solely for low or moderate-income persons or families.

(b) A municipality shall abate the real property taxes, for the period commencing July 1, 2016, and ending June 30, 2018, on any real property for which a tax abatement was granted pursuant to subsection (a) of this section in the fiscal year ending June 30, 2015, except no abatement shall (1) exceed the value of the tax abatement granted pursuant to subsection (a) of this section in the fiscal year ending June 30, 2015, (2) be granted if the housing no longer fulfills the purposes stated in subsection (a) of this section, or (3) be granted to the extent to which funds are made available for such taxes by an agency or department of the United States government.

Sec. 2. Section 8-71 of the general statutes is repealed and the following is substituted in lieu thereof (Effective from passage):

In lieu of real property taxes, special benefit assessments and sewerage system use charges otherwise payable to such municipality, except in such municipalities as, by special act or charter, on May 20, 1957, had a sewer use charge, an authority shall pay each year to the municipality in which any of its moderate rental housing projects are located a sum to be determined by the municipality, with the approval of the Commissioner of Housing, not in excess of twelve and one-half per cent of the shelter rent per annum for each occupied dwelling unit in any such housing project; except that the amount of such payment shall not be so limited in any case where funds are made available for such payment by an agency or department of the United States government. [, but no] No payment shall exceed the amount of taxes which would be paid on the property were the property not exempt from taxation. For the period commencing July 1, 2016, and ending June 30, 2018, each municipality that has received a grant-in-aid pursuant to section 8-216 in the fiscal year ending June 30, 2015, shall waive any payment required pursuant to this section, except that no waiver shall be required in any case where funds are made available for such payment by an agency or department of the United States government.

This act shall take effect as follows and shall amend the following sections:

Section 1

from passage

8-215

Sec. 2

from passage

8-71

Statement of Legislative Commissioners:

In section 2, the effective date was changed for consistency.

HSG

Joint Favorable Subst.

 

The following Fiscal Impact Statement and Bill Analysis are prepared for the benefit of the members of the General Assembly, solely for purposes of information, summarization and explanation and do not represent the intent of the General Assembly or either chamber thereof for any purpose. In general, fiscal impacts are based upon a variety of informational sources, including the analyst's professional knowledge. Whenever applicable, agency data is consulted as part of the analysis, however final products do not necessarily reflect an assessment from any specific department.

OFA Fiscal Note

State Impact: None

Municipal Impact:

Municipalities

Effect

FY 17 $

FY 18 $

Various Municipalities

STATE MANDATE

Revenue Loss

Revenue Loss

Summary Explanation

The bill results in:

(1) a revenue loss in FY 17 – 18 by requiring a waiver of property tax payments required under CGS 8-71 (Moderate Rental PILOT); and

(2) a potential revenue loss in FY 17 – 18 to certain municipalities by requiring a waiver of property tax payments required under CGS 8-215 (Tax Abatement). The revenue loss associated with the Tax Abatement program will vary by municipality depending upon whether a given municipality provides tax abatements to eligible developments, as allowed under existing law.

Background: State Appropriations

Historically, the state budget provided appropriations to fund state aid grants under Tax Abatement and Moderate Rental PILOT to subsidize the revenue loss associated with these provisions.

PA 15-244, the FY 16 – 17 Biennial Budget Act (Budget Act), did not provide an appropriation for the Moderate Rental PILOT grant.

Section 1 of the Budget Act appropriated $1,118,580 in FY 16 and $1,153,793 in FY 17 to the Tax Abatement grant. Under Section 12 of the Budget Act, the FY 16 funding of $1,118,580 was eliminated through a statutorily required lapse adjustment.

HB 5044, the Governor's revised FY 17 budget, proposes to eliminate the current FY 17 appropriation of $1,153,793 for the Tax Abatement grant.

The bill impacts those municipalities that received a state aid grant in FY 15 from the Department of Housing. The table below lists those municipalities as well as the state aid grant amounts.1

It is assumed the revenue losses are not fully subsided through state appropriations; therefore, the actual revenue loss per municipality is anticipated to be higher than listed below.

Tax Abatement

Municipality

Amount

Ansonia

13,473

Bethel

37,013

Bloomfield

58,383

Bridgeport

29,641

Granby

12,974

Hartford

298,544

Waterbury

259,580

Kent

8,533

Middletown

90,070

New Britain

37,425

New Haven

84,958

Norwalk

11,482

Stamford

430,338

Total FY 15 Appropriation

1,372,414

Moderate Rental PILOT

Municipality

Amount

Bristol

54,794

Danbury

140,991

East Hartford

38,734

Enfield

87,821

Greenwich

100,286

Hartford

482,774

Meriden

138,706

Middletown

141,931

Norwich

129,713

Seymour

68,127

Sharon

4,279

Stamford

237,929

Storrs

10,028

Stratford

65,480

Wethersfield

21,517

Willimantic

56,620

Total FY 15 Appropriation

1,779,730

The Out Years

The bill limits the waivers of payment to FY 17 and FY 18 only and therefore will have no fiscal impact beginning in FY 19.

OLR Bill Analysis

sHB 5399

AN ACT CONCERNING STATE REIMBURSEMENT FOR TAX ABATEMENTS AND PAYMENTS IN LIEU OF TAXES.

SUMMARY:

This bill gives financial relief to certain housing providers on whose behalf the Department of Housing (DOH) made payments to municipalities in FY 15. It (1) establishes a two-year real property tax abatement for certain privately-owned low- or moderate-income housing developments and (2) extends by two years the requirement that municipalities waive certain payments due from certain state-financed housing authorities.

EFFECTIVE DATE: Upon passage

TAX ABATEMENT FOR PRIVATELY-OWNED DEVELOPMENTS

Existing law authorizes (1) municipalities to provide tax abatements to privately-owned low- or moderate-income housing developments and (2) DOH to reimburse municipalities for some of this revenue loss as part of its Tax Abatement Subsidy Program.

The bill requires, in FY 17 and FY 18, municipalities to abate the taxes on property that received an abatement in FY 15. The FY 17 and FY 18 abatements must (1) have the same dollar value as the FY 15 abatement and (2) be reduced by the amount of any federal funds made available to the development for such taxes. Under the bill, municipalities need not abate taxes owed by a development that no longer qualifies as low- or moderate-income housing.

WAIVER OF PAYMENTS DUE FROM STATE-FINANCED HOUSING AUTHORITIES

Existing law requires tax-exempt state-financed housing authorities for moderate rental housing projects to make payments to municipalities in lieu of paying property taxes, special benefit assessments, and sewer system use charges. The law authorizes DOH to make payments on authorities' behalf as part of its Payment in Lieu of Taxes Subsidy Program.

PA 15-5, June Special Session ( 495) prohibits municipalities from requiring an authority to make these payments to municipalities in FY 16 if DOH made a payment on the authority's behalf in FY 15. The bill expands this prohibition for two more years, through FY 18. Under both existing law and the bill, no waiver is required if federal funds are made available for the payments.

COMMITTEE ACTION

Housing Committee

Joint Favorable Substitute

Yea

9

Nay

2

(03/08/2016)

TOP

1 These totals represent the FY 15 appropriation by program, including changes implemented under the Governor's January 2015 rescission.